In a perfect world


A Venezuelan newspaper would find a dogged, talented journalist and give him/her a research budget, six months and enough exposure to blow the top right off of a story like this one.

Until then, we have Setty.

Though, in fairness, it shouldn’t take a pile of resources to bring down this Illarramendi fellow. His own investment firm’s prospectus reads curiously like a confession:

its primary investment strategy seeks to take advantage of products offered in the global fixed income and derivatives markets…particularly those subject to currency arbitrage opportunities in their country of issuance, due to a particular country’s exchange rate policy.

Subtle, dude. Real subtle.

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  1. Thanks, as always, for the link. Just to be clear — there is nothing illegal about Illarramendi et al setting up a Venezuela currency trading house in the USA. So I’m not sure there was anything for them to confess. They were just taking advantage of opportunities presented by the legal weirdness. And we haven’t heard his side of the story. But the PDVSA pension plan as the main player in that market? That would seem to be a little at odds with government policy.
    Also, given my experience in Venezuela, I’d say there isn’t a whole lot one could do in six months that I didn’t do in one day working on that post. Though a budget would be great. I could use a trip to Panama about now.

    • Well, it’s all down to perspective. This stuff may be legal in the U.S., but from a Venezuelan perspective, obtaining enough cut-rate dollars to make this setup profitable would involve breaking the law in one way or another – most likely by getting PDVSA petro-bonds adjudicated directly at implicitly discounted exchange rates, which is a clear Salvaguarda violation.

      And c’mon, I think there’s a TON of backstory to be filled in here – mapping out the exact web of relationships that put Illarramendi in a position to actually set up this tarantín should keep someone busy for months on end.

    • Setty,
      What I’d like to know is what’s behind this deal with PDVSA bailing out Illaramendi’s investments in the nuclear power companies. Why would they do that? Why would PDVSA all of the sudden come in to make sure Illaramendi’s obligations are met?

      I don’t get it.

      • PDVSA told the SEC that they were aware that the fund was starting to do private-equity investment. So it’s possible they actually want to be shareholders of these small companies. Plus, how often do you get to make a venture investment AND be considered the savior of scores of jobs in the U.S. and maybe, longer-term, get a relatively cheap nuclear power plant out of the deal? It really may be good business — if tone-deaf to just how sensitive the USA is about nukes.

      • he has already sunk 23 million in the venture already so he must be really liked and well connected in venezuela if pdvsa is floating his commitments like nothing has happened.

        no one hands over an entire fund to a guy unless he has something to give back and well someone got some serious money from this deal

  2. Such trading would be illegal after May, whether you do it in the USA or in Venezuela. Once it is illegal here, you are making money out of transaction which has to take part in a country where it is illegal. Under the Patriot’s Act, that would be absolutely illegal since May.

  3. Rather than state a grosso modo that an action is illegal, one way or another, or not illegal, there’d be more traction if the statement mentioned the actual section of the law(s) that is being violated. In either country.

  4. The “Periodismo investigativo” in Venezuela sucks major donkey balls (I won´t discuss the reasons, they are obvious and/or puzzling).

    If we could get Spanish Journalists involved, I can´t help but wonder how much more info would be revealed…


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