Things you find in your septic tank

Keep it up
Keep it up

Over the years, we’ve been hard on traditional Venezuelan media outlets. Sometimes, we’re really hard on them. So it came as a refreshing surprise to read the latest reportage from El Nacional’s Siete Días, written by the paper’s investigative journalism unit. (Sorry, in Spanish)

The folks in charge of the piece went through the painstaking effort of finding out just how many ways there are to scam the country’s foreign exchange controls. They talked to the operators, the movers and shakers, and the analysts, most of whom spoke under condition of anonimity, of course. The result is a tour de force that is not entirely surprising, but still contains a lot of detailed information on the scam that is Cadivi. (I use the verb “is” because controls still exist, just under a different name).

Hopefully, stories like this will be news to many folks who still think that exchange controls can somehow be made to “work.” Time and again, our politicians announce a currency exchange control – when will we convince ourselves that, no matter who is in charge, these systems are always perverse?

The authors talk about fake companies getting dollars, about insider trading regarding which sectors would get funds, and about the scam of the Rusad registry – a necessary and highly prized piece of paper, without which you cannot access cheap dollars. It reads like a tour of your septic tank, and hopefully some day it will be required reading to understand the wasted opportunities of the chavista years.

The part that stood out for me:

Companies registered with Rusad are sold and rented out for millions. Some people were simply in the business of creating fake companies that had their paperwork in order, and trading them when they were ready to ask for cheap dollars for “importing.” We learned about this by talking to middlemen, who spoke to us under condition of anonymity. On the web, you can find people who supply more than two companies at the same time. Others do not have an ample selection in their portfolio. One vendor whom we contacted last week about a possible company told us, “we sold it already, and the signing of the documents will take place in a few days.”

“Do you have another for sale?” we asked. The question prompted an indignant response from the other end of the line. “What do you think? That this is easy?”

There you have it. Milking the system … such hard work.

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  1. “the part that stood out for me”?! Surely you me THE MONEY QUOTE! Getting rid of your signature line Juan would be akin to CocaCola suddenly deciding to drop red #fe001a!

    • Lots of “árabes” do that too, I’ve met one who charges quite the nice cash to forge all the documents you need to claim the remittances.
      Just give the guy a couple of photos, and the man gets you a whole new family to support and claim your lettuces.

    • I havent heard of prosecution as such, but i know of cases where people in uniform come knocking on doors and saying something along the lines of “we know what you are up to, pay now or come with us for a ride”. Bank managers, police, regular Joes, government officials, everyone is in it, unless you are straight as an arrow or lack the network to get into this very profitable business.

    • Most of them belong to the hysterical troll diosdado cabello and other fat fish in the revolution, so no, they’re not prosecuted.

  2. I think the time for quibbling with El Nacional is over. This publication has achieved dissident status. It is one of the last standing canaries in the coal mine of Madurismo, and we know what the situation is when the canary croaks.

      • From the link JC put up I thought the issue was its owner’s occasional tendency to self-aggrandizement, which was what I meant by “quibbling”.

        • Quite right, credit is due to the journos at the unidad de investigaciones. And yet we know for certain that if their investigation had compromised any of a number of “intocables” on MHO’s friends’ lists, it would not have been published…

          • What’s to tell? El Nacional recently ran a headline stating that a judge in Manhattan dismissed the case regarding Derwick Associates, when in reality the judge dismissed two parts of the indictment yet still ordered discovery to proceed in the case that Otto Reich is bringing against them.

            Far from being over, discovery is precisely what Derwick wants to avoid, as anything “discovered” becomes public knowledge and is available to be used in any future proceedings.

            So yes, Quico is right, there are “untouchables” (whether from friendship or fear).

      • Maybe it is my crappy castellano but guys like this in El Nacional I find to be brilliant on the subject:

        The thing is, and I pose this as a real question, how do you apply normal journalistic standards to a newspaper in a country where on any given day, pretty much anyone you went out and talked to who was half conscious would know a true story which, if published, would without question, result in the paper being shut down immediately?

          • Second that wholeheartedly . His article is the first one I seek every sunday morning , the quality of the writing is superb as are the ideas and images he uses. he can be biting and witty as no one else writing today .!!

  3. Last month I was travelling around Colombia and with the Maduro-Santos meeting I learned another way in which cadivi breaks the second law of thermodynamics: remittances. Say I live in San Cristóbal and my parents live in Cúcuta. I get paid in BsF and I take 500 of those (which I think is the limit) and send them to my parents in Colombia. They get an amount in pesos that is converted at a preferential rate (I’m unsure which one, but definitely better than parallel). Then my parents take those pesos, buy 500 BsF with them in Cúcuta and pocket the rest. Next weekend they visit me and give me back the 500 BsF to re-send in the next month.

    I asked around and this sort of thing has being going on forever in some form or another. I also noticed an odd amount of travel agencies advertising Viajes a Venezuela in Cartagena and Barranquilla, and even more weirdly, the exchange bureaux all advertised in big letters Dollars, Euros and Bolívares. In Bogotá bolívares are usually one of the last currencies listed, in contrast.

    • Well, that happens with these systems, if there wasn’t a limit of how many currency would you buy at a given moment (The abscense of the monopoly), there wouldn’t be any need to pay the currency at a higher proce, because the market, offer and demand, would eventually settle the just price.

      The black market is a tentacle coming from the currency monopoly, that exists as a consequence of the limits imposed to aquire currency by legal means, if you remove the limit, the blark market dissappears inmediately.

  4. I don’t get why you give the guy milking the system so much flak for calling it hard work. Think about it, if it were easy nobody would be willing to pay to have someone else do it (much less large amounts of money). The way I see it that’s just the market at work.

  5. “…when will we convince ourselves that, no matter who is in charge, these systems are always perverse?”
    That’ll happen when people stop lying themselves claiming it’s a “subsidy” and see it by what those systems actually are: A MONOPOLY.


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