When You Thought You Had Seen Enough Corruption And Distortions In Venezuela

July 21, 2013

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While Chavismo/Madurismo continues to solidly embrace controls, creating ever more complicated systems, rules and regulations, there is daily evidence that the whole thing has become a Rubesque-like system whereby the system has become absolutely ineffective due to corruption and arbitrage. Despite the daily evidence, the revolution (?) presses forward with its brainless creation of economic rules and foreign exchange systems, where common sense and logic are completely absent.

Two items caught my attention in the last two days that absolutely make you wonder if these guys even try to use their brains when designing the whole thing:

1) The Head of the Venezuelan Association of Airlines said yesterday (today’s El Nacional, page 6) that during the last three months, occupancy in international flights has not exceeded 40%, despite the fact that flights are completely sold out and all tickets have been booked.

Do you know what this means?

Easy, with the large arbitrage between the official rate (Bs. 6.3 per US$) and the black rate (about four times more) the times of Oligarco Burguesito are back! The only way that occupancy in flights can be that low, is that organized Mafias are gathering cedulas, buying tickets and obtaining Cadivi dollars for travel. Say you buy a ticket to go to Spain with Iberia. I just checked, and on October 1st, I could go for Bs. 14,857 round trip. If you buy the ticket, get US$ 3000 for the trip in your credit card and 400 euros in cash, that is about US$ 3,520, which at the black rate is something like 116,000 bolivars, subtract the Bs. 14,857 and without bothering to travel you have made a tidy profit of around Bs. 100,000. Why bother to even travel and use the airline ticket?That cost money after all. Give the credit card to someone and have them use it to get cash or whatever.

Or organize twenty or thirty people like that and you yourself could go and take care of it, paying everyone one of them a fee for the use of their cedula in your endeavours.

And clearly someone is doing that right now, in massive numbers, if 60% of the seats flew empty before the summer season began.

2) You would think that scams and “guisos” would take a while to develop under the new Sicad rules. Well, corruption is so entrenched, that in the first Sicad auction corruption was already present in full force. Indeed, 127 companies of the health sector were assigned foreign currency. This health sector was defined as “only medical equipment and parts”. If these 127 companies were assigned the “average” amount of 166,000 dollars per request, we are talking about US$ 21 million for all of them.

The problem is that the Venezuelan Association of Distributors of Medical, Odontological, Laboratory and Similar Equipment, reported that of its 137 members not one was approved a single dollar (El Nacional yesterday).

Yes, not ONE, of the ONLY association that groups distributors of medical equipment and the like.

So, the mafias were in place even before the auction took place and they were generously rewarded. Except they went overboard and somebody noticed. The Government said it will “investigate”, “hold off” giving out the dollars and the like, but pardon me for being skeptical, if the Mafias are so entrenched, I am sure the same people that decided to award the dollars to what are mostly phantom companies, will carry out the investigation and nothing will happen.

So, all that complicated system, “checks” and “balances” and in the end, the dollars went to the wrong hands.

I guess in Chavista/Madurista la-la land, it is time to create even more controls…

23 Responses to “When You Thought You Had Seen Enough Corruption And Distortions In Venezuela”


  1. I was going to write about that scam. Oh well, I am sure that there is another scam i can write about ……

  2. xp Says:

    >>> … Well, corruption is so entrenched, that in the first Sicad auction corruption was already present in full force. etc etc. … <<<

    It's Giordani with the Buena Pros, n'est pas?
    Approval still channeled through Giordani and his buddies?

    Merentes is more of a must-fix kind of a guy.

  3. Virginia Laffitte Says:

    Just more insanity!

  4. Glenn Says:

    I don’t understand how a mafia could recover the 3000 USD put on the credit card by Cadivi for resale as Bs.

  5. island canuck Says:

    “Why bother to even travel and use the airline ticket?”
    Is there no cross reference form the immigration department who input all your data as you leave & enter the country with CADIVI?

    I would think that this is step 1 for any system allotting $$ for travel in this day of the Internet & computers.

  6. Imbroglio Says:

    And the problem with airline tickets is only going to get worse as people buy tickets for sicad and, if they are not adjudicated the dollars, postpone the trip to use it in the next auction. At least sicad is demanding that you show the passport with the seals proving that you did travel in those dates.

  7. megaescualidus Says:

    Miguel,

    Could you at some point write a blog about Globovision now that a few months have gone since Zuloaga sold it? I’d really like to read an analysis of what the current state of it is, and I thought you, as many times have already done on many topics, could do a great analysis on it. In advance, thank you!!!

  8. m_astera Says:

    Communism and capitalism attract the same type of crooks. But communism seems to promote the more stupid ones. What a fail.

    So if I want or need to fly to Europe, will I be SOL because the flight is already fully booked with empty seats?

    I think they are getting too blatant, but remember how ‘democracy’ works: All one has to do is fool a 51% majority of the people and that 51% gets to tell the other 49% what to do, or be robbed or imprisoned or exiled.

    It is not too difficult to fool or buy off 51% of the poor and undereducated, when the poor and undereducated make up the majority. That was what Chavez learned from Castro.

