As gathered from a large file of documents, jointly obtained and processed by the Spanish newspaper EL PAÍS and Armando.info, which has given rise to this series of investigative reports entitled “Mexican Bypass against Sanctions,” a company unknown in the raw material production business, called Consorcio Panamericano de Exportación (Copaex), proposed to the presidency of CVG a plan to “reactivate the aluminum industry in Venezuela.”

The project with CVG was another idea of Mexican businessman Joaquín Leal Jiménez, an ally of Alex Saab in Mexico, who activated a secret network for the trading of Venezuelan commodities designed from an original request of Venezuelan Vice President Delcy Rodríguez to solve the inconveniences generated by the national 5-day blackout, in March 2019. By a subtle irony, it was precisely that electricity crisis what condemned the state-owned aluminum industry to inoperability… the electricity from Guayana —a Venezuelan region south of the Orinoco River, rich in minerals and water flows— until then abundant, continuous and inexpensive, is one of the essential supplies for this industry to produce. To concentrate aluminum in its cells, Alcasa and Venalum, the two CVG companies engaged in the aluminum market, require around 1,500 megawatts per day.

The blackout represented the coup de grace for an industrial park that in March 2019 reached a production equal to barely 10 percent of its installed capacity. It was the end of a decline that began in 2010, when the late former President Hugo Chávez ordered the aluminum industry to shut down in order to save electric power during the first great crisis of the electric utility, officially blamed on that year’s drought and the drop of the level of the Guri dam, on the upper Caroní River, in the State of Bolívar, one of the three rivers —together with Delta Amacuro and Amazonas— of the Guayana region. If the production of this conglomerate of mineral processing companies has never been the same since then, after the 2019 blackout, it fell to zero.

A Blessing for Leal’s sake

The debacle, however, looked like a business opportunity for Leal, who was a rising star in Mexico, as a businessman in the electricity sector. He saw within reach the possibility of adding another Venezuelan raw material to his portfolio of products for the global market.

Through the unknown Copaex, he proposed to the Venezuelan counterpart to make a one-off US$ 300-million investment to supply and transport “gas-based power generation plants of 200-MV capacity” which, together with an alliance with the Venezuelan state-owned Corporación Eléctrica Nacional (Corpoelec), would be enough to activate within nine months 125 out of the 905 aluminum cells paralyzed since the blackout of March 2019.

After one more year, according to the document addressed with much familiarity to “Pedro,” referring to Pedro Maldonado, president of CVG and trusted man of Vice President of Economy Tarek El Aissami, Leal and Copaex estimated that all the cells could already be active.

“Copaex will send power generating plants to Venezuela as of July 2019, and expects to complete the installed capacity of 200 MW within the next 12 months. With the 16 MV, it is estimated that 10 cells will be reactivated with a production of 510 tons per month. To start with the production, it is required to enter into a cooperation agreement by and between Venalum and Copaex, where the contributions of the parties and their benefit will be determined,” reads the proposal in an optimistic tone, dated June 10, 2019.

While in the letter addressed to the president of CVG, the Mexican company assured that it was solely motivated to submit the proposal due to its “commitment to the industrial development of Venezuela,” and highlighted that Leal had accumulated experience in the electricity business, the plan fell short when it came to envisioning the eventual rescue of the Venezuelan aluminum industry.

The business proposal acknowledged that at least 1,448 megawatts of generation would be needed to activate all the aluminum cells, but did not disclose whether the new added capacity was part of the proposed agreement or how many power generation plants it entailed. In fact, it ended up explicitly assigning to the state-owned Corpoelec the responsibility of generating and supplying some 1,250 megawatts of the required capacity from the planned Tocoma hydroelectric plant on the lower Caroní River, which never went on stream despite the state’s injection of nearly US$ 10 billion. However, it does make it clear that Copaex’s services would be paid “in kind with produced aluminum.”

Resuscitation maneuver

The bet on aluminum was a maneuver that Leal attempted to channel income towards the aforementioned Consorcio Panamericano de Exportación (Copaex), created as a variable stock corporation in 1998, but finally registered in the Mexican state of Guanajuato in 2017, with a very broad corporate object, slightly inclined to livestock or agricultural activity. The company was not created by Leal, who later acquired it through relatives.

The company was registered with a capital of 50,000 Mexican pesos and with three members on its board of directors, until August 2019, when its initial corporate purpose —also very broad but now with some ambition in the field of food and oil trading— was modified, and the three directors who were on record at its creation were removed from their positions giving way to two new members, María Guadalupe Villanueva Ayala and Francisco González Ramírez. Ramírez was the signatory of the proposal to CVG, as president of the Consortium, which, based on the dates, he had just joined.

At an Extraordinary Meeting held in October 2019, the company took another turn with the increase of capital from 50,000 to 100,000 Mexican pesos (from US$ 2,500 to US$ 4,500) and the inclusion of a new board member, María Teresa Alfaro Castañeda, Joaquín Leal’s grandmother, which ratifies a common practice in Leal’s companies —he does not appear in the articles of incorporation of the companies, but his relatives.

