CLAP Boxes incessantly fatten Group Grand Limited Cash Register

That was just the beginning of a larger business, according to new documents obtained for this report. The contract signed between the firm of Hong Kong and Cobiserta, represented by the then Army Colonel José Salvador Bolívar Pérez —detained last April and investigated for possible acts of corruption, was not the only one that Group Grand Limited achieved. Months later, the company sealed agreement 0086-2017 with the Venezuelan Foreign Trade Corporation (Corpovex), the state-owned company that centralizes public imports, chaired by Major General Giuseppe Yoffreda Yorio, for the supply of 11 million 500 thousand "food combos" for the Corporation for Food and Product Services (Cuspal), attached to the Ministry of Food. The invoices confirm the dimensions of the business.

In just one day, on September 29, 2017, Group Grand Limited quoted Cuspal nine commercial invoices amounting to just over $ 113 million dollars for the sale of canned tuna, pasta, corn flour, tomato sauce and mayonnaise, among other of the eleven products included in the CLAP boxes that the Government sells at subsidized prices among the poorest and that it uses as the flagship against the alleged "economic war" by local entrepreneurs. Moving the cash register like that in a Venezuela marked by an uninterrupted contraction for the last four years, the paralysis of exchange control - effective since 2003 - and the collapse of its international reserves, is an accomplishment of just a few companies.

For instance, Alimentos Polar faces constant stoppages in its industrial plants because the Venezuelan government has failed to pay 130 million dollars for the import of raw materials for the last three years. "We have 449 applications for Foreign Currency Clearance Authorization (ALD) awaiting response, which have an average of 1,095 days in Cencoex. This implies that our international suppliers have not been paid. Many of them have suspended credit lines to Venezuela for these delays," says a recent report by the company belonging to Empresas Polar, the largest private group in the country.

The story of Group Grand Limited, however, is a happy one. The invoices for January and September total 325 million dollars, but sources familiar with the CLAP business say that the two contracts signed with the Venezuelan government exceed 600 million dollars in exchange for 21 million combos. They also affirm that Group Grand Limited also supplies other essential products to other state agencies. Everything has been possible without a factory, with few workers and without fixed headquarters, at least in Caracas, and in the strictest silence.

It was only in last year’s August that its name became public. At that time, Prosecutor General Luisa Ortega Díaz, dismissed by the Government of Maduro, said that the company was run by Colombian entrepreneurs Alex Saab Morán and Álvaro Pulido Vargas on behalf of president Nicolás Maduro. "We have conducted an investigation on the CLAP food bags delivered in Venezuela by a company registered in Mexico under the name of two people. The company is Group Grand Limited and presumably belongs to the president of the Republic," Ortega Díaz said to unleash a scandal.

By that time, Armando.info had revealed several of the signs that connected Group Grand Limited with Saab Morán and Pulido Vargas, e.g. the telephone and the company's address in Caracas referred to the headquarters of Fondo Global de Construcción, a company that allowed the entrepreneurs sign a millionaire contract with the late Hugo Chávez for the construction of prefabricated houses; the son of Alex Saab Morán, Shadi Nain Saab Morán, appeared in the incorporation papers of the company in Hong Kong from 2015 to February 24, 2017. Then, the accusation of Ortega Díaz, revealed that in the company registration in Mexico, Enmanuel Enrique Rubio González—son of Álvaro Enrique Pulido Vargas, whose original identity is Germán Rubio, according to the investigations of Univisión journalist Gerardo Reyes—appeared as attorney-in-fact. However, the defense of the entrepreneurs denies their link with Group Grand Limited.

Although the children of the entrepreneurs have disappeared from the records of Group Grand Limited in Hong Kong and Mexico, the documents obtained now provide one more link in the connection between Group Grand Limited and Fondo Global de Construcción, a company whose corporate structure leads to Malta and allowed Alex Nain Saab Morán to sign an agreement with the Venezuelan Government in the Miraflores Palace in 2011 before Hugo Chávez, his counterpart Juan Manuel Santos, and the then Venezuelan Foreign Minister, Nicolás Maduro. In the end, that agreement led to an investigation by the Ecuadorian Prosecutor for various irregularities.

In the contracts signed by Group Grand Limited with the Venezuelan state agencies for the sale of CLAP boxes, Andreina Fuentes Mazzei acts as "legal representative". Following the trail of this lawyer leads again to the offices of Fondo Global de Construcción in Caracas because based on the documents from the Mercantile Registry she is the CEO of the company since 2013 and of another construction company that also uses the same office in the luxurious business complex Centro Galipán, east of the Venezuelan capital.

At the close of this report, neither Fondo Global de Construcción nor Group Grand Limited responded to the request for comments.

