Two stepbrothers — One penalty

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?

14 June 2021
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In early 2020, Publimetro, a free newspaper in Mexico City, published an unsigned article that reported, “Dozens of former directors and high-level executives of PDVSA [...] currently collaborate with companies that are taking crude oil out of Venezuela.” According to this media, such companies were then focusing “the lifting of oil, after OFAC sanctioned Russian company Rosneft and one of its subsidiaries” in the South American country. The article mentioned the Venezuelan citizens, Dolly Mendoza and Mirtha Quintero, among the “former key players of the oil company [PDVSA] in supply, operations and trade matters,” who had been recruited at that time by private companies “with little or no experience in hydrocarbons.”

Even though the newspaper did not attribute the information to any source, it certainly drew an identikit of the underground operation of crude oil sales that by that time had been operating for almost a year from Mexico. The scheme was designed and set in motion by the young local businessman, Joaquín Leal, following an initial request from Venezuelan Vice President Delcy Rodríguez Gómez. The express purpose was to take advantage of alternative international trade circuits to bypass the financial sanctions imposed by Washington on the regime of Nicolás Maduro, and to continue placing the oil that PDVSA was still barely producing and other coveted Venezuelan raw materials, like aluminum and coal, on the global market. 

With the knowledge and apparent connivance of the government of President Andrés Manuel López Obrador, the scheme got going. Although the regime in Caracas was thirsty for foreign currency, other than the U.S. dollar, —an urge not yet satisfied— the first transaction that Leal and his company Libre Abordo made with the Venezuelan state-owned Corpovex in June 2020 adopted the façade of a “humanitarian exchange” of white corn and tanker trucks for two million barrels of PDVSA’s oil.

The deal eventually gained scale and was focused on the sale for cash only. As evident in the thousands of internal documents of the network, —that Armando.info and the newspaper EL PAÍS of Madrid obtained and reviewed together to produce the series of reports entitled “Mexican Bypass against Sanctions,” of which this article is the fifth installment— it metastasized and extended its tentacles to some thirty countries. Among the dozens of alter egos and companies that Leal developed, were the links with Alex Saab, the Colombian trader who became Nicolás Maduro’s favorite supplier, and company Elemento Oil & Gas Ltd.

This is the Element

Elemento (in English, element) is a company registered since March 2015 in the island nation of Malta, a renowned tax haven in the eastern Mediterranean. It is not a legal entity that Joaquín Leal had incorporated. Its creator was Italian broker Alessandro Bazzoni, who founded it under the initial name of CT Energia Oil & Gas Ltd. Before changing its name to Elemento, Bazzoni made a new issue of company shares in November 2015 to bring in, as a 50 percent owner, Venezuelan businessman Francisco D’Agostino.

Although he had nothing to do with the oil marketing scheme, Francisco D’Agostino managed a finance company in Panama called Element.

That same year of 2015, both Bazzoni and D’Agostino bought for at least US$ 32 million a small Texas oil company, Harvest Natural Resources, which at that time had a tense alliance with PDVSA. Harvest owned 20 percent of the joint venture resulting from the alliance with the state oil company which, under the name of Petrodelta S.A., intended to put into production fields in the Orinoco Oil Belt in the states of Monagas and Delta Amacuro, in eastern Venezuela. The operation raised the public profile of CT Energia/ Elemento Oil & Gas Ltd in the country. In a 2018 article of Armando. info, apropos of the fact that the leak of the so-called Paradise Papers, coordinated by the International Consortium of Investigative Journalists (ICIJ) of Washington DC, included the articles of incorporation of the broad holding of companies with the prefix CT, —initials of Cinque Terre, the region on Italy’s northwestern coast where he was born— Alessandro Bazzoni just admitted that he was “an advisor” to Elemento and that it could market no more than “four PDVSA vessels between February and April 2017.”

However, Elemento’s activity with Venezuelan oil would be much more intense in the future, though not because of the exploitation in Monagas, but due to its role as a broker.