Three months after that modification, the company made a transfer with a check for 15 million dollars to another company of Leal’s scheme, Libre Abordo, which it gave in turn to the state-owned Seguridad Alimentaria Mexicana (Segalmex) as part of the payment for 210,000 tons of white corn that would eventually be exchanged for oil in Venezuela. This was one of the first moves of a sophisticated corporate structure, in which Alex Saab also participated to obtain resources in exchange for oil and thus evade U.S. sanctions. Then came the control of coal, the interest in collecting remittances from Venezuelans abroad, and aluminum.

A year after that signature, which meant the entry of Leal’s relatives in Copaex, in March 2020, the “variable” capital stock of the company dramatically increased to 100 million pesos (a little more than five million dollars); it multiplied by 1,000. The two former shareholders resigned, as per the minutes to which EL PAÍS and Armando.info have had access, and Leal’s grandmother is joined by a new partner, Carlota Leal Jiménez, Joaquín’s sister, with a minimum 0.5-percent share.

While Copaex was trying to close the deal with CVG, it also offered to place a shipment of 180,000 tons of coal in Central American ports, specifically in Guatemala, for a value of 12.3 million dollars. This sales proposal had much clearer technical specifications than the proposal to reactivate aluminum. Although nowhere it is stated in the document that the coal was of Venezuelan origin, by that time, the network of Leal and Saab was managing the coal exports of the state-owned Carbozulia.

There is no indication that the business proposed by Consorcio Panamericano de Exportación had materialized. Reactivating Alcasa and Venalum with a 200-megawatt gas plant is virtually impossible. An engineer with over 20 years of experience in the aluminum industry, who prefers to keep his name confidential, explains, at the request of the reporters, what is really needed for this basic company to resume operations. “The total energy requirement for a 100 percent production of the aluminum industry is around 1,800 to 2,000 megawatts, equivalent to 18 or 20 percent of the capacity of Guri, with a total capacity of 10,300 megawatts. It is not possible to talk about package power plants of this size or about sectioned plants that are gradually added. It is necessary to have a highly reliable dedicated system, which would require a large investment or the recovery of the national interconnected system within a clear balance strategy between the consumption of the industry and that of the rest of the country.”

On the other hand, the improvised scheme seemed to be a great deal for businessman Joaquín Leal. What began under the guise of a “humanitarian exchange” of oil for goods, ended up opening a source of Venezuelan raw material to feed his energy business in Mexico, as he once envision, or to resell it in a hungry global market, just before the outbreak of the pandemic, for goods like oil, coal and aluminum.

She helped in a courier company and cleaned houses. She left the school where she taught in Venezuela and displayed her knowledge as a Bachelor of Education with a Master’s degree in Educational Psychology behind. She was not making ends meet. When she returns to mainland, she hopes to live off what she buys with the sale of the dollars, little by little, for at least six months, to return to Trinidad and repeat the operation. She hopes to support her family in hyperinflationary Venezuela under this architecture of seasonal travels.

At first sight, Cedros, on the Trinidadian coast, is like any Venezuelan beach, Higuerote, Cuyagua or Punta Arenas, but without reggaeton in the background or "empanadas". The sand is fine and brown, the water is warm.

On a long concrete jetty that serves as a pier, the line of those who have their papers to enter legally is formed. Around four boats arrive every Thursday, each with at least 20 Venezuelans seeking to escape from hunger and shortages, which represent their homeland these days. Family or friends wait for them under a tree to prove, if necessary, that they are invited by someone.

Yes, the landscape reminds us of Venezuela but everything suddenly changes. A Trinidadian official shouts the names of the newcomers with a strong English accent. If anyone is waiting for Venezuelans when called, they are sent back.

Once you set foot in Trinidad, the real odyssey begins. Arriving Venezuelans usually make one of these two decisions: the one made by Andrea, entering legally, staying a while and returning, or remain indefinitely seeking international protection as a refugee.

Those who do not have passports disembark on the beaches of Icacos -even farther west than Cedros- or Erin -more to the south-, where there are no official entry points and the welcome is offered by the gentle beach, the night and the silence. The fishermen of the area acknowledge that many Venezuelans enter "but less and less from here," according to Selwyn Joseph, who lives in Icacos, "There are more surveillance patrols lately." Regardless of the strategy, most come to Trinidad with a single goal: to work and earn in dollars to help those who stay at home.

Helpless

Unlike other countries bordering Venezuela, which for months have had some legal and logistical apparatus to receive the growing flow of those escaping the crisis, Trinidad and Tobago hardly improvises. According to the Chief of the Immigration Office, Charmaine Gandhi-Andrews, in 2015 only six Venezuelans had requested asylum, but the number rocketed to 2,000 applicants in 2017, mostly processed by the Catholic refugee service agency Living Water Community (LWC), a sort of an executive branch of the United Nations Agency for Refugees (UNHCR).

