The year 2003 brought two milestones in my life: I graduated from Law School, and Cadivi was born.

For the first couple of years, the exchange control system was not something I bothered much with. I didn’t much travel, and was concentrating on figuring out the ropes of lawyering. Actually, most people were dealing with the uncertainties of an improvised, chavista-style system, trying to figure out “¿con qué se come eso?”.

Then, in 2005 the exchange crimes law was put in place. It tightened controls, but it also left an open door to trade bolivars for dollars through the bonds market – the later infamous permuta loophole. What followed was a massive migration from whatever your profession was to permutaland. And anyone in the business made a killing.

I kept at it in my normal lawyer job. The profession, as was the case with many pre-Chávez era careers, had its own career rhythms. Put in the hours, get a graduate degree, polish your English, endure a crappy salary, and eventually, you would be able to start cashing in big.

Permutaland didn’t place such demands on your patience. Everyone around me seemed to be making fortunes overnight thanks to the immense arbitrage opportunities Cadivi opened up. I kept my eyes on the long term prize, and, drunken with self righteousness, tried to convince myself that I was on the path of becoming a nobler individual.

In that Venezuela, a junior attorney salary was not enough to cover rent in a decent neighborhood, but quite enough to bathe in whisky during the weekends. Vainas de Cadivi.

But as the exchange control rules became more stringent, the amount of exchange control work started to explode. I found myself dedicating at least 75% of my hours to it. While in the streets people spent bolivars as if the world was about to end, at the office we saw that in fact it would.

“Lawyers do better in times of crisis,” people would tell me. A big fat lie. Lawyers do better when things are better. When clients have more money to spend.

Work became all about helping foreign companies deal with the exchange controls. From providing advice on the impossible task of obtaining foreign currency to pay dividends, to finding a legal workaround to repatriate funds.

At that time I never gave much thought as to how useless that experience would be. The moment I first had to put it all down on my resumé to hunt for a job abroad is perhaps when I first realized that the work that had consumed years of my life was meaningless.

But as far as acknowledging the place where I stood, I especially remember this one time.

I had an intern at the office, he was smart, fast, and resourceful. The type of person who would solve a problem without coming up to you 100 times. A good kid, in general, and a promising lawyer. A little wild, perhaps, but who isn’t at 21?

His work space, an open view desk, was adjacent to my higher ranking, closed, cubicle.

On a Friday morning (I remember it was a Friday, later that day I had to check in at the local bar to get shitfaced), I heard him screaming into his phone, rabid and deranged, like a Hollywood Wall Street stockbroker: “close it! close it!” He was speaking loud, throwing curses and massive figures all around. I trotted to his desk to tug at his ear and reprimand him. Just before I came onto him, I heard him slamming his cellphone on the desk, followed by a triumphant “Nojoa!

I understood perfectly what he was doing, and I didn’t really care he was moonlighting as a permutero. When I got to his desk I found this kid, wearing a post-coital smirk and a loose neck tie (just like those Hollywood Wall Street brokers), just grinning.

I started my rant, “chamo, you can’t talk like that here, the partners walk by all the time, clients too, remember you are the face of this organization…”

He didn’t care even a little bit. Instead of listening, took me by the shoulders, looked me in the eye, and said: “Have you got any idea how much money I just made?”     

He was part of a scheme that had become popular at the time, one of those things “everybody” was doing to squeeze a little something from our far-from-infallible exchange regime. “Tarjeteros,” you know.

They would “buy” identity card numbers from people at the barrio, to issue credit cards in their names, get the Cadivi authorization, and then just swipe away.  

Well, my not-so-underpaid intern had quadrupled my yearly salary in just a couple of days. I was speechless, and pale.

I went back to my cubicle, and just sat there.

I remember staring at the gray fabric wall, and spacing out for 20 minutes or so. It wasn’t the first time I’d heard of this, but it was the first time I was knocked off my high horse. All the bullshit I’d been preaching, the pretty words about principles and morals. Every single effort I had made up to that moment seemed miniscule. Laughable.

What sort of motivation would this kid have to follow my career path and, in a few years, sit in this same cubicle staring at the same gray wall? What motivation could I have to keep on going? What was the future going to be like?

At the time, the official exchange rate was 2.15 on the Dollar, and the parallel rate was 3.5. Just this week, week the black market Dollar crossed the Bs. 1,000.00 mark.