In April 2020, Elemento resold to clients in Singapore one of the first two shipments of crude oil that Libre Abordo and Joaquín Leal’s network in Mexico produced. In some dozens of the thousands of internal documents of the network that Armando.info and EL PAÍS reviewed, corresponding to the period from November 2019 to May 2020, two executives of Elemento, both Venezuelan and with email addresses ending with the suffix elemento.com.mt, decisively intervene in the intense exchange of communications. One, is Joaquín García, a former employee of PDVSA in the marketing area; the other, is Dolly Mendoza, the “former key figure” of PDVSA, mentioned in the report of the Mexican newspaper, Publimetro

Mendoza has been identified as CEO of Elemento in newspaper reports that erroneously call her “Doly.” A 41-year-old mechanical engineer, Mendoza held until 2016 a managerial position at PDVSA, in the area of White Products, Purchases and Supplies. In the reviewed documentation on the secret network in Mexico, Mendoza often appears giving instructions regarding the purchase and invoicing of crude oil shipments, the coordination of the logistics of vessels in STS (ship to ship) operations, as well as the relationship with service suppliers of quality certification of the goods that PDVSA delivered, among other technical aspects. Mendoza’s instructions were often addressed to Joaquín García.

“I propose t[hat] Libre [Abordo] and Cosmos [sic] act as consignee and endorse that BL [bill of lading] in the name of Swissoil [Trading],” Mendoza wrote, for example, in an e-mail dated February 17, 2020, addressed, among others, to García and Alessandro Bazzoni, founder of Elemento. In that sentence alone, Mendoza, an executive of Elemento, not only referred to Libre Abordo, but to other actors in the cast of companies formed by Leal to move Venezuelan crude exports. One was Cosmo Resources, a company created by the Mexican in Singapore; and the other, Swissoil Trading S.A., an office in Switzerland in which the Swiss, Philip Apikian, was listed as the sole administrator and Alessandro Bazzoni as the director.

That February 2020 e-mail referred to a shipment aboard the Liberian-flagged tanker, Perfect. Perfect’s cargo was reported by Reuters, attributing it in March 2020 to Libre Abordo. The agency highlighted in the information that “the Mexican Libre Abordo [...] plans to take up to 15 million barrels of Venezuelan oil,” without clarifying who was the spokesperson for the company and how he or she contacted the reporters who signed the cable.

It could not be confirmed if such Libre Abordo cargo corresponded to the same crude oil that Elemento immediately resold; however, it seems possible, since Perfect’s route took it to Malaysia and Singapore. In addition, as verified in the documents that Armando.info and EL PAÍS have, Dolly Mendoza, a director of Elemento, had made the arrangements pertaining Perfect.

But in those communications it is striking how easily Dolly Mendoza seemed to switch her allegiance from Elemento to Libre Abordo, a sign that behind the scenes, all of them —together with Cosmo Resources, Swissoil Trading and other brands— were different names for a common structure. For example, Mendoza had sent an e-mail in January 2020 to Aivepet, once again copied to Joaquín García, notifying that that supplier had been appointed to inspect the cargo on Perfect. The e-mail was signed by Mendoza as “Libre Abordo Team.”

None of these efforts escaped the attention of the U.S. Department of the Treasury, which in June 2020, through its Office of Foreign Assets Control (OFAC), had already issued sanctions against Leal and some family members and associates involved in the businesses of Libre Abordo and Schlager Business Group. Thus, on January 19, 2021, it announced the addition of Alessandro Bazzoni and Francisco D’Agostino – partners in Elemento – to the so-called Clinton List of individuals and entities subject to financial penalties. Washington’s batch of sanctions also included the Swiss, Philip Apikian, and the company Swissoil Trading S.A.

Francisco D’Agostino, far left, during a safari, which he is fond of. Credit: Jambanyani Safaris

For those included on the list, it entails that all their bank accounts, properties and companies are frozen or blocked from doing business in the United States. The Treasury bulletin, which back then quoted its head under Trump’s administration, Steven Mnuchin, went into arguments to justify why Bazzoni and D’Agostino, along with Philip Apikian, twelve other legal entities in addition to Elemento, and six tankers, were subject to the measure. But the same bulletin sidestepped an issue susceptible to controversy —both Bazzoni and D’Agostino, at least on paper, had left Elemento in 2016, five years before the sanctions.

Between Malta and Majorca

From the outbreak of the pandemic to the persecution by the authorities in Washington, last year proved to be a real annus horribilis for Francisco D’Agostino, who remains barricaded, together with his family, in a lavish villa in Alaró, a municipality in west Majorca, the largest of the Balearic Islands, off the Catalan coast. Until 2020, D’Agostino lived between Madrid and New York, a city where he has properties and interests and to which he will not be able to return for the time being.

Armando.info had a brief exchange via Whatsapp with D’Agostino, who soon appointed a spokesman from Madrid to speak officially with the reporter. In both instances, the businessman described the U.S. Treasury’s measure as “unfair,” while he said he was sure it would eventually be reversed.