The invoices of Group Grand Limited also show striking data, for instance, that the Maduro government paid more in January than in September for several of the products that the company sent from the port of Veracruz in Mexico to the port of La Guaira in Venezuela. On January 19, 2017, Group Grand Limited charged the Government of Táchira $ 4.75 per kilogram of "whole milk powder," but eight months later, it sold each kilogram at $ 6.95 to Cuspal, the company attached to the Ministry of Food, headed by Army General Luis Medina Ramírez. That invoice of September 29 for milk powder totaled 41.7 million dollars.

"What a deal," exclaims a Venezuelan food industry entrepreneur when comparing both invoices. The increase seems incomprehensible, if considering that specialized sites in the variations of commodities report that in mid-September of 2017 the price of "whole milk powder" was around 3 thousand dollars per ton. Today the price is around $ 3,200, which would be $ 3.2 per kilogram. "Mexico does not produce milk powder, let alone to export it. Those international prices are for whole milk, but the milk in the CLAPs is not whole," adds the industrialist.

A chemical analysis conducted by the Institute of Food Science and Technology of Universidad Central de Venezuela (UCV), at the request of Armando.info, agrees with the industrialist and makes that increase of nearly 50% reflected in the invoices of Group Grand Limited even more incomprehensible. This analysis showed that the Mexican suppliers of brands like Macleche, Suprema, Kosland or Rancho Nuevo, to name a few, lied in the nutritional information and sent to Venezuela a product low in protein and calcium, but high in carbohydrates and sodium, and neither own traders nor the Venezuelan authorities took notice of that.

Although the Venezuelan Government did not publicly pronounce on this finding nor revealed which of the ten intermediaries that it hired was responsible for the marketing of those products, on February 21 - just three days after the publication of the report on CLAP’s Bad Milk - the president of Corpovex sent a letter to the Mexican suppliers, complaining about the food quality. After a "Bolivarian, patriotic and revolutionary greeting," Yoffreda Yorio recalled that "the sanitary permit and the certificate of free sale in the country of origin of all shipped food items corresponding to the products of the Local Committee for Supply and Production (CLAP), either in the form of combos or loose cargo, must be submitted to the verification company and Corpovex."

On May 14, deputy and president of the Comptroller's Office Commission of the Venezuelan National Assembly Freddy Superlano formally filed a complaint in Mexico to the Prosecutor General of that country to start an investigation against the Mexican suppliers that dispatched poor-quality products from Mexico, like the milk powder in CLAP boxes. The doubts and shadows about the business set with the CLAP grew a few days later when the president of Colombia, Juan Manuel Santos, reported irregularities in a batch of over 25,000 boxes with food combos for Venezuela in the port of Cartagena. "Nearly 400 tons of food not suitable for consumption and to be distributed by these political committees of social control in Venezuela were seized in Cartagena. This is the tip of the iceberg of a shameful business involving front companies in Colombia, Mexico and many other countries," warned the president on May 17, from the Nariño Palace.

After the seizure, appeared the name of a Venezuelan entrepreneur, Luis Francisco Sagarzazu, who was the owner of two companies domiciled in Cartagena and responsible for the goods. However, the suspicion of the Colombian authorities is that there is a larger scheme of corruption and other crimes behind. "Front companies, money laundering companies, are being used for acts of corruption and illegal re-export of these foods to the Government of Venezuela," summed up Juan Carlos Buitrago, director of the Colombian Tax and Customs Police, at the press conference offered with the Colombian president.

The president of the Comptroller's Office Commission of the Venezuelan National Assembly asked the Prosecutor General of Mexico to investigate the companies in that country that have shipped poor-quality milk in CLAP boxes for Venezuela.

There is silence in Caracas. No spokesperson has explained why since late 2016 they have paid millions of dollars to shell companies registered in tax havens, like Postar Intertrade Limited, or Million Rise Industries Limited, FB Foods LLC or Welsford Trading Corp, among others, for the sale of around 90 million CLAP boxes that were mainly acquired in Mexico, but also in Colombia, Panama or Brazil, in 2017 alone. From January to May of this year alone, around 20 ships arrived loaded with food combos as part of Maduro's electoral offer for the presidential election of May 20.

Apart from the intermediaries, the scheme has also benefited Mexican companies like El Sardinero, which has shipped thousands of boxes to Group Grand Limited, Deshidratados Alimenticios e Industriales (DAI), Grupo Brandon, Rice & Beans, La Cosmopolitana or Digrava, among others.

"CLAPs are not a temporary measure, they are here to stay," Nicolás Maduro proclaimed last Thursday before the questioned National Constituent Assembly (ANC) in a swearing-in ceremony for the new term of office. It appears that the “cha-ching” of the cash register of Group Grand Limited will continue.