    Plato (ca 400 BCE) saw through democracy and majority rule almost 2500 years ago yet people are still falling for the lie. No, a majority of your neighbors who were convinced to vote for someone who promised them free lunch, do not have the right to tell you what to do, or how to live your life, or take your money, or imprison you, if you are not causing harm to the community. The very idea of democracy is sick and twisted, and that is exactly what is happening with the sociopaths in charge of robbing Venezuela today. They are claiming some majority of ignorants who voted them into office gave them the power to tell everyone else how to live, and gave them permission and the right to steal the money and wealth of others.

    Don’t even get me started on government ownership of public resources. Government is a criminal enterprise. Always has been, which is why it attracts criminals, thieves, and liars. Always has and always will. Just like law, and the criminals always take over.

    I despise capitalism (meaning bankers and usury) as much as I do government and communism. I value free enterprise, free trade, among those who produce things of value. Government has never produced anything of value by forcing it on people. Only individual people produce things of value.

    • Roy Says:

      m_astera,

      So, who protects peaceful people from un-peaceful people? Who resolves disputes between peaceful people? Who protects the country from outside aggression? And finally, assuming you will agree on the necessity of those functions, who decides who will provide them and control them?

      If men do not establish just and effective governments, they will surely be ruled by tyrants.

      • NorskeDiv Says:

        Agreed. An absence of government will eventually result in tyranny (i.e. a minority of people with guns ruling over the majority). The question is what form of government is least bad.

        • Jeffry house Says:

          Corporations, unregulated by government, will simply attract the Hugo/Diosdado types who wish to enrich themselves, and they will trample on your rights to do it. Make way for the corporate armies, courts, jails, and tax collectors.

    • gordo Says:

      “Communism and capitalism attract the same type of crooks. But communism seems to promote the more stupid ones. What a fail.”

      It’s not the communism. It’s the traditional alliance between corruption and stupidity. It’s the story of “Chicken Little” who rallies up the farm animals with “the sky is falling” message, and then they all end up in the fox’s cage.

    • kairov Says:

      Leaving the destiny of a nation in the hands of entrepeneurs is not what Plato envisioned as the best form of government. Instead, Plato thought that only a nation ruled by sages would be the best. Just imagine the fate of people with religious of artistisc inclinations in a country ruled by people who thinks that success is in producing material goods only. No Mozart, no San Juan de la Cruz, no Tahj Majal, perhaps not even ipads ;-)

  9. firepigette Says:

    M Astera,

    While you have some truth in what you say, there are quite a few fallacies as well.Nothing is perfect but some things are worse than others,

    Just to mention one example in my own small life though I could mention hundreds if I had time or inclination :

    My daughter in -law is a lawyer for the State, and is quite honest, as are the rest of the lawyers I know in her office.She fights quite hard( for only a barely middle class income) to keep the State from being bankrupted by frivolous law suits from ordinary citizens.Sometimes she has even faced danger.This is hard, and she is one of the few who are successful at protecting us from the sociopaths who want something for nothing.There are even prisoners out there suing just for fun and making a mint when they get away with it.

    If it were not for the government, as Roy states above, we would be completely ruled by these sociopaths/criminals who are out to take it all away from us.

  10. CARLOS Says:

    BCV must also check on duty free importers (Margarita and Paraguana) and look for true importers. There were restaurants and cleaners buying as “importers” during SITME old good times, you may bet there are many of them now bidding at SICAD ..
    BTW.. this auction is ludicrous, nonsense, I would call it an ANTI-AUCTION ,,

    Fisrt, BCV awards the lower bids and disregards the higher bid

    Second,, Even for a low bids , say at 15Bs. they actually will buy the currency at 11… This is what I would call a subsidy overdrive,, dollars cheaper than very cheap , then used to import material that will eventually be sold at 30+ blackmarket rate,,

  11. concerned Says:

    Three things from this:

    1. Explains why the ticket prices are double what they used to be for economy seating.
    2. Auction dollars will do nothing to reduce the rapid black market rate increase, only slowing it down temporarily with the promise of available lower rate dollars.
    3. Medical supplies will still be lacking.

  12. Cristina Says:

    By Rubesque-like system are you referring to a Rube-Goldberg machine’s kind of system? I’ve had so much fun with my students building those…

  13. HalfEmpty Says:

    Gotta be Cristina. I reveled in his comic machinery every Sunday for years. I always wondered why he didn’t make use of Schrodinger’s Cat in a box as some randomizer for the dropping bowling ball.


  14. Of course, that was the idea behind the picture!

  15. Morpheous Says:

    It’s not complicated, the sicad auctions are designed to leave more bolivars of most of the participants to chase the dollars of the mafias who were adjudicated. So the black market rate cannot fall and corruption either.

    As I always say, if after 15 years those honest people in the government have not learned, they never will; while the mafias has become truly experts. Or perhaps there are not honest people left in the government.
    THE SOLUTION IS JUST ELIMINATING THE EXCHANGE CONTROL.
    I don’t care who the president was that would kill the control but I will consider him a hero if successful.

  16. John Says:

    You have to admire the inventivness of the picaros who have figured out how to cheat the system and the exchange racket. The problem here is that few in power are interested in applying their intelligence to honest and transparent enterprises, and the other raft of Chavistas are shockingly incompetant to the extent that they are basically incapible of doing any meaningful civic duty. It is a plain miracle that, for instance, the Guri Dam turbines are still working, to mention just one thing. Sometime soon something in the power grid (I am told) Cadafi) is going to go, and the last 14 years of bullshit will catch up to us in a hurry.

    Vivalargo


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