“Without a doubt, he U.S. sanction is due to an error, either because of scarce, misleading or incomplete information. D’Agostino is looking forward to a detailed and exhaustive review of all the documents so that they can verify conclusively that he has nothing to do with the matters he is accused of being involved. Therefore, he is absolutely convinced that the United States will lift the sanction imposed on him as soon as the information is thoroughly checked,” said D’Agostino’s designated spokesman, who asked not to be identified in the report.

Washington’s sanction became the first official confirmation of all the news that had been circulating in networks and electronic media for years, which associated D’Agostino with the new business class that has made a fortune through business with Chavism and which the general public baptized as Bolibourgeoisie.

“Mr. Bazzoni and I agreed to transfer all our interests in Elemento to a company owned by the Cisneros”

Otto Reich, former U.S. ambassador to Caracas, had already tried to prove that D’Agostino was an integral part, and not just a formal figure of the scheme of bribes and illicit enrichment of the so-called bolichicos, together with Leopoldo Betancourt López and Pedro Trebbau López.

D’Agostino is also the son-in-law of another troubled businessman linked to Chavismo, banker Víctor Vargas Irausquín, and has been a partner and an executive of his financial group. Through the marriages of his sisters, Diana and Dora, respectively, he is brother-in-law of Henry Ramos Allup —former opposition president of the National Assembly of Venezuela (2016-2017) and secretary general since 2000 of the Democratic Action (Acción Democrática - AD) political party— and of Eladio Larez, an emblematic figure of the private television channel, RCTV, closed in 2007 by late President Hugo Chávez. 

D’Agostino, aged 47, comes from a family of builders of Italian origin, who have worked as contractors for the State. The family company, Dayco, has important investments in Venezuela and Florida. With an inherited fortune, D’Agostino’s tangle of relationships has fueled versions that connect him with the circle of businessmen who have made money with Chavism.  

In the case of Elemento, he has a point though. He ratifies that he became part of Elemento with Alessandro Bazzoni —“my friend,” he admits— in Malta, in 2015, but that he has nothing to do with “its management and administration since August 2016.” He and his spokesman cling to this mantra in exchanges with Armando.info. In addition, he said that in February 2017, the ownership of Elemento was transferred to a company called CISA Holdings and, since then, he has had “no participation” in Elemento and knows anything about it.

Half Siblings, Half Partners

Indeed, in November 2018, Francisco D’Agostino personally told the inside story of that transfer of ownership in an affidavit before the Court for the Southern District of New York. In that court, an action brought against Alessandro Bazzoni by one of his creditors, Centauro Liquid Opportunities Master Fund L.P., is still being heard. Centauro had loaned just over $21 million to Bazzoni to make oil purchase and sale transactions through a company he owned in the British Virgin Islands, Cinque Terre Financial Group Limited. Bazzoni never honored that debt. When Cinque Terre filed for bankruptcy in the BVI, in 2016, Centauro’s lenders suspected not only that they would never get their money back, but that it had been diverted to fund Bazzoni’s other ventures. After all, Bazzoni had just bought the Houston-based oil company, Harvest Natural Resources, and set up operations in Venezuela, including a promising partnership with Pdvsa.

So, as part of its lawsuit against Bazzoni, Centauro alleged that the action should include not only the bankrupt Cinque Terre Financial Group in the British Virgin Islands, but the whole system of companies built by Bazzoni in different jurisdictions, always with the prefix CT (for Cinque Terre) in their names, and which they considered a mere reflection of the same business. Among them was the former CT Energia Oil & Gas Ltd of Malta, which had become Elemento in the meantime.

To clarify whether this was correct, the court called D’Agostino to testify. The Venezuelan businessman recounted that in September 2015, shortly before joining Elemento as a shareholder and director, he had secured a 30 million-dollar injection for the venture. The funds had been agreed upon in a meeting in Miami between D’Agostino, Bazzoni, and two of his associates, Alex Goldstein and Richard Rothenberg, with Venezuelan Eduardo Cisneros, son of Ricardo Cisneros Rendiles and nephew of Gustavo Cisneros Rendiles, a Venezuelan tycoon who regularly appeared in the Forbes ranking of the richest men in the world.