Although they do not offer information on the number of applicants, the LWC spokespersons slip a calculation: each week they receive 150 to 180 Venezuelans requesting asylum, and their projection for year end is that at least 10,100 will be in the island asking for protection. According to the Trinidadian authorities, in 2017 alone, 27,000 Venezuelans entered through the official ports of entry.

However, being on the LWC list does not represent a solution for Venezuelans seeking protection and refuge in Trinidad and Tobago. The legal scaffolding of the Caribbean country to deal with migration is limited to the Immigration Act of 1969, amended for the last time in 1995, and where there is not a single reference to the figure of asylum or refuge. The misalignment of this law with the present time dates back to the use of an archaic and discriminatory language, like the express prohibition to enter the country for "people who are persons who are idiots, imbeciles, feeble-minded and insane persons, and who are likely to be a charge on public funds” (article 8(a)),"persons who are dumb, blind or otherwise physically defective, or physically handicapped, which might endanger their ability to earn a livelihood" (article 8(c)), or "prostitutes, homosexuals or persons living on the earnings of prostitutes or homosexuals" (article 8(e)).

A strong flow of Cuban migrants who arrived in Trinidad in 2014 finally led to the creation of an Immigration Unit. In 2016, Acnur opened an office in Port of Spain, the capital of this Caribbean nation that comprises of two islands. But these instances were soon surprised by the arrival of Venezuelans en masse. "There had never been a migration of Venezuelans like that," explains Rochelle Nakhid, director of LWC. "We are receiving more and more people without passports. They always show the identity card. Some arrive by plane, but most of those who enter by sea do not have documentation, and almost all say that they are looking for a better life, ways to send food to their homes or medicines."

Without regulations or laws that support the status of asylum or refugee, Trinidad and Tobago does not grant this status to anyone, despite being a signatory to the Convention relating to the Status of Refugees, created in 1951 by the United Nations. LWC just provides a paper warning that the bearer is an asylum seeker and the Immigration Office of Trinidad and Tobago provides a similar document, although printed on yellow paper and with a couple of conditions: Venezuelans must submit their passport to the Immigration Office and appear before that instance on a regular basis.

This last document is known as "order of supervision" and they usually give it also to migrants who were arrested because they entered the country illegally and had not requested asylum. The detainees in these conditions, who want to request protection once arrested, can only obtain the "yellow paper" if they pay a fine or serve their time in prison.

In practice, none of these papers is equal to obtaining refugee status. Nor do they imply a formal residence and, worse still, they do not mean a permit to work or study, in the case of minors. "The paper from LWC or the yellow paper generally is an alternative to being arrested. It provides them with protection from being deported or under arrest. It is the only mechanism available," Nakhid points out.

Suspended Lives

But to Jean Carlos Anaya, for example, the paper provided by LWC did not help him. He has an associate degree in IT, born in Valencia, capital of the state of Carabobo (center of Venezuela), is a prisoner in the IDC, Immigration Detention Center, built in 2009 in Aripo, almost an hour from Port of Spain. He arrived in Erin without a passport when the boat trip from Tucupita, in last year’s November, could still be paid in bolivars. Soon he settled in a room and started working in a chicken farm, then in a hardware store, in both cases, as an illegal and earning up to 1,500 Trinidadian dollars a week (214 US dollars), which he distributed so that he managed to send money to his fourteen and six-year old children.

"I was good with money. The first week I paid for the room, the second and third week I bought food, and I sent to Venezuela what I earned in the fourth week," he says in a telephone call from the IDC. "I worked from sunrise to sunset. I could settle and was happy. Two months later, I went to LWC and obtained my paper as an asylum seeker, like my brother, who arrived with me and is also in prison here." Both were arrested after a party in the coastal area of ??Los Iros, despite of showing their asylum seeker certificates — "I didn’t know that there was so much patrolling," he complains. The police overrode. "They asked for a $ 1,000 each to let us go. I only had TT$ 700 cash, so they arrested us."

That happened in June 2017. Anaya was imprisoned in the IDC before he was presented in court. After verifying that he was an asylum seeker registered with LWC, the court decided to give him a verbal reprimand only and ordered his release "in the next few days". But the native of Valencia was transferred to the maximum security prison (MSP) with common criminals. He stayed there for seven days without receiving any explanation and then back to the IDC, where he remains imprisoned to date. His brother, who entered Trinidad like him and was arrested in the same circumstances, has not even been brought before a court.

"I know my rights. The court ordered my release, but I am still here. I asked for international protection and I have a paper that guarantees it. I'm just waiting to get out of here and I'm going to sue Trinidad and Tobago," says Jean Carlo, who despite being holed up, does not want to return to Venezuela. "With much grief I must say that I cannot go back. I need to keep working, earn money and send it to my home. You need to understand my desperation. My children and my mother depend on me."