Don’t get me wrong, I’m glad I didn’t capitulate to permutaland. But, right then and there, I can tell you how I felt: like a fucking idiot.

That was, perhaps, when I realized that I had to get away. At least for a while. A few months later, in 2008, I left Venezuela to get my Master’s degree stateside.

Using Cadivi dollars, of course.

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  1. Jeez, man. I’m glad you didn’t capitulate. I’m sure that long-term you’re ending up way better than that kiddo and the others. If there’s one thing petrodollars can’t buy is una conciencia limpia.

  2. Es cierto, un muy buen artículo. Es el ejemplo perfecto para el que quiera analizar la situación de Venezuela desde el lado de la moral y los valores. Contar dónde está ahora su antiguo subordinado habría sido el broche de oro para este texto. Usted se sintió risible en aquel momento pero intuyo que, con el paso de los años podrá decir aquello de que el que ríe el último ríe mejor.

  3. What a great story, Raul. Thanks for sharing it. A lot of people have asked me, over my years in Venezuela why I didn’t get my “cupo” or start a business to take advantage of the system. The only answer I have been able to give is that I sleep well at night, and that I want to keep it that way. Even with that, I sometimes felt like a chump.

  4. Remind me my case: Tax adviser at a big 4 accountancy firm in CCS surrounded by these Caribbean version of City/WS brokers who were supposed to be my assistants. I only had a car and a couple of suits back then after 8 years working for a good Firm. I realised I had to leave for good and never ever come back

    Venezuelan society is rotten, Cadivi corrupted a whole generation that made insane amounts of money permuteando and hence helped to create the conditions millions of Venezuelans suffer today

    It’s a real shame

  5. Great post Raúl, masterly written:

    “When I got to his desk I found this kid, wearing a post-coital smirk and a loose neck tie (just like those Hollywood Wall Street brokers), just grinning.”


  6. I have seen this study repeatedly, it appears smart kids (i mean kids of less than 8 years or so, at this age moral lessons haven’t permeated too deep) are more prone to lie or cheat than those less smart.

    Knowing by reading this article and other dozens of similar histories we hear every day of people taking advantage of a defective system and enrich themself, i started to wonder how dumb am i taking pride of my honesty.

    I mean, i always knew you could cheat your way to a good life but i was educated to be honest, even by force, jejeje, and you could see numerous example of people achieving a decent way of living without corrupt themselves. So i embraced my honesty. Being honest, rightful was (still is) my thing.

    Chávez legacy will be demolish the notion of values as a moral framework to a decent life (may be not an exciting or hugely successfull one).

    Now, after this 15 years in Venezuela honesty is a liability, it is a burden. If you are a honest person, you are simply handicapped because you are not well suited to function.

    After 15 years of Cháves government it is clear to me that when my mother inprinted on me this moral ideas what she did was ill prepared me for the future. It wasn’t her fault though, nobody could know this desastre could happen.

    Beg you to forgive my poor english.

  7. Great story Raul! I witnessed the same story several times, but instead of a bright kid doing the “permuta”, was “un guebon” with no values or education learning to live out of the “chavista” system.

  8. This was really lucid writing, Raúl. I think you hit upon a really important aspect: how Cadivi has destroyed the work ethic of many Venezuelans. How many people have grown up thinking that “work hard to get ahead in life” is a moniker for morons?

  9. As a lawyer myself I felt the same feeling of hopelesness, all this honest legalese work where would it get me in Venezuela.
    As JCN pointed out, the work ethic of young (and old)venezuelans is now shattered. I see this from younger generations who either leave the country or join the dark side if they want to achieve minimum decent living standards or thrive in Venezuela.
    i guess the same reality applies to to the masses, they see criminality as a fast track to enjoy the perks that by being honest they will surely be left unreachable. This is one of the most shameful achievements under the new chavista “let’s award the the thug, punish the honest” work ethic culture.

  10. Y lo peor del caso … los ministros que pusieron Cadivi piden una comisión que “investigue” a dónde fueron a parar $300 mil millones.

    • Someone, please, translate this article and the others from CADIVI chronicles send them to Giordani, Víctor Alvarez, Felipe Perez Marti, Mr. Boza and Alfredo Serrano.

