Posted: Friday, February 14, 2003 By: Gustavo Coronel

VHeadline.com commentarist Gustavo Coronel writes: Questioned by a reporter, J. V. Rangel said: "Mr. Urdaneta asked me to place his two relatives and a friend in the Consulates of Miami, Cartagena (Colombia) and Barcelona (Spain)"... "And did you agree?"... "Yes,of course"... said Mr. Rangel. "Would not this be corruption?".... "No" said Mr. Rangel... "Corruption is in the asking, not in the giving." Interview with J. V: Rangel, El Universal, February 9, 2000.

Corruption is a systemic disease involving most sectors of society. It becomes a cultural trait. For many years high petroleum income, populist governments and weak Institutions have produced a state of "hypercorruption" in Venezuela.

A recent book by journalist Agustin Beroes, summarizes the incidence and intensity of corruption during the first three years of the Chavez Presidency. Beroes bases his findings on multiple sources, personal interviews and complaints by government or opposition leaders. As is often the case, "revolutionary" corruption is not easy to prove as there rarely exists a "smoking gun."

In general, however, when a society is highly disorganized, when a government has no plans, programs, procedures or controls, when accountability does not exist, corruption is likely to be present in one or more of its multiple forms: fraud, extorsion, bribery, abuse of power, nepotism, traffic of influences, plain stealing.... you name it.

It has been said that where there is a line of waiting people there is corruption. And Venezuela nowadays is a very long line!

Chavez won the elections in 1998 on the strength of his campaign against the corruption of past governments. He was perceived by many as having the political will and the ethical posture which could minimize the problem of corruption in Venezuela.

Four years later things have not worked that way. Already in 2001 a poll conducted by Eugenio Escuela indicated that 64% of the population felt that corruption in times of Chavez was as great or greater than under preceding governments. A poll taken today would most probably show a much higher percentage.

Beroes estimates in his book that corruption during the first three years of Chavez government adds up to some $10 billion wasted or stolen. Although he speaks in bolivar terms, we have done an approximate calculation of what this means in dollars and the amount above mentioned is a very close estimate.

Although Beroes mentions dozens of cases, there are some cases that either because of the amounts of money or the people involved are worth mentioning:

1. MICABU, the name of the printing company owned by Chavez' mentors Luis Miquilena, Manuel Quijada and Tobias Carrero. This company got a contract to print the new 1999 Constitution ... they subcontracted and pocketed the difference.  The money involved was "peanuts" ... some $500000 ... but Miquilena was at the time the number 2 man in government.

2. CAVENDES, a bank owned by Luis Vallenilla, financial supporter of Chavez and member of the Constituent Assembly. This bank incurred in fraud and other illicit dealings in the amount of some $200 million. It was intervened but the government kept depositing its money in the bank, even after the intervention. Vallenilla was indicted but he never went to prison.

3. The Chavez Family in Barinas, the Governor of the State is Chavez' father. The central government, says Beroes, provided him with funds in advance of his needs. The money was deposited earning substantial interests that were never accounted for. Brother Argenis became one of the main contractors for the government in the area.

4. Plan Bolivar 2000, Started in February 1999 in order to recover infrastructure and promote employment. Utilized by some 6,000 soldiers. Chavez was its first "Commander" ... the program received $250 million during the first three months. Its first coordinator, Victor Cruz Weffer, is reported to have obtained blank invoices that later on filled with inflated numbers. The first year the program held 2,300 popular markets, gave 60,000 haircuts and collected 31,000 tons of garbage, among other activities.

During the second year the program went into the construction of housing for poor Venezuelans and spent some $400 million in contracting without bidding taking place. Many of the houses can not be inhabited due to structural defects.

5. The Integrated Social Fund, an organization led by fellow coupster, Commander William Farinas, to construct popular housing and schools. This fund spent some $1.4 billion without any accountability. Results can not be seen. The fund distributed the money among phantom institutions, including $1 million to a group led by the wife of Farinas' driver.

6. SENIAT, the tax collecting agency. The director's son was caught red-handed by the Technical Police during a raid, reportedly trying to extort Valencia businessmen. The young man was never indicted or sent to prison.

