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.
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.
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
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.
What is striking about this assignment to Million Rise is that it is described on its website as a textile company. "Million Rise was founded in 1990. We invested in a factory in the city of Ningbo in China, and developed the Home Textiles collection. All our products have the best quality and the most competitive price. We can help you create a luxurious and comfortable home," offers the site with a catalog of items to decorate rooms, kitchens, bathrooms, or baby blankets, among others.
Although there is a company with the same name in Panama, both the address and the contact telephone number on the invoices issued to Corpovex are in Hong Kong and are the same that appear on the website. The company did not answer the interview request for this report.
The company registry of Hong Kong reveals that Million Rise Industries Limited was created on October 3, 1995 and not in 1990, as stated on the website. The documents of the company include the names of Cheung Kwok Chuen Joseph and Ho Kin Din Danny, who also appear as directors of another company in Hong Kong called Mass Joy Industries Limited, another supplier of the Clap business based on the list that Well Thought Consultants published on its Twitter account. These two people seem to act as "front men," a common practice in tax havens to hide the identity of the actual beneficiaries.
But there is more. Kwok Cheung is the director of a company with the same name as the company in Hong Kong, recently created on January 19, 2018 in Miami, Florida. In the incorporation papers, the address of the North American Million Rise is the same of the one on the invoices issued by the Hong Kong Million Rise to Corpovex and the one published on the company's website.
The beneficiaries of Million Rise Industries opening a company in Miami can be interpreted as a sign that the supply for Claps is on the right track and tends to become a permanent relationship between supplier and customer. Figures revealed by the Minister of Urban Agriculture and Chief of the Claps, Freddy Bernal, indicate that last year, the Government traded 91 million Clap combos. Approximately 86 million boxes were imported, mostly from Mexico and through intermediaries. This figure shows a business that last year alone could represent 2,500 to 3,500 million dollars, if taking into account that traders charge 30 to 40 dollars per box.
Although the magnitude of the business is clear, the performance of the program seems increasingly shady. The quality of the products is questioned after a chemical analysis to eight Mexican brands of milk powder by the Institute of Food Science and Technology of UCV (Universidad Central de Venezuela), at the request of Armando.info, showed that the manufacturing companies give false nutritional information on the labels and that the product is actually a high-carb and low-protein mixture. The results of the 2017 National Survey of Living Conditions (Encovi), recently presented at Universidad Católica Andrés Bello (Ucab) in Caracas, also question the efficiency of the government plan by revealing that the box distribution is "discretionary" and "just over half of the beneficiary households do not receive it periodically, a percentage that increases to 69% in small towns and villages." For traders, however, the winning run to the business is nonstop.
Another intermediary is J & B International Trading LLC. Although its headquarters are registered in Miami, Florida, the payments received from Corpovex are directed to a tax haven, just like Million Rise does.
This company signed contract CPVX-CJ-CONT-0091-2017 with the Venezuelan state-owned company for the supply of Clap boxes and, on October 10, 2017 alone, it issued at least two invoices for nearly $ 1.7 million for the shipment of 52,858 "food combo boxes" i.e. $ 31.57 per kit. The invoices show that the money had to be transferred to an account in LGT Bank in Switzerland, the country at the top of the Tax Justice Network’s Financial Secrecy Index, and that the intermediary bank was LGT Bank in Liechtenstein, another jurisdiction that stands out for its financial secrecy.
The list that Well Thought Consultants disclosed in the social media attributes a contract for one million boxes to this company, which would mean almost $ 32 million dollars at the price of $ 31.57 per box. The international trade database ImportGenius gives some clues about the business volume of J & B International Trading. Just between last year’s August and September, the company made at least five shipments from the port of Veracruz, Mexico, with tons of food purchased from Integradora de Productores del Estado de Mexico. It is another Mexican supplier that joins the list of companies like El Sardinero or Deshidratados Alimenticios e Industriales (DAI), used by other intermediaries since late 2016.
According to the company registry of the state of Florida, J & B International Trading was created in 2008 and has the Venezuelans José Antonio Achram Lugo and Brigitt Tonelly Achram Lugo as directors. The Venezuelan Institute of Social Security (IVSS) indicates that José Achram worked until October 2015 for Inversiones Jaba 2426, while Brigitt worked until December 31, 2017 at Universidad Nueva Esparta (UNE), a private institution. The company has an office in Edificio Gerencial de Las Mercedes, a luxurious complex in the commercial and financial district of the same name, southeast of Caracas. "Right now we are not interested in giving any interview. Thank you very much," was the answer from that office to the request made for this report.
No authority has explained the nature of the negotiations, nor the reason why it has resorted to intermediaries to buy the food that Venezuelan demands at a time when up to 8.2 million of its people eat two or fewer meals a day, according to Encovi 2017. The Government, like the traders, prefers to move quietly.
For some months now, parliament members of different opposition political parties have been offering to make informal proceedings on request before agencies like the Colombian Attorney General's Office and the United States Department of the Treasury. They issue letters of good conduct to those responsible for negotiations on the imports for CLAP combos, so that such agencies absolve or stop investigating entrepreneurs like Carlos Lizcano, a subordinate of the already sanctioned Alex Saab and Alvaro Pulido. The fact that the most active defense of the main social program and focus of corruption of the government of Nicolas Maduro comes from the heart of the National Assembly 'in contempt' is just one of the ironies of this story.