  11. As another lawyer working in the private sector I wholeheartedly agree, the incentives for becoming a hard working, well pay professional are nonexistent-

  12. Well written piece.
    I don’t blame the actors.
    The system (CADIVI) was badly designed from the start.
    Before CADIVI there was another FX control during the 80’s ridden with the same issues.
    It seems like History didn’t matter.
    Moral and Ethics is great but only take you so far, this would happen anywhere in the world.
    USA 2008 Financial Collapse anyone?
    The reality is that we Humans are hunters and gatherers. That is what we do.

    Back in 1998 there was a Venezuelan Economist and others suggesting Dollarization as an alternative to deal with the issues of FX, but nobody listened.
    None of these corruption schemes would have happened.
    Neither the government would need to create an expensive bureaucratic apparatus. Just imagine all the wasted man hours there and all the energy Venezuelans spent dealing with the paperwork.
    Unbelievable. !

  13. You’re a natural storyteller. I could almost picture the gray wall.

    It can’t be easy to handle a moral conflict like that when it hits you straight in the face the way it did to you. In a parallel universe that kid is a great attorney nowadays. Well writen.

        • I know, I know, Polvora, Zamuro, etc…

          You’re not getting it *at*all* chamo. The point is that if you control the state it’s easy to engineer any number of morally dubious propositions that people are *forced* to engage with just to survive. Every time you fill up your gas tank (or jump on a bus that runs on gas) you’re “looting the state”, but the state doesn’t give you any choice – you need to move around, you need gas. Bolivarianism has engineered zillions of situations where being fully moral was just not compatible with survival.

          • Filling up with gas I cannot control. Filling up with cheap dollars for personal use I can. When some people choose to confuse the two I now understand Chavez was not the problem.

  14. cadivi corrupted middle professional classes,

    cupo viajero corrupted any one with a scheme to travel or be a raspacupo entrepreneur,

    plan bolivar 2000 was the genesis of it all – masterfully executed to corrupt first and foremost the ones that would help you to keep everyone in check (Quis custodiet ipsos custodes?)

    large unchecked public service and an un professional and unethical PDVSA did its much for bureaucrats and contractors alike.

    free petrol corrupted everyone….

    The losses, inefficiencies and loot fro mall these schemes together, pale in comparison to what the occupation was allowed to loot once it had everyone distracted and salivating for their own mijagas….

    At the end, no one talks about the moral fible that was and still is our largest weakness, effectively exploited by cubans and other tier 1 puppeteers to control and suck dry this economy.

    • And that’s where our poverty lies…

      Somebody in colombia once told me that the sons and daughters of the narcos were raised abroad, because their parents wanted to protect them from the violence.

      Since they had lots of money some of them got an excellent education and when they came back after all, and having no drug money, they made a decent living as high ranking executives…

      Maybe the generation that’s growing up and studying abroad can be a little less tainted by all this filth..

      That’s assuming they come back and assuming the phrase “si añades una cucharada de vino a un barril lleno de mierda se obtiene mierda, pero si añades una cucharada de mierda a un barril lleno de vino se obtiene mierda” is wrong.

      You may say I am a dreamer, but I do believe this could be the beggining of something good in the long run.

      • Returning emigres, first generation or second may have a great effect in the nation I agree.

        Chile was successful IMHO to recover some of the young chileans born and trained abroad after it managed to return to more normal times…. I personally know many Chileans educated in USB , UCV that choose to go back with government sponsored programs…

        Now, when your government (regime) is bent on calling them “blancos de mierda” and gusanos, etc. you know you are far to go in the cycle…

  15. “I left Venezuela to get my Master’s degree stateside.

    Using Cadivi dollars, of course.”

    And then, Jhon was a zombie all along.

  16. I really don’t think that one can call those kids corrupt or rotten just because they were taking advantage of the loophole. Granted, most of them were “hijitos de papi y mami” and self-worshipping jerks, lo certifico! but they were nowhere near your Antonini Wilsons or your Godgiven. Most of us have used gladly the cadivi viajero or estudiante and that didn’t make us crooks, we thought that that was our rightful share of the pie and you would have to be pendejo to not use it. El que no haya usado cadivi que tire la primera piedra!

  17. “Most of us have used gladly the cadivi viajero or estudiante and that didn’t make us crooks, we thought that that was our rightful share of the pie and you would have to be pendejo to not use it”
    Of course you are not crooks, merely followers picking up the crumbs of the crooks. Surprisingly a bit like Chavista voters. “What’s in it for me” seems to have penetrated further than I thought possible.


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