Most of the arrested immigrants must pay a penalty of up to three years in prison or a fine of up to 2,100 Trinidadian dollars (about US $ 300), equivalent to a potential return ticket to their country of origin. Between loneliness and poverty, not everyone has friends or resources to cover that expense. In addition, the amounts of the fines are sometimes set discretionally, as well as the bails.

José Heredia, has spent exactly six months trying to collect the 3,000 US dollars (21,000 Trinidadian or titi dollars) required to get his friend Ericson out of prison, arrested in December 2017 and sentenced in less than a week to three years in jail for entering Trinidad illegally. "It was all very fast, without a lawyer, nothing," says Heredia, "They told us that if he doesn’t pay the fine he will have to pay the penalty in the maximum security prison, but the amount is high and it has been difficult for me to collect it."

A ‘Spanish’ is Worse than a Burden

Not long ago, the transit of Venezuelans was a routine matter in Trinidad and Tobago because it was just that, transit. In Cedros and Icacos, almost everyone remembers that arrival routine of Venezuelans on Fridays to party or go to the beach on the weekend, buy something and return on Sunday. Another of the classic activities of Venezuelans, especially middle class, was to go for a few months to study English. On the other hand, many Trinidadians remember that they liked to travel to Margarita Island and Cumana, and those with more resources, to Puerto La Cruz - all tourist enclaves of the Venezuelan northeast - or to Caracas, where they could enjoy the frenzy of a big city that used to emanate from the Venezuelan capital.

The change began in 2015 with the collapse of both oil-dependent economies -a catastrophic fall in Venezuela’s case- and the growing number of Venezuelans arriving and remaining in a country whose native population was going through the lean times. The smile that was reserved for the tourist transmuted into distrust for the immigrant, a little fairer in skin than the Trinidadian, with little understanding of English and definitely with less available resources than the Venezuelans in the past. The constant police patrol on the street, especially in Port of Spain, the legal limbo of their situation and the scrutinizing looks of the locals keep Venezuelans hidden in their homes or jobs. "Hello Spanish," as a greeting on the street, is not exactly welcoming.

Norka Delgado and her two children do not speak Spanish when they go to the city center, and they hardly go out. "We whisper. We do not want to attract attention. Here we are Spanish, Latin." The Trinidadian Government is so rigid with immigrants that even if an alien has a resident status, their children are not admitted to the formal education system unless they have the same status. Norka, a Venezuelan resident—because her father is Trinidadian—, an administrator by profession and a waitress by necessity, has over a year in Port of Spain, but her 14 and 16-year old children are not admitted to any school.

"That greeting implies that you are an alien, different," explains Arnaldo Gómez, a Venezuelan journalist caught in the legal limbo of being an asylum seeker without the right to study or work, "it is a phenotype observation." Gómez arrived in 2016, and claims to be one of the first Venezuelans to apply for asylum in Trinidad. He started organizing boxes in a shop, of which he is a sort of a manager today, because he earned the trust of the owners. Considering the time elapsed, he can affirm that the treatment of the Trinidadians has deteriorated rapidly. In a recent release, the Newsday newspaper of Port of Spain dared to describe the Venezuelan migration as an "invasion."

"From the moment I asked for asylum, they told me that I could not stay, but they offered to send me to another country in a resettlement process. We chose Canada. I had a very cordial interview at the immigration office. I appeared at the office every three months. Then, in the second interview, they took my passport and asked me to appear every month. In last year’s July, they should have helped me with the resettlement or at least give us the residence or work permit, but nothing happened. They told me that there will be no resettlement. It is a legal nonsense. They push people towards illegality and they know it. We do not exist in Trinidad," he explains.

In this context, Venezuelans do not adapt, they feel in an eternal transition. Most expect to be able to save and go elsewhere, but many, like Gómez, face another problem, the expiration of their passports and the impossibility of obtaining a new one through the website of the Venezuelan Immigration and Naturalization Service (Saime), because when filling out the electronic form, there are the tourist and resident categories only, there is no refugee category. Venezuelan immigrants in Trinidad are neither tourists nor residents.

Out of the Radar

With no work permits, arriving Venezuelans can only relocate in jobs as taxi drivers, construction workers, masons, waiters, household employees. Trinidadians express fear that this flow of immigrants will fill the jobs; hence, many applaud the official tightening policy towards immigrants declared by the prime minister in late July. However, not everyone panics. "People think that Venezuelans will take our jobs. They get scared because the economy is bad," says a Trinidadian taxi driver with a strong Hindu accent during a long trip, "but the truth is that there is a lot to do here and a little help would not hurt."

The condition of illegality to work - with asylum seeker paper or not - usually means that the payments received by Venezuelan immigrants are well below the minimum wage. On the coast, where the most common trades are related to work in the country, on farms, in fishing or in informal commerce, is even worse. But Venezuelans accept it. Any dollar multiplies exponentially when sent home. "Trinidadians work for 350 titis a day (US$ 50), but we are paid 150 titis, depending on the work," says Magda Estaba, a 45-year-old Venezuelan who lives in Icacos, but who has also become a kind of guide or leader for the growing community of newcomer compatriots.

