Venezuela - Corruption

Corruption is a problem in Venezuela. Transparency International's 2011 Corruption Perceptions Index ranked Venezuela as the most corrupt country in Latin America. Venezuela has laws on the books to prevent and prosecute corruption, and accepting a bribe is a criminal act. A proposed amendment to the existing corruption law passed a first reading in the National Assembly in May 2011 but was pending a second reading.

As Venezuela’s state owned oil company, PdVSA has long been a vehicle for corruption. A variety of schemes have been designed to embezzle billions of dollars from PdVSA for the personal gain of corrupt Venezuelan officials and businessmen. For example, a 2014 currency exchange scheme was designed to embezzle and launder around $600 million from PdVSA, money obtained through bribery and fraud. By May 2015, the conspiracy had allegedly doubled in amount, to $1.2 billion embezzled from PdVSA. Abraham Edgardo Ortega, a Venezuelan national who was PdVSA’s executive director of financial planning, pled guilty to one count of conspiracy to commit money laundering for his role in the billion-dollar international scheme to launder funds embezzled from PdVSA.

In a separate case, U.S. prosecutors have alleged that, from 2011 to 2013, senior Government of Venezuela and PdVSA officials, including Nervis Villalobos, the former Venezuelan vice minister of energy; Rafael Reiter, who worked as PdVSA’s head of security and loss prevention; and Luis Carlos de Leon, a former official at a state-run electric company, sought bribes and kickbacks from vendors in exchange for helping them secure PdVSA contracts and gain priority over other vendors for outstanding invoices during its liquidity crisis.

It is an open secret that the Russian defense industry is an important trough at which senior officials feed, and weapons sales continue to enrich many. Defense analysts attribute Russia's decision to sell weapons that the Venezuelan military objectively did not need due to the interest of both Venezuelan and Russian government officials in skimming money off the top. The sale of Su-30MK2 fighter-bombers was cited as a specific example where corruption on both ends facilitated the off-loading of moth-balled planes that were inadequate for the Venezuelan Air Force's needs.

In July 2017 then attorney general Luisa Ortega released a Public Ministry investigation report that at least a dozen high-ranking officials and their relatives received bribes in exchange for contracts with the Brazilian construction company Odebrecht. Ortega said the government paid approximately 30 billion dollars for 20 infrastructure projects that were never finished. Ortega also claimed that Odebrecht provided campaign funding to politicians. On 07 September 2017, the newly appointed attorney general, Tarek William Saab, announced that the Public Ministry would not pursue investigations into Odebrecht infrastructure projects, including allegations that President Maduro was involved.

According to Transparency International, the main reasons for the country’s widespread corruption were the government’s anticorruption program, impunity, weak institutions, and lack of transparency in the management of government resources. Corruption was a major problem in all police forces, whose members were generally poorly paid and minimally trained. There was no information publicly available about the number of cases involving police and military officials during the year, although the Public Ministry publicized several individual cases against police officers for soliciting bribes and other corrupt activities.

The law provides criminal penalties for official corruption. However, the government did not implement the law effectively or impartially and frequently investigated and prosecuted its political opponents selectively on corruption charges to harass, intimidate, or imprison them. The press reported that officials engaged in corrupt practices with impunity.

The Comptroller General’s Office is responsible for investigating and administratively sanctioning corruption by public officials. The Public Ministry investigates and criminally prosecutes individuals and entities in the public and private sectors for corruption. The National Assembly can order the Public Ministry to undertake investigations. The Public Ministry and the Public Defender’s Office investigate abuses by police and military officials.

Starting in the 1980s many cases of bribery and corruption were exposed, ignited, primarily, by some European countries such as France and Germany where "commissions" [aka bribes] were granted by these governments as a tax deduction for defense contractors. In the 1988 contract formodernizing Venezuelan Navy patrol boats by the Italian company, Oto Melara, the company did not finish the job and payments were illegally made, defraudingVenezuela of about 9.5 million dollars. And in contract for modernizing 81 Army AMX-30 tanks by the Venezuelan-Italian Van Damcompany on August 7, 1988, the contracting company received payment for more than 70 percent of the contract price without delivering any operational tanks.

The NGO Transparency Venezuela reported that between 2004 and 2010, the government had fulfilled four, and made some progress on 12, of the 113 recommendations that the Mechanism for Follow-Up on the Implementation of the Inter-American Convention against Corruption had made to improve government transparency and fight corruption. The NGO reported no progress on the remaining 97 recommendations. Transparency International’s 2011 report reflected a perception that the public sector was highly corrupt.

During his 15 March 2011 appearance before the National Assembly to present his annual report, Comptroller General Clodosbaldo Russian acknowledged corruption in the government’s housing construction program, paralysis in public works projects, the loss or deterioration of state-owned property, expired medications and rotten food in government warehouses, and minimal accountability over the funds transferred from the national government to community councils. During 2011 the comptroller general sanctioned 157 public officials for alleged corruption: 116 were administratively disqualified from holding public office, 36 were suspended from their jobs, and five were dismissed.

Although the Public Ministry said that corruption was “one of the phenomena that most affects national development,” the Public Ministry dismissed or suspended 81 percent of its corruption-related cases in 2010, according to its annual report. The Public Ministry reported it had closed 3,210 cases involving corruption in both the private and official sectors: 596 resulted in indictments, 2,443 were dismissed, and 171 were suspended.

The Public Ministry and the Public Defender’s Office also investigate abuses by police and military officials. Corruption was a major problem in all police forces, whose members were generally poorly paid and minimally trained. Impunity for corruption, brutality, and other acts of violence were major problems explicitly acknowledged by some government officials (see section 1.d.). There was no information publicly available about the number of investigations, prosecutions, and convictions of police and military officials during the year.

One example of high-level corruption involved Rafael Ramos de la Rosa, a government-appointed trustee for two stock brokerage firms, Uno Valores and Italbursatil. Ramos had been appointed as a receiver by the National Securities Superintendency. He was charged in the Southern District Court of Florida in October 2010 on allegations he came to Miami, Florida, to collect a $1.5 million extortion payment from the former owner of Uno Valores. He pled guilty on July 4 to charges of extortion and conspiracy to obstruct foreign commerce.

On 07 November 2011, after an 18-month detention, the court conditionally released, pending trial, the three defendants charged in the June 2010 “Pudreval” scandal, in which thousands of tons of decomposed food were found at government warehouses throughout the country. The food had been intended for distribution through the government’s subsidized food programs. The individuals charged were current or former employees of PDVAL, the food import and distribution unit of the state oil company, PDVSA: director Luis Pulido Lopez, former executive director of operations Mercedes Vilyeska Betancourt Pacheco, and former general manager Ronnal Jose Flores Burgillo. The court had suspended or deferred the trial 24 times, annulled the original proceedings and ordered a retrial in a different court, and recused four judges in the case, including one who had reduced the charges against the defendants.

On 31 August 2011, former opposition governor Didalco Bolivar returned to the country and was detained in connection with outstanding 2009 charges for “irregularities in the exercise” of his official responsibilities. On September 15, the court released Bolivar on conditional parole pending a review of his case. Shortly after his release, in interviews with government-controlled media, Bolivar publicly denounced several prominent opposition figures, including National Assembly Deputy Ismael Garcia, for alleged corruption. Garcia denied the allegations, claimed Bolivar was “following the government's playbook,” and contrasted the Public Ministry’s prompt response to Bolivar’s accusations with the lack of any official investigation into his various allegations of corruption by government officials.