Eduardo Cisneros is also Francisco D’Agostino’s stepbrother, as stated in D’Agostino’s declaration. Eduardo’s mother, Alicia Ziegert, ex-wife of Ricardo Cisneros Rendiles, remarried Franco D’Agostino, the patriarch of the construction family. Both live in retirement in Indian Creek Island, one of the most expensive areas of Miami, where they are neighbors of Mario Kreutzberg, (aka) Don Francisco, financier Carl Icahn, Colombian banker Jaime Gillinsky, Brazilian supermodel Gisele Bündchen, Julio Iglesias, and, since a few months ago and among many other personalities, Ivanka Trump and Jared Kushner.

At that September 2015 meeting in Miami, as D’Agostino told the New York court, he learned that his “brother-in-law,” Eduardo, had “significant responsibility as to the investments of his father, Ricardo J. Cisneros.” Thus, Eduardo Cisneros agreed to invest $30 million in Elemento from company Cedaridge, incorporated in Panama since 2014, and “the last owner of which was, as far as I now, Ricardo J. Cisneros,” D’Agostino swore.

The structured loan, disbursed in two installments, allowed Elemento to resume activities. Under the terms of the agreement, 50 percent of Elemento’s shares belonged to the Cisneros, that is, Ricardo, through his son Eduardo. But, based on D’Agostino’s statement before the judge, in August 2016 “Mr. Bazzoni and I agreed to transfer all our interests in Elemento to a company owned by the Cisneros.” According to D’Agostino, the entire transfer of Elemento to Eduardo Cisneros was because “the process of transferring [50 percent of] the shares had been delayed, generating frustration on the part of the Cisneros team” and because “Eduardo had been feeling disappointed with the performance of Elemento and the likelihood that the financing could not be paid to him in the time frame originally planned.”

“The transfer of the shares was completed in February 2017. Elemento thus came under the control of a company also created in Malta by Ricardo Cisneros–Eduardo Cisneros for that purpose, CISA Holdings Limited, the same name of another company of the family in Panama, CISA Holdings Corporation. As per the registry in Malta, the company’s contact person is attorney Joan Burton Jenssen, representative of Cisneros Corporation, the corporate structure formed by Ricardo Cisneros’ sons in Florida to manage their interests.

Another issue being settled in the same New York court proceeding is whether a shipment of naphtha, destined for a client in Texas, purchased from the state-owned Petroperú by Elemento with funds from the Cisneros’ loan, when they had already taken over the management of the company in 2017, can be subject to the precautionary actions requested by the plaintiff, Centauro. The shipment of 220,000 barrels had been won in a bidding process. In his report on the matter, Stuart Mckellar, liquidator of Cinque Terre Financial Group in the British Virgin Islands, indicates that the coordinator of that transaction with Petroperú was the well-known Dolly Mendoza.

However, as seen above, as recently as 2020, Dolly Mendoza was still accountable for her decisions by e-mail to Alessandro Bazzoni, founder of Elemento, but who was supposed to have left the management and shareholding of the company in mid-2016.

When interrogated on this matter and asked if him and Bazzoni leaving Elemento could have been part of an agreed move to deceive, Francisco D’Agostino’s representative said from Madrid that “Mr. D’Agostino can firmly assure that he has no relationship with [...] Elemento since August 18, 2016, the date on which he resigned his position as director of this company, as you may verify in the public documents you have. Therefore, as far as he is concerned, there is no fiction whatsoever.”

But with all this evidence, at the time of sanctioning Elemento, the Department of the Treasury penalized only D’Agostino and Bazzoni, its former owners. Why?

The trace of the documents grants the ownership of Elemento to Eduardo Cisneros. Last March, a Bloomberg report uncovered the emergence of Eduardo Cisneros as a new bargain hunter among the rubble of the Venezuelan manufacturing industry. Endowed with US$ 200 million, he set up a fund, 3B1 Guacamaya Fund, to go on a shopping spree for cheap assets with potential. Its first prey was Corimón, the traditional paint manufacturer, founded in the mid-20th century by Hans Neumann. The acquisition price would have been around US$ 60 million.

Corimón was the first prey of Eduardo Cisneros’ purchase of industrial bargains in Venezuela. Credit: Corimonpintura.com

Cisneros manages the fund from the headquarters of Cisneros Corporation, in the penthouse of the Alhambra Plaza building, the tower of which, together with the silhouette of the old Biltmore Hotel, are perhaps the most characteristic constructions of the opulent city of Coral Gables, in Miami-Dade County, Florida.

The writer of this report tried to contact Eduard Cisneros by e-mail and telephone, but could not reach him.

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