"I help as I can. Sometimes I lend money for them to show that they can be on the island and then they pay me back, but mostly, I try to help them find work. In the coconut processing plant at the beach alone there are five Venezuelans, and I got them the job," she says proudly, although not trying to idealize that work. She knows, for example, that the work in the country could entail a twelve-hour day. "Those who want to stay obtain their paper as asylum seekers in Port of Spain and stay in those jobs, but many, especially those who come with the family, end up returning because the children cannot attend school."

In Port of Spain, wages improve a little. But the costs of living in the city are also higher. You can find at least one Venezuelan waiting tables in almost every restaurant in the capital of Trinidad, which by some prodigy seem to be exempt from police raids. However, a great vulnerability is perceived even among these privileged immigrants, who enjoy regular employment and salary.

Women take care of each other with dedication, because, since they look different, they are in great demand in the business of sex slavery. Malena Rodríguez is a girl from the island of Margarita who has been an immigrant for nearly two years. She entered the island of Tobago, more rugged and northern than Trinidad, but today, she lives on the main island. She has the marks and scratches from what she describes as an attempt to kidnap her in April of this year, when she took a taxi on the street. "I was going from home to work, a route that I do all the time, but the taxi got diverted and turn off and drove through an unknown area. I asked the taxi driver where were we going and he did not answer me. The second time, he accelerated and I jumped off the car while still in motion. Luckily, I could stand up and run. Who knows what he was going to do to me," she recalls.

Now, she only uses an Uber-like taxi service, which is the same used by all of her co-workers, waitresses at the bar on Ariapita Avenue in Port of Spain. She hopes to save enough to leave soon. "Trinidadians does not treat aliens well," she says. Nearby, at least five Venezuelans work in prostitution guarded by burly Trinidadians. They look very young and their accent stands out, like that of two Cuban girls. None of them wants to tell how they got there.

* The identities of all Venezuelans quoted in this report have been changed to protect their immigration status and procedures before the government of Trinidad and Tobago.

As the metaphor of that player who is fourth bat, catcher and boyfriend of the godmother of the team, the previous paragraph is just the first of eight objectives set by company Pdvsa Marketing Internacional (Aruba) AVV, established on that Caribbean island with a capital of $ 30,000, more than a modest amount for the pretensions of also issuing and buying bonds, participate in the liquidation of companies or participate in "all types of contracts with legal purpose". This is stated in the company's articles of incorporation, one of the 13.4 million documents obtained in a leak of the Appleby law firm by the German newspaper Süddeutsche Zeitung and shared by the International Consortium of Investigative Journalism, better known as Paradise Papers. 

The document states that the company was incorporated on July 22, 1991, and was relaunched in 2009 with the signatures of Asdrúbal Chávez -then vice president of Trade and Supplies of Pdvsa and current president of Citgo- and Eudomario Carruyo, then vice president of finance of the state oil company, fallen in disgrace after being blamed for participating in the diversion of resources that ended with the Pension Fund of the company. Although there are no clear signs to notice if the company made any contract through that Aruban branch and from which it does not leave a formal registration anywhere, the organization of this company in a tax haven is far from being an isolated practice in the times of the “redder than red” PDVSA.

Also in 2009, Pdvsa Gas contracted the services of the Appleby law firm for the incorporation of company Pdvsa Gas Accro Ltd - replacing another company known as Accroven Holdings Ltd - which was registered in Barbados in September of that year with a wide range of objectives and more ambitious purposes related to gas exploitation.

In 2010, Ricardo Coronado, the then general manager of the PDVSA Offshore Division, signed the as the sole director. After climbing high positions within the industry, he was accused of corruption by the Comptroller's Office Committee of the National Assembly and left the country long before the raid that now has directors like Eulogio del Pino and Nelson Martínez, among 63 other workers of the company, behind bars.

Although Pdvsa Gas's finance department did not officially respond to a questionnaire about the scope and operation of that company, not specified in any management report, a source from the oil company confirmed that the office is active, but did not specify the nature of its activities.

The leak of law firm Appleby also reveals that company WillPro Energy Services (Pigap II) was acquired by Pdvsa Gas - specialized in gas injection and compression services - for 112.4 million dollars, which is registered in the Cayman Islands, although it has an established office in Maturín, state of Monagas. Many unsuccessful attempts were made to establish a telephone contact with that branch.

Why a state-owned company opens offices in a tax haven? After clarifying the point that PDVSA has no need to evade taxes in Venezuela, a lawyer experienced in the organization of financial entities and offshore companies assured Armando.info that the first explanation can be found in the exchange control in force in Venezuela since 2003 and the possibility offered by these companies to have a business relationship with the oil company without passing through that control.

"The payments in US dollars received by an offshore company, even from Pdvsa, do not have to pass through the Central Bank of Venezuela," specifies the expert referring to the amendment to the BCV Law that released Pdvsa from the obligation to pass all its profits to this entity. "This made it easier to place foreign exchange in other places like Fonden or offshore companies."