Adrián Perdomo Mata has just entered the list of sanctioned entities of the US Department of the Treasury, as president of Minerven, the state company in charge of exploring, exporting and processing precious metals, particularly gold from the Guayana mines. His arrival in office coincided with the boom in exports of Venezuelan gold to new destinations, like Turkey, to finance food imports. Behind these secretive operations is the shadow of Alex Saab and Álvaro Pulido, the main beneficiaries of the sales of food for the Local Supply and Production Committee (Clap). Perdomo worked with them before Nicolás Maduro placed him in charge of the Venezuelan gold.
A study by Mexican authorities confirms what the palate of the Venezuelans quickly detected: There is something odd in the Mexican canned tuna that comes in the combos of the Local Supply and Production Committee (CLAP). At least three of the brands that the poorest homes have consumed in the country since March 2016, when the state plan was formalized, have high proportions of soy, a vegetable protein that although not harmful, it does not have the same taste and protein contribution of tuna. Behind the addition of soy there is an operation to reduce costs where all the intermediaries, handpicked by the Venezuelan Government to buy the goods, have participated.
Gassan Salama, a Palestinian-cause activist, born in Colombia and naturalized Panamanian, frequently posts messages supporting the Cuban and Bolivarian revolutions on his social media accounts. But that leaning is not the main sign to doubt his impartiality as an observer of the elections in Venezuela, a role he played in the contested elections whereby Nicolás Maduro ratified himself as president. In fact, Salama, an entrepreneur and politician who has carried out controversial searches for submarine wrecks in Caribbean waters, found his true treasure in the main social aid and control program of Chavismo, the Clap, for which he receives millions of euros.
While the key role of Colombian entrepreneurs Alex Saab Morán and Álvaro Pulido Vargas in the import scheme of Nicolás Maduro’s Government program has come to light, almost nothing has been said about the participation of the traders who act as suppliers from Mexico. These are economic groups that, even before doing business with Venezuela, were not alien to public controversy.
Even though there are new brands, a new physical-chemical analysis requested by Armando.Info to UCV researchers shows that the milk powder currently distributed through the Venezuelan Government's food aid program, still has poor nutritional performance that jeopardizes the health of those who consume it. In the meantime, a mysterious supplier manages to monopolize the increasing imports and sales from Mexico to Venezuela.
When Vice President Delcy Rodríguez turned to a group of Mexican friends and partners to lessen the new electricity emergency in Venezuela, she laid the foundation stone of a shortcut through which Chavismo and its commercial allies have dodged the sanctions imposed by Washington on PDVSA’s exports of crude oil. Since then, with Alex Saab, Joaquín Leal and Alessandro Bazzoni as key figures, the circuit has spread to some thirty countries to trade other Venezuelan commodities. This is part of the revelations of this joint investigative series between the newspaper El País and Armando.info, developed from a leak of thousands of documents.
Leaked documents on Libre Abordo and the rest of the shady network that Joaquín Leal managed from Mexico, with tentacles reaching 30 countries, ―aimed to trade PDVSA crude oil and other raw materials that the Caracas regime needed to place in international markets in spite of the sanctions― show that the businessman claimed to have the approval of the Mexican government and supplies from Segalmex, an official entity. Beyond this smoking gun, there is evidence that Leal had privileged access to the vice foreign minister for Latin America and the Caribbean, Maximiliano Reyes.
The business structure that Alex Saab had registered in Turkey—revealed in 2018 in an article by Armando.info—was merely a false start for his plans to export Venezuelan coal. Almost simultaneously, the Colombian merchant made contact with his Mexican counterpart, Joaquín Leal, to plot a network that would not only market crude oil from Venezuelan state oil company PDVSA, as part of a maneuver to bypass the sanctions imposed by Washington, but would also take charge of a scheme to export coal from the mines of Zulia, in western Venezuela. The dirty play allowed that thousands of tons, valued in millions of dollars, ended up in ports in Mexico and Central America.
As part of their business network based in Mexico, with one foot in Dubai, the two traders devised a way to replace the operation of the large international credit card franchises if they were to abandon the Venezuelan market because of Washington’s sanctions. The developed electronic payment system, “Paquete Alcance,” aimed to get hundreds of millions of dollars in remittances sent by expatriates and use them to finance purchases at CLAP stores.
Scions of different lineages of tycoons in Venezuela, Francisco D’Agostino and Eduardo Cisneros are non-blood relatives. They were also partners for a short time in Elemento Oil & Gas Ltd, a Malta-based company, over which the young Cisneros eventually took full ownership. Elemento was a protagonist in the secret network of Venezuelan crude oil marketing that Joaquín Leal activated from Mexico. However, when it came to imposing sanctions, Washington penalized D’Agostino only… Why?
Through a company registered in Mexico – Consorcio Panamericano de Exportación – with no known trajectory or experience, Joaquín Leal made a daring proposal to the Venezuelan Guyana Corporation to “reactivate” the aluminum industry, paralyzed after March 2019 blackout. The business proposed to pay the power supply of state-owned companies in exchange for payment-in-kind with the metal.