A plug for the Petroleos de Venezuela (PDVSA) 2002 Annual Report

<a href=www.vheadline.com>Venezuela's Elecronic News Posted: Sunday, June 01, 2003 By: Oliver L. Campbell

VHeadline.com commentarist Oliver L. Campbell writes: It was good news to hear doctor Ali Rodriguez agreed to take back some 900 ex-PDVSA employees on the payroll.

I trust they are well qualified, with sound experience and include two or three capable accountants who can finish the preparation of the company’s 2002 accounts. These should have been ready for consideration and approval by the PDVSA Board by 31 March.

The strike delayed the work but ... five months after the year-end ... the accounts should really be ready.

I understand they're unlikely to be finished before July, and this does not reflect well on a company of the size and prestige of PDVSA. If the latter were a private company, the shareholders would have made a great fuss and the Finance Director would have probably resigned.

However, PDVSA’s shareholders ... ultimately all Venezuelan citizens as represented by the Minister for Energy and Mines ... are less demanding and unlikely to make any commotion. This is a pity because we should all take an active interest in knowing how well the company did financially in 2002 or, indeed, in any year.

• After all, PDVSA’s financial results impinge on the whole economy and so affect the individual citizen.

I have said before, that the principles for consolidating the accounts with subsidiaries are simple enough in theory but, when it comes to the practice, PDVSA’S accounts are complicated and require the service of some good accountants.

What is more, the latter must rely on their own expertise since it's unlikely their new bosses will know the first thing about USA accounting standards as set out in the numerous statements issued by the Financial Accounting Standards Board (FASB).

Although the books are kept in bolivares, the accounts are presented in US dollars, which creates a further complication. My plea to doctor Ali Rodriguez is to take back those competent accountants who know about consolidated accounts and are familiar with FASB standards.

PDVSA has successfully restored oil production; now is the time to restore financial credibility.

My second point follows on from the above. May I make a plug for the Annual Report (Informe Anual) which PDVSA produces both in Spanish and English versions. This document starts with the President’s Message and is followed by an excellent commentary on the company’s operations during the previous year. The company’s consolidated accounts appear at the end of the report. The sad fact is few Venezuelans read it, but I believe it should be read by all those who have the interest of their premier company at heart.

People who criticize PDVSA may not always have the full facts.

Certainly by reading the Annual Report they will be better informed about the company’s operations, and also become aware of its many achievements.

In my time at the company, the Report used to appear at the end of May, but in recent years it has not been published till October. By that time, people have forgotten all about the previous year and are only interested in events of the current year.

That is why it is important for the “shareholders,” the Venezuelan people, that the Report comes out again no later than the end of May.

Three years ago I prepared, and sent to PDVSA, a detailed timetable which would achieve this ... they thanked me, but I suspect it was shelved (engavetado) or binned.

Administratively, it is not difficult to meet the target, if you use the carrot and stick approach ... you make one person responsible for the Report and tell him he'll get a bonus if he makes the deadline, but will receive no salary increase if he does not.

The latter will concentrate the mind wonderfully!

A few years ago, PDVSA decided to publish the Report with a black cover, front and back, with just its name and “Annual Report” on the front. Somebody obviously thought this projected PDVSA as a serious company. It entirely missed the point that the Report is a PR document par excellence, intended to attract and inform readers while allowing the company occasionally to pat itself on the back.

Thankfully, they have gone back to placing an impressive photograph on the front cover ... the version in English has readers abroad among those interested in oil matters or the Venezuelan economy.

To summarize my pitch, I strongly feel PDVSA should make much more of its Annual Report and ensure it reaches many more “shareholders” in Venezuela.

The document should aim to foster a closer rapport between Venezuela’s premier company and its citizens.

• At present, few people know the Report exists let alone read it.

So, please get the Report out earlier, distribute it more widely, give it better press coverage, and let us all know how well the company is doing.

The “shareholders” deserve no less.

Oliver L Campbell, MBA, DipM, FCCA, ACMA, MCIM  was born in El Callao in 1931 where his father worked in the gold mining industry.  He spent the WWII years in England, returning to Venezuela in 1953 to work with Shell de Venezuela (CSV), later as Finance Coordinator at Petroleos de Venezuela (PDVSA).  In 1982 he returned to the UK with his family and retired early in 2002.  Campbell returns frequently to Venezuela and maintains an active interest in political affairs: "I am most passionate about changing the education system so that those who are not academically inclined can have the chance to learn a useful skill ... the main goal, of course, is to allow many of the poor to get well paid jobs as artisans and technicians."  You may contact Oliver L Campbell at email: oliver@lbcampbell.com