7. Gruber Odreman, Governor of Caracas. This man led a second military coup in 1992. Named Governor by Chavez he published 5 books of lamentable poems with government money. The Legislative Chamber of the Metropolitan Council determined that he had wasted or pocketed about $200 million. He claims his fortune has been made writing poems and songs. I can assure our readers he is no Bee Gee. He is free.

8. The Electoral College (CNE) 1999-2000, wasted some $60 million in trying to organize an election in 2000 that had to be cancelled due the chaotic state of the plans. No one was held responsible.

9. Misuse of the Macroeconomic Stabilization Fund. In open violation of the Constitution and the laws governing this fund Chavez diverted $4 billion deposited in the fund to other uses, such as paying christmas bonuses to State employees. The name of this crime in Spanish is "Peculado de Uso."

10. Money received by Chavez from the Bilbao-Vizcaya Bank. Chavez received  $500,000 from this bank for his Presidential campaign and $1 million after he became President. These monies were not reported to the authorities and they were illegal to start with.

These last two items have been reported to the Supreme Tribunal of Justice where they collect dust in the desks of a tribunal which is not independent but an appendix to the Executive Power.

We would need much more space to mention the corruption at the Industrial Bank of Venezuela, the People's Bank, the Women's Bank, at the Institute of Lands supervised by Chavez' brother Adan and at many other government agencies.

This horrendous performance on the issue of corruption has led to the illegitimacy of a regime that started out with full support of the nation. Chavez has squandered his popularity by violating his electoral promises and by excluding large portions of the society from decision mechanisms on topics of collective interest.

This explains why the Venezuelan government is fast becoming an international pariah...

Gustavo Coronel is the founder and president of Agrupacion Pro Calidad de Vida (The Pro-Quality of Life Alliance), a Caracas-based organization devoted to fighting corruption and the promotion of civic education in Latin America, primarily Venezuela. A member of the first board of directors (1975-1979) of Petroleos de Venezuela (PDVSA), following nationalization of Venezuela's oil industry, Coronel has worked in the oil industry for 28 years in the United States, Holland, Indonesia, Algiers and in Venezuela. He is a Distinguished alumnus of the University of Tulsa (USA) where he was a Trustee from 1987 to 1999. Coronel led the Hydrocarbons Division of the Inter-American Development Bank (IADB) in Washington DC for 5 years. The author of three books and many articles on Venezuela ("Curbing Corruption in Venezuela." Journal of Democracy, Vol. 7, No. 3, July, 1996, pp. 157-163), he is a fellow of Harvard University and a member of the Harvard faculty from 1981 to 1983.  In 1998, he was presidential election campaign manager for Henrique Salas Romer and now lives in retirement on the Caribbean island of Margarita where he runs a leading Hotel-Resort.  You may contact Gustavo Coronel at email ppcvicep@telcel.net.ve

www.latintrade.com 02/14/2003 - Source: BNamericas Venezuela's banks are restructuring the loans of small- and medium-sized enterprises on a case-by-case basis, rather than in a blanket agreement as suggested by business leaders, banking association Asobanca chairman Ignacio Salvatierra told BNamericas. "This is already in motion, there are clients talking with their banks and in the process of restructuring. It is a process that is on the march," he said. Asobanca has adopted a policy whereby each member bank is free to negotiate with its clients. Salvatierra rejected the proposal floated by Miguel Perez, chairman of small business association Fedeindustria, earlier this week that called for a general freeze on principal and late payment penalties as well as the restructuring of debts. Salvatierra said that Fedeindustria had never hinted at a moratorium on debt payments rather a renegotiation of loan terms and conditions. "Each client is in charge of his relationship with each bank, and if some form of restructuring is justified a bank will obviously be disposed to restructure debt on an individual basis. But in no case [accept] a suspension or cessation of payment," he said. Fedeindustria argues that the two-month nationwide strike that started on December 2 last year has driven many small businesses to the verge of bankruptcy. According to Perez, as many as 25,000 companies that employ 200,000 people could fold. The strike was orchestrated by groups opposed to President Hugo Chavez, who they accuse of mismanaging the economy under an increasingly dictatorial rule. However, strike organizers underestimated Chavez's staying power and the strike collapsed at the end of January as businesses opened their doors to avoid bankruptcy. The long-term damage to the Venezuelan economy remains to be seen. Oil production, the main source of government revenues, remains disrupted and a foreign exchange freeze decreed last week has made it difficult for businesses to import raw materials.

sg.biz.yahoo.com Friday February 14, 3:55 PM

Despite a recent rebound in production, Venezuela's oil industry is expected to remain hobbled indefinitely even after the current strike is settled, Friday's Wall Street Journal reported.

