Eligio Cedeño's businesses reached the British Virgin Islands

The last two major global investigations conducted by the International Consortium of Investigative Journalists revealed the offshore business of Eligio Cedeño, a former Venezuelan banker considered a fugitive from justice by some and politically persecuted by others. Company Cedel International Investment, owner of Bolívar Banco and Banpro, also requested the services of Mossack Fonseca to operate in the British Virgin Islands.

Company Cedel International Investment LTD - which was the owner of the Venezuelan banks Canarias, Banpro and Bolivar Banco - operates in the tax jurisdiction of the British Virgin Islands, as revealed by the information of the last worldwide filtration known as the Panama Papers and published by the International Consortium of Investigative Journalists (ICIJ).

The name of Cedel comes from the abbreviations of the last and first name of the Venezuelan banker Eligio Cedeño. The Chavismo arrested him and accused of a scam that led to a legal process that ended with him fleeing to the United States of America in 2009 and, at the same time, gave rise to the already infamous case of Judge María Lourdes Afiuni.

Eligio Cedeño and his brother Santos Luis Cedeño are the main shareholders of the company in the British Virgin Islands, registered in 2003, through company Amanco Management (BVI) Ltd, who used the law firm Mossack Fonseca as an intermediary to create offshore companies. Cedel was also the name of the brokerage firm that operated in the Venezuelan capital, owned by Cedeño, which was intervened by the National Securities Superintendency (SNV) in January 2011.

In an interview with Armando.info, Cedeño says that appearing in the Panama Papers has been distorted and that if he had had bad intentions in creating the company he would not have signed as a beneficiary. "An entrepreneur, not a public official, does usually have companies to hold his or her assets. And he or she usually has such companies outside the jurisdiction where he is represented... It will be possible to identify the one with good intentions and the one with bad intentions when the shareholder ends up being an employee of the firm and not the real owner. And that is not my case," says the former banker.

Banking and Tax Havens

Eligio Cedeño has been one of the most controversial entrepreneurs in contemporary Venezuelan history. Native of Caracas, of humble origin, he began his career at 16 years of age as an intern and at 30 he already owned his own brokerage firm. He was also the president of a financial institution, but his luck changed in February 2007, when he was charged for the Microstar case. The Venezuelan justice accused him of simulating the importation of computers and opened the abovementioned legal process.

In the early 90’s, Cedeño founded Cedel Casa de Bolsa, previously called Citi-Invest, which was questioned a decade later for having been benefited in a sale transaction of National Public Debt Bonds. In 2002, the Ministry of Finance of Venezuela authorized Cedel to sell bonds for about 190 billion bolivars, when its capital was only about 7 billion bolivars. The operation was considered flaw-ridden since the brokerage firm bought the bonds at 78% and then resold them in the secondary market to Bandes, a state bank, at a value of 91%.

In addition to having the brokerage firm, Cedeño owned shares in Banco Canarias, Banco Caracas, Banpro and Bolívar Banco, which were later on liquidated by the Venezuelan Government. However, at the time of the intervention, they were no longer owned by the Cedel group, explains the former banker: "The banks were mine, but four months after being arrested I sold them to supporters of the regime. Two and a half years later, those banks went bankrupt. But they did not go bankrupt in my hands, but in theirs. The owners were already another company, not Cedel International Investment. "

The company in the British Virgin Islands owned Banco Canarias before Cedeño became the owner of Banpro and Bolívar Banco. Once these entities were acquired, in 2004, Cedel ceased to have a relationship with Banco Canarias.

As to the legality of this type of company, the professor and former national superintendent, Alejandro Caribas, explains that the Venezuelan Banks Law requires the Superintendency’s authorization for banking entities incorporated in the country to have branches abroad or investments in banks abroad. "It is generally required that where branches are opened or investments are made, there are institutions engaged in banking control and supervision".

In this case, the Superintendency of Banks (Sudeban), in communication of February 15, 2005 authorized Bolivar Banco C.A. "the transfer of 100% of the associated capital of the Financial Institution to company Cedel International Investment, LTD, existing under the laws of the British Virgin Islands;" hence, he was aware of the existence of the company.

Currently, Venezuelan laws prohibit transactions or operations with offshore banks. Resolution
312-10 published in 2010 by Sudeban provides that "it is prohibited to carry out and maintain operations with banks and other entities, with banking and/or investment licenses granted in countries, states or jurisdictions with tax systems with low tax burden, without supervision or monetary, banking or financial regulation and with strong protection to bank secrecy." 

Twice in the Spotlight

The name of Cedel International Investment LTD also appeared on the well-known Falciani list. In 2015, the ICIJ published a series of reports on the more than 106,000 clients with accounts in the Swiss bank HSBC, from different countries around the world. The data was filtered by the former employee of that entity, Hervé Falciani.

The account of Cedel International Investment LTD in HSBC, owned by Eligio Cedeño and his brother, had a balance of around 38 million dollars in 2006 and 2007, based on the leak.

Cedeño has publicly accepted the existence of that account. But he claims that it was closed in 2011. "This same company that appears in Mossack Fonseca had an account with HSBC, and when the accounts of the shareholders leaked, Cedel appeared there. What you have discovered is a company that owned a bank and an account with funds. Typical of my usual performance as an entrepreneur," he said.

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