The basic problem with these placements is their lack of transparency. Being out of Venezuelan jurisdiction, the Venezuelan Office of the Comptroller or the National Assembly can hardly ask for any accountability, especially if Pdvsa does not make these companies public. In its official organization chart, the state company only recognizes PDV Insurance Company (Pdvic) as the only company established in Bermuda.

The other relevant point is that by organizing subsidiaries in tax havens, Petróleos de Venezuela has the possibility of subcontracting without going through the bidding process established in Venezuelan laws. "The offshore company can, by nature, receive payments and also pay to any supplier practically without controls. If it is an offshore that is managed as a Pdvsa subsidiary, the bidding is also avoided because it is the company itself acquiring a good or service from a subsidiary. It does not mean that this happens, but it gives room to all kinds of subcontracting, surcharge and collection of commission."

An example of these uncontrolled management was what Pdvsa Insurance Company (Pdvic) did by giving 66.7 million dollars to a financial fund –Fractal Fund Management– that ended up entangled in the Ponzi scheme in which over 500 million dollars of the state oil company were lost. "The ought-to-be is that Pdvsa does not have intermediaries and contracts directly, so that the companies can be duly audited," concludes the lawyer.

The number and broadness of the objectives established by these companies in their articles of incorporation also contributes to the possibility of making all kind of contracting with any type of company. Tax havens allow these lax definitions to facilitate the establishment of companies, unlike the laws of other countries, including Venezuela, which order more specific definitions.

Another well-known case of a detrimental subcontracting for the Venezuelan public treasury was the lease of the Aban Pearl platform from offshore company Petromarine Energy Services Ltd, registered in Barbados. The platform, which collapsed on April 13, 2010, was contracted with a surcharge of up to 50 million dollars, according to the complaint filed by the Commission of the Comptroller's Office of the National Assembly with the Venezuelan Prosecutor's Office.

With the first leak of documents known as Panama Papers - that time from the Panamanian law firm Mossack Fonseca– it was learned that Pdvsa’s liking for offshore companies was enough to create the joint venture Veniran Petrochemical Company in August 2007 between the Corporación Petroquímica de Venezuela (Pequiven) and its Iranian counterpart, National Petrochemical Company, then registered in the British Virgin Islands.

The prosecutor imposed by the Constituent, Tarek William Saab, reported this week the contracting of Pdvsa with company Petrosaudi Oil Services, which he qualified as a company without experience in offshore drilling, based in Barbados, without giving details about the potential loss for the Venezuelan state for contracting that company.

However, in the Paradise Papers there is proof that Pdvsa, through Petrosaudi Oil Services (Venezuela) Ltd, signed two drilling contracts, one, in October 2007, for 120 million dollars, which they called Neptune Drilling Contract; and the other, in September 2010, for 130 million dollars, which they called Saturn Drilling Contract.

Another leak shows that Pdvsa formed a joint venture (Petrolera Güiria) to exploit crude oil and gas in the Gulf of Paria together with the Italian oil company ENI and an offshore company called Ine Paria - previously called EOG Resources Venezuela Ltd -, registered in the Cayman Islands and with an office in Caracas. With the same company, it also created another joint venture (Petroparia) with the participation of the Chinese state company Sinopec. The then president of the Venezuelan Petroleum Corporation, Eulogio del Pino, who until a week ago was the "strong man" of Pdvsa, signed the papers of those companies on behalf of Venezuela.

Although the legality in the organization of these companies is not under discussion, Pdvsa does not give an official account of its relationship with most of them and, in some cases -as Pdvsa Gas Accro Ltd, PDVSA Marketing International (Aruba) AVV-, it does not even mention them in their management reports, much less the type of operations they do or the cost they represent to the State. So far, the only contribution of Pdvsa’s acquired liking in contracting offshore companies is the thickening of the veil of its operations.

Months later, the government ordered the intervention of Credican, another commercial company of Gorrín, much less known, which he did not liquidate immediately, as he did with Banco Canarias, which was financially buried just a month after its intervention. Months passed and Credican, although intervened, was still standing, which meant for Gorrín and his associates the opportunity to rescue at least some of what was trapped in the way of doing business in Venezuela, Lehman notes - or Lehman bonds - transferred to Credican by Banco Canarias valued at 410 million dollars.

The move was ambitious, it required planning and could not be a legal initiative by Gorrín personally or Credican, as they were accused and sunk in legal problems with the Venezuelan government. Meanwhile, the former banker, his business acumen and with his son as a partner, proved the path of other investments and thus opened company Don Pan in the state of Florida, which opened at least 20 branches in less than three years to please the growing public of Venezuelan migrants in their search for the perfect baguette or cachito de jamón (a croissant-like bread filled with minced ham) that they used to find in the streets of Caracas, or Maracaibo, or Valencia.