This could leave global petroleum markets vulnerable in the event of war with Iraq and increase the prospect of further gasoline-price increases.

Industry experts and striking workers said Venezuela's state oil concern, Petroleos de Venezuela SA, is unlikely to restore more than two-thirds of its prestrike output this year. They said the company is hindered by a lack of experienced employees and managers. Moreover, wells were damaged as workers shut down fields Dec. 2 in a strike aimed at forcing Venezuela President Hugo Chavez from office. Foreign petroleum firms, which produce about 400,000 barrels a day of heavy oil in joint operations with Petroleos de Venezuela, said they are hamstrung as well.

Petroleos de Venezuela produced three million barrels of petroleum a day before the walkout, which made it the world's fifth-largest oil producer and the fourth-largest exporter to the U.S. Although the strike is continuing, analysts said the company has restored output to about 1.4 million barrels daily. Mr. Chavez said production is 1.9 million barrels a day. In any case, experts said Venezuela will be hard pressed to produce much more than that.

The Organization of Petroleum Exporting Countries has sought to offset the Venezuelan losses, but U.S. oil inventories have plummeted to 269.8 million barrels, their lowest level since 1975, according to the U.S. Energy Information Agency. Low stocks in addition to war fears have helped send the price of petroleum soaring, with the U.S. benchmark surging to $36.36 a barrel Thursday, up 59 cents, in trading on the New York Mercantile Exchange.

Wall Street Journal Staff Reporters Thaddeus Herrick and Alexei Barrionuevo in Houston, and Marc Lifsher in Caracas, Venezuela contributed to this report.

www.vheadline.com Posted: Friday, February 14, 2003 By: Charles Presswell Date: Fri, 14 Feb 2003 00:43:40 -0500 From: Charles Presswell charles.presswell@sympatico.ca To: editor@vheadline.com Subject: government is not concerned

Dear Editor: Please Mr. Forstell -- tell us all -- which opposition party has the interest of the poor in mind?

What are their platforms for reforming Venezuela?

Where is this noble opposition?

Who are these devoted citizens that allowed Mr. Chavez to be elected in the first place?

What are their great political ideals?

If Mr. Chavez "...is concerned only with accumulating power and maintaining it," the opposition is apparently concerned only with destroying the democratically-elected party of Mr. Chavez and keeping it out of the political process altogether.

Surely you can't be referring to the likes of Mr. Carmona ... this Venezuelan patriot fled to the US at the first opportunity didn't he?

Sir, where are the opposition?

When will we see a clear plan from any one of them on the future of Venezuela?

The anti-Chavez argument is pretty tired -- don't you think?

Or are the intentions of the opposition so sinister that they must keep them secret?

Are the opposition so morally bankrupt that their privileged position and the grinding poverty that they have helped to create is what they really want to sustain?

Please enlighten us ... we all know there are "millions" of you out there ... what exactly do you have to offer to counter Chavez politically?

Only gutter talk and sabotage?

Charles Presswell Toronto, Canada charles.presswell@sympatico.ca

reuters.com Fri February 14, 2003 09:53 AM ET By Fabian Cambero

CARACAS, Venezuela (Reuters) - "Open again at last!" shouted one jubilant Venezuelan shopper as she entered the giant Sambil commercial center, the flagship of Caracas' shopping malls, which reopened this month after a two-month opposition strike.

The protest shutdown, launched on Dec. 2 to try to force leftist President Hugo Chavez to hold early elections, had deprived the capital's inhabitants of their favorite emporiums of fashion, fast food and Hollywood movies for nine weeks.

"I was desperate, just waiting for them to open," said 21-year-old Dayana Gutierrez, as she checked out the post-strike prices in her favorite clothing store.

Eager shoppers prowled the mall, hunting for bargains or just feasting their eyes on consumer goodies denied to them for weeks. Some emptied automatic drinks dispensers selling beverages that had become scarce during the shutdown.

