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Food sometimes arrives to the Community - Money Always arrives to Tax Havens

The Venezuelan government has resorted to a myriad of trading intermediaries to provide imported merchandise for the Claps, its star food aid program. With massive purchases in international markets, it poorly satisfies the hunger of popular sectors while safely feeding the financial flows that end in bank accounts in Hong Kong or Switzerland.

11/03/2018 0:00:00

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The business of the Local Supply and Production Committees (Claps) has at least two sides. The head, visible to everyone —thousands of citizens waiting for the long-awaited box that the Government distributes with food at subsidized prices; and the tail, —the eagerness of intermediaries who bill millions of dollars for that merchandise. For some, access to the boxes and the range of products in them seems a matter of chance and consent by officials, while others, the traders, have their fortune guaranteed since the boxes are shipped in containers from ports abroad. The route of prosperity is not for traders in Venezuela only, but for certain tax havens as well.

The reward is so profitable that since the middle of last year, when the state plan created in 2016 took shape, despite the framework of what might the biggest economic crisis in the history of Venezuela, an endless number of suppliers that only the Venezuelan authorities seem to know wanted to be part of the business. Just a couple of names have been made public, namely Postar Intertrade Limited and Group Grand Limited, but they are certainly not the only ones.

For example, Million Rise Industries Limited is one of the unknown suppliers of the program. It is, like Group Grand Limited—infamous since the dismissed public prosecutor general of Venezuela, Luisa Ortega Díaz, linked it with Maduro last August , registered in Hong Kong, the most important tax haven in Asia and the fourth jurisdiction in the Financial Secrecy Index prepared by the Tax Justice Network. The Venezuelan government resorted to that company to buy sugar and mayonnaise from Brazil or white rice from Uruguay in what seems to be an odd intermediation since Venezuelan state companies directly negotiated for years with companies from both countries.

For Million Rise Industries Limited, the gateway to the business was a contract with the Venezuelan Foreign Trade Corporation (Corpovex), a sort of state holding that centralizes public imports, chaired by the Major General of Aviation, Giuseppe Yoffreda Yorio. Thanks to contract CPVX-CJ-CONT-0072-2017, in last year’s September, the Hong Kong-registered company billed in a week at least 668.10 metric tons of Uruguayan white rice, dispatched from Montevideo by Damboriarena Escosteguy, as well as 125 tons of sugar and 72 tons of Brazilian mayonnaise, shipped from the port of Santos by Tenda Atacado Ltda, a supermarket chain.

Just to pay for the rice and mayonnaise to Million Rise Industries Limited, Corpovex disbursements totaled $ 1.3 million in a seemingly incomprehensible triangulation. The invoices make the route of the money and the payment conditions clear. The Venezuelan state-own company had to transfer the money to an account in DBS Bank of Hong Kong, with the Deutsche Bank of Frankfurt as an intermediary. A quarter of the amount had to be "prepaid", another 65% "against shipping documents", and the remaining tenth "against delivery and receipt certificate."

The figure of 1.3 million dollars seems small if compared to the frequent amounts in these transactions. But it would be just a small slice of the whole pie if —as disclosed on Twitter by Well Thoughts Consultants, a consulting company ran by Army Major General Hebert García Plaza, former Minister of Food and Water and Air Transportation in the early years of Maduro's administration— Million Rise was assigned the provision of five million Clap boxes.