It was then that Gorrín, contracting the services of Appleby and the support of contacts in the New York Chadbourne & Parke law firm, could create company Smith Rocke Ltd. on March 1, 2012, and registered it in the British Virgin Islands. The leak of documents that make up the Paradise Papers accounts that Appleby showed concern about the Gorrín’s unfinished business with the Venezuelan justice, but soon dismissed the matter when Chadbourne & Parke assure him that the banker is free of problems.

"Regarding the criminal investigation and extradition procedure mentioned in your email, Alvaro Gorrín, like many influential businessmen in Venezuela, was the subject of several attacks on his reputation motivated by political reasons. These actions are intended to harass and obstruct the ordinary course of any negotiation. As far as we know, both the criminal investigation and the extradition are no longer in process," says the email.

Another letter, signed by Clara Krivoy, an international partner of the New York law firm took in November 2011 a step forward in defense of Gorrín: "I have known Alvaro Gorrín for more than two years, and the nature of our relationship is professional. During that time, I have formed the opinion that the client is respectable and reliable in his affairs, financially stable, and I have no reason to suspect otherwise."

Based on these credentials, and even when Gorrín was later imprisoned in Caracas in November 2014, Appleby contributed to the creation of Smith Rocke Ltd., which proceeds in January 2014 to sue the Bolivarian Republic of Venezuela before the Southern District Court of New York. With the action, it intends to claim the Lehman notes that remained as part of Credican properties at the time of being intervened by the Chávez government.

Upon filing the lawsuit, Smith Rocke affirms having bought Credican shares and therefore, it has a legitimate interest in its properties, including the Lehman bonds, which it says have a value of 410 million dollars. However, that purchase or transfer of shares of Credican to Smith Rocke, created in 2012, raised many questions. How could Credican make this transfer if it had been intervened since 2010 and was managed by an intervening board appointed by the Venezuelan Superintendency of Banks? Who allowed that transfer or sale?

In fact, other Appleby leaks show Smith Rocke Ltd. as part of Credican, as well as a company called Akamai Globan Inc., created on the same day as Smith Rocke, and among its shareholders is Rafael González Yanes, who had also been president of Banco Canarias, and one of its vice presidents, Manuel Herrera Castilla.

In the summary of the lawsuit, Judge Lorna Schofield claims that Credican intervening board requested the bankruptcy management office of Lehman Brothers (LBHI Bankrupcy) to dismiss any claim by the company's shareholders, as the company was intervened by the Venezuelan government. "In effect, preventing Smith Rocke from getting any payment for the Lehman notes," the judge wrote.

So while a portion of Credican's board of directors allowed the sale of shares to Smith Rocke, other members of that board warned the Lehman bankruptcy office not to pay the shareholders? Who wanted to help Gorrín and who did not?

Based on the summary of the lawsuit published by the New York court, Venezuelan Rafael José Moreno Franco and Rosa María Jimenez Urrutia were the agents appointed by Sudeban as administrators of Credican. We tried to contact them without success yet.

While these questions remain about the performance of Credican's intervening board, the New York court dismissed Smith Rocke's claim with the final aim of collecting the Lehman notes as it is a matter outside its jurisdiction. The last stroke of Gorrín to rescue some "ashes" of 410 million dollars was drowned in the organization of a company for which it could have obtained aid from the same ones that expropriated it in Venezuela.

After this event, Álvaro Gorrín dared to return to Caracas in late 2014, shortly after Sudeban ordered the liquidation of Credican in April of that year by resolution 066.14 published in the Official Gazette. He was then arrested in a restaurant in the capital and held in the Bolivarian Intelligence Service until March 2015, when the court that judges him for the misappropriation of the resources of Banco Canarias savers decided to proceed with his trial in freedom.

(*) This note is part of the Paradise Papers project. This project analyzed 13.4 million documents from two offshore service providers, Appleby (Bermuda) and Asiaciti Trust (Hong Kong), and business records of 19 tax havens, obtained by the German newspaper Süddeutsche Zeitung due to a leak that it shared through the International Consortium of Investigative Journalists (ICIJ, Washington) with 382 journalists from 96 media in 67 countries. In Venezuela, the project partner is Armando.info, which made an alliance to publish it with the newspaper El Nacional.

The official story recalls that in 2011, this ambitious Venezuelan-American broker ended up declaring himself guilty of structuring a Ponzi scheme in which he had no way to replace some 540 million dollars that made up the savings fund of PDVSA retirees. The new leak of documents known as Paradise Papers shows that PDV Insurance Company, a subsidiary of PDVSA registered in the Bermuda Islands as its main insurance company, placed funds in the same bag, which had the same fate, they vanished.

A complex triangulation of operations, coordinated by Illarramendi, succeeded in placing shares in several financial operators, including Fractal Fund Management, to which the Securities and Exchange Commission of the United States of America (SEC) froze 170 million. In that company of Venezuelan Moris Beracha, at least 66.7 million dollars of the state oil company were stranded.