After sacrificing lucrative Christmas and New Year sales in support of the strike, the country's shopping centers unlocked their doors this month when opposition leaders decided to lift the protest in non-oil sectors. Many small businesses and shops, facing bankruptcy, had already abandoned the strike.

Slashing oil output in the world's fifth largest petroleum exporter, the stoppage caused unprecedented gasoline and food shortages and plunged the oil-reliant economy into crisis. The strategic oil industry is still reeling from the impact.

But the protest failed to budge former paratrooper Chavez, who introduced tough currency and price controls to counter the financial emergency and is demanding that oil industry strikers he calls "terrorists" and "coup mongers" be sent to jail.

In this turbulent economic and political climate, shopping malls like the Sambil are trying to recoup some of their lost profits. Some shops still had their Christmas decorations up, while others were hurriedly re-dressing their front windows.

Luis Perez, who owns a chain of small outlets selling shirts, felt the strike had not been worth the sacrifice.

"We paid a high price to achieve so little," he told Reuters. As most of his stores are located in shopping malls which closed down, his December sales, which normally account for half of his annual income, were 70 percent below normal.

The lost income forced him to dig deep into savings. "I'm lucky because I could survive," Perez said.

FEW CUT-PRICE SALES

The drive to recover lost income meant there was a notable absence of the usual signs announcing New Year sales bargains.

"All my autumn-winter collection was left unsold on the racks and there's not going to be a spring collection ... so I don't think we'll be offering any sales," said Sussy Samuele, who runs an exclusive fashion store at the Sambil.

Some stores were already adjusting their price tags upward in anticipation of the impact of the stringent currency controls introduced by the government this month.

Chavez, who survived a coup last year, has declared a political vendetta against businesses which took part in the strike, saying he will restrict their access to hard currency. This will limit their capacity to import and in turn produce shortages and price hikes, businessmen and economists predict.

"I don't think we're going to get back to normal again soon. I think it will take time for us to recover," said the manager of a pharmacy, which suffered the loss of some products because they had passed their sell-by date during the strike.

Private business chambers and trades associations which overwhelmingly backed the anti-Chavez stoppage have declined to give details of the losses incurred by their members. But they are believed to be in the hundreds of millions of dollars.

Private sector leaders, who oppose Chavez because they say his anti-capitalist left-wing rhetoric and statist, interventionist economic policies are bad for business, say 500,000 jobs were lost in the trade sector alone in 2002.

They expected 800,000 more jobs to be lost in 2003.

The grueling opposition strike dragged down an economy already floundering in recession. Gross Domestic Product fell by 6.4 percent in the first nine months of last year.

In the absence of a definitive figure from the Central Bank, economists estimate the contraction for all of 2002 was at least 10 percent. They expect a bigger contraction in 2003.

Inflation ended the year at 31.2 percent and is still rising. It stood at 33.8 percent at end-January.

Unemployment too has been going up. It had reached a four-year high of 17 percent in September and most analysts expect the number of jobless to swell rapidly.

OUTLOOK BLEAK

The grim economic outlook has worsened the already bitter conflict between the government and the opposition, who have so far failed to agree on a date for elections in ongoing talks brokered by the Organization of American States.

Each side accuses the other of being inflexible.

Many ordinary citizens say they are fed up with both sides after their livelihoods have become increasingly squeezed by the politically fueled recession and the opposition strike.

In the modern El Recreo shopping center, the owner of a mobile telephone outlet said he had lost the equivalent of around $35,0000 in December because the mall had closed in support of the strike. He, however, had opposed the stoppage.

Shopping mall owners said they had polled their shop tenants about whether or not to take part in the strike.

"I didn't sign up in support ... there was a tendency to go ahead without the participation of everyone," said the mobile phone salesman, who asked not to be named.

Although he initially considered suing the shopping center for his lost business, he decided against it in the end. "If I let go of this place, I lose out ... I'm going to soldier on with the stocks I've got left from December," he said.

Supporters of the government, including several lawyers, have created a nongovernment organization called "Victims of the Strike" to encourage citizens to initiate court cases against the organizers of the protest.

They say that people who feel their lives or businesses were materially damaged by the strike should seek compensation from the strikers in the courts.

"If the strikers had a real blueprint for the country, they should have put forward an economic program ... not halt everything and carry all of their people into bankruptcy," said Andres Giussepe, president of the Victims of the Strike group.