Why Fonden accounting is never going to add up…


Deep in his comment section, the Satanic Bowel Movement turns up the smoking gun in the case for thinking Fonden’s books will never ever make sense  to an outside auditor: this line item for 60 million “dollars” to wind up the old INAM (National Minors’ Institute).

Why the scare quotes?

Because, even though Fonden was supposed to only ever spend in U.S. currency (precisely to avoid the shenanigans inherent in moving back across the bolívar-dollar divide), it’s more than obvious that if you’re liquidating INAM, what you need is bolivars (to pay off prestaciones, wind up obligations to local contractors, etc.), not dollars. More than likely, then, Fonden funds have been moving back-and-forth between the currencies. And that gives the game away right there.

Because, remember, there have long been multiple simultaneous exchange rates between the bolivar and the dollar, and it’s precisely state actors who have privileged access to the arbitrage opportunities that anomaly generates.

Who’s to say that, a few years ago, INAM didn’t turn its dollars into bolivars at Bs.8:$, then went to CADIVI and rebought dollars the next day at Bs.2.15? CADIVI wouldn’t be heartless enough to reject a dollar request coming from a good, red, socialist institute set up to help poor little orphans, would it?

And if one project did that once, what’s to stop multiple projects doing it multiple times? Not the Contraloría General de la República, that’s for sure!

And who’s to say, if they could do it at the project level, that they didn’t also do it at the macro, Fonden-wide level too? Once you go through the dollar arbitrage looking glass, there’s no turning back: it’s just too tempting.

Fonden might publish its Balance Sheets, but it sure as hell isn’t going to give us the gory detail of the ilícitos cambiarios you can bet lie behind that $60 million outlay to wind-up INAM. Which gives me the strong hunch that, fun though the hobby is, we’re never ever going to be able to make Fonden’s numbers square off with one another.

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  1. I would love to see the actual accounting on just 1 project along with receipts & evidence that the money actually was received by the project & where it went.

    My idea would be to pick at random from the hundreds of projects & analyse it down to the last penny. If it didn’t add up then move on to another project until we see the extent of the corruption.

    I know that this is only a dream & it will never happen. We do live in Venezuela after all.

    Nothing is as it first appears.

    • I agree with you 100%.
      And yet: Do you know what they will say?
      “Te vas a poner con esas mariqueras?”
      And then: “con nosotros no te metas, no nos busques”

  2. An alternative, perhaps equally frustrating but potentially more revealing of the macro nature of the guiso, is to look at it from Cadivi’s side. Here is a naive question: Would they keep a disaggregated tally of public versus private sector FX purchases? With some luck they might have an item line for INAM.

  3. “Who’s to say that, a few years ago, INAM didn’t turn its dollars into bolivars at Bs.8:$, then went to CADIVI and rebought dollars the next day at Bs.2.15?”

    I’ll say it. What’s my evidence? That $29 billion is unaccounted for. If they had been playing this game (on any large scale, at least), they could easily account for all of that, with plenty of juicy comisiones (always in bolivares, however, which does make them less juicy to many), and have been able to cover everything. My bet is that Merentes or someone like that managed to outlaw the practice, knowing full well it would be unsustainable.

    Regardless, your last sentence is indisputable. They are too incompetent to manage that, even if absolutely everything were totally on the up-and-up. Which is too preposterous to even consider.

  4. OT: new sycophant alert over at the BBC: http://www.bbc.co.uk/news/business-14812962

    The bozo praises the “economic directions” of “Lula da Silva in Brazil and Hugo Chavez in Venezuela” (he doesn’t even know that Lula is NOT his first name?), then later throws in “Nestor Kirchner in Argentina, Rafael Correa in Ecuador and Evo Morales in Bolivia” and “Daniel Ortega and Mauricio Funes…in Nicaragua and El Salvador.”

    When he starts getting to reasons why their economies did so well, he highlights (besides the influence of China, which is hardly to any Latinoamericano’s credit) the canal in Panama, microchips in Costa Rica, the copper fund in Chile, and Brazil’s “management” of revenue from mineral resources. OK, Mr. Marquez, I’m happy to give you Luiz Inacio (if you can figure out who that is), but do you think you could maybe provide just one shining example for all these other guys you single out for praise?

    • …..but do you think you could maybe provide just one shining example for all these other guys you single out for praise?

      Evo, Daniel Ortega, Kirchner, Correa: they were able to get Thugo to bequeath them lots of money. (Funes should probably be on the list- haven’t investigated him.)

      Just like university presidents get kudos for attracting grant money and donations from rich alumni.

      Granted, Venezuelan citizens might not consider this a positive attribute.

  5. Some continue to look for evidence of the fraud! like it would make any difference to all the water that has already gone under the bridge.

    Quico, is not a matter of arquear las cuentas, of finding out the accounting of this or that project.

    We need to stop being delusional and understand waht the real picture is. The regime is sucking dry the coffers of three or more future generations. The regime has mortgaged the Faja development and other future oil revenues to china. Nothing works and all the money has been embezzled or spent in small arms, ammunition, training (and some big ticket items for the generals to play too…)

    The regime is now ready (with strong foreign interest’s backing it up), to carry out more crimes to cover past crimes and try to remain in power by all means posible. its a realpolitik game.

    Force is required to take them out. BTWForce is not un-democratic, but is not peacefull either.
    kind regards fellow blog readers.

    • My thoughts exactly. Chavez y su combo are a mix of the criminally-inclined, ignorant, sociopath, and deceitful. They won’t stop until the land is totally rampaged. Elections won’t get the out for sure. Time to think deep on the alternative.

    • “The regime is sucking dry the coffers of three or more future generations”
      Actually- I hope that stopping Chavez sooner rather than later could lead to
      getting rid of some of these debt obligations from the madman. Cancel
      lots of this stuff- arms deals for example- future guarantees with China- it is
      the only way for Venezuela to survive. IF decisions are not made soon –
      Venezuela will suffer longer period of debt and underdevelopment.
      This moron Chavez is making a large scale CUba-don’ tyou know?

  6. What’s to stop this same kind of trickery from happening, post chavez? Some people argue that it’s a matter of replacing the top chavismo players with their players, but I think the problem is inherent to the system, that without changing the system, changing the players will not get rid of this kind of problem. What I want to hear from all candidates is the parts of their platforms making reference to the proposed changes to the system that are going to prevent *any* players, including themselves, from this kind of mismanagement of monies.

    As to getting some of the current players to talk, maybe candidates should be talking about the accountants they’re going to train to detect, and the prisons they’re going to build just for that kind of crime…

    • Here’s a Guatemalan candidate example. One doesn’t have to agree with what he proposes, but clearly it’s a change of system:

      “El candidato ofrece, por ejemplo, eliminar todos los impuestos y establecer uno solo del 5 % que pagarían todos los ciudadanos por igual; dar becas de estudio a todos los niños y jóvenes pobres; aplicar la pena de muerte a los delincuentes para reducir la violencia; llevar a la selección de fútbol a un campeonato Mundial y otorgar una decimoquinta paga anual a todos los trabajadores.”


    • Todo es demagogia.
      Lo único que le concedo es que de educación de primera a los preuniversitarios.
      Guatemala’s land is mostly in the hands of very few families who got that land through simple robbery, rather Middle Age mentality…no wonder the country’s got so screwed.
      Death penality? For Goodness sake, we don’t have death penality in Western Europe and the crime rate is much lower than in most other places. Why?


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