As in the Panama Papers, the German newspaper Süddeutsche Zeitung obtained a file of more than 6.8 million internal documents from the Appleby law firm - with over 700 employees in tax havens - which it shared with almost 100 media in the world through the International Consortium of Investigative Journalists. In those papers, there was a copy of the agreements signed between Pdvsa and Fractal Fund Management.

Through PDV Insurance Company, Pdvsa handed over $ 3.5 million to Fractal Fund Management in a contract dated May 7, 2008, which is in addition to $ 63.2 million deposited on March 19, 2007 in two parts, 14 million and 49.2 million, of which there is no news.

Official Héctor Gamboa - who became Pdvsa treasurer - was responsible for the deposit of 2008, while the large slices of 2007 were under the signature of former VP of Finance Pdvsa Eudomario Carruyo. Carruyo was dismissed from the company in 2011 after the Illarramendi scandal, when he was compromised as chairman of the pension and welfare fund boards.

Two weeks before being dismissed by Hugo Chávez, Carruyo had his last public pronouncement through a letter sent to the National Assembly, where he denied that the board of the state oil company was responsible for the already infamous swindle of the Illarramendi case. At that time, he did not say a word about any investment of PDV Insurance Company, much less that the investments stayed in one of the companies blamed for participating in the fraud.

In Limbo

PDVSA retirees and pensioners still await answers. To date, they have not been compensated, even though the Connecticut Court in the United States of America recovered part of the money. On behalf of the Association of Retirees of the Petroleum, Petrochemical and National Carboniferous Industry (AJIP), Elena Pino anticipates that the latest changes of authorities in PDVSA have allowed conducting an audit to specify what is and what is not in their assets.

"An audit is conducted for the first time," he said this week. "Nobody has informed us if this money was reversed. We do not have any receipt and we do not know, as a board of directors, what happened to assets like those of the Ministry of Tourism, which were part of the Pension Fund assets of PDVSA workers."

Petróleos de Venezuela gives no answer either. Neither for this nor for any other report have they informed what happened with the funds saved for years by their pensioners. The silence extends over the 66.7 million dollars deposited in Fractal between 2007 and 2008, which could have easily contributed to the payment of PDV Insurance Company's fees to foreign insurers - like the English firm Cooper Bay - before the explosion in the refining complex of Amuay, which surprised the dawn of August 25, 2012 with 55 dead, 156 injured and over one billion dollars in damages.

After claiming that the accident was the result of "sabotage," PDVSA never requested the financial support of its insurers, although some experts claim that the Venezuelan state-owned company had not paid the installments of their policies and, therefore, there was no reimbursement for losses in the tragedy.

Since then, the company is not the same. Figures are eloquent. The production of Amuay fell from 620 thousand barrels per day to 370 thousand, while fuel imports have quadrupled from about 27 thousand to 108 thousand barrels per day.

There is no spokesman for Pdvsa insurance to answer for what really happened with their policies. It was not possible to find a balance neither in Caracas nor in Hamilton, the capital of the Bermuda Islands, where, paradoxically, the company that must ensure and be held liable for the assets of the most important Venezuelan State-owned company was registered.

But hidden in the files of Appleby were clues that the shares of PDV Insurance Company were frozen in the wake of the Illarramendi case and six months, and that before the explosion in Amuay, the company tried to recover by demanding Fractal Fund Management full refund.

"We exercise our right to request the redemption of all PV shares that PDVIC holds in the Fractal Fund, and we request that the corresponding payment be made by bank transfer," said official Mariela Matheus as managing director, in a letter signed on February 15, 2012.

Moris Beracha, owner of Fractal - who was an advisor to Finance Minister Rafael Isea - confirmed for this work by e-mail the receipt of this claim by PDV Insurance Company, and described it as an "improper attempt since they were clear of the situation and that the resources were frozen pending the decision on the legal process of the MK case (Michael Kenwood, name of Illarramendi’s company)."

Beracha said that he never pushed or tried to convince PDV Insurance Company to invest in his company and that, instead, that Pdvsa subsidiary "introduced" Francisco Illarramendi's company to Fractal Fund Management. What came next is uncertain. While a portion of the booty was recovered in the Connecticut Court, although how much was it or what PDVSA did with that amount remains unknown. "How or what did they do internally? I really do not know," says the entrepreneur.

Two years after the pension fund scandal, Fractal officially declared its inability to return the money. "The assets of Illarramendi remain frozen, but, as far as we know, the Receiver intends to present a distribution plan, which will determine whether Illarramendi's creditors will be compensated and to which extent and on what terms."

That was indicated on September 9, 2014, in a communication with no guarantees. "At this moment, Fractal does not know what compensation, if any, it will ultimately receive for its claim against the estate of the judicial administration. However, as it is its obligation, it will keep relevant investors like PDV Insurance informed on the judicial proceedings and any relevant distribution."

From then until now, there is no information on the destiny of these millions, which seem to have vanished into the Bermuda Islands.