Movistar (Telefonica), Banco Confederado and Shipping

Spain’s Foreign Minister Miguel Angel Moratinos visited Venezuela a week ago with a large delegation of business leaders.

During his brief visit, Moratinos showed his venality by declaring that press freedom in Venezuela is “satisfactory.”

Perhaps this idiotic distortion of the truth was part of whatever business and political deals Moratinos cut secretly with senior figures in the Chavez regime during his stop in Caracas.

Several commercial agreements were signed during his visit, including Repsol’s sale of the Termobarrancas thermal power plant and associated gas infrastructure to PdV for over $180 million.

But here’s one agreement reached during Moratinos’ visit to Caracas which was not made public:

Movistar, the Venezuelan subsidiary of Spain’s Telefonica, reportedly is closing a secret transaction on 7 August 2009 to purchase a shipping company in a deal which apparently was structured through Banco Confederado.

The name of the shipping company that Movistar is buying, and the price it is paying, are not confirmed as of this writing by Caracas Gringo. But banking sources tell us it’s a done deal. We’ll update as more intelligence becomes available.

Banco Confederado is owned by the Panama-based Venezuelan-Colombian “entrepreneur” Ricardo Fernandez Barrueco, who is a known business associate of Public Works and Housing Minister Diosdado Cabello, the most powerful man in Venezuela today after President Hugo Chavez.

Also, Banco Confederado was demonstrably bankrupt as of 31 December 2008, though currently Fernandez Barrueco claims to have $1 billion in cash on hand to make new financial investments.

Fernandez Barrueco owns several banks including Banpro, the first bank he acquired from the Azpurua family in 2005, after Jorge Azpurua was abducted in Caracas. Law enforcement sources familiar with the case say the abduction and sale of Banpro were related.

Fernandez Barrueco also owns at least one shipping company.

Movistar reportedly has about BsF 4.3 billion ($2 billion at the official Bs.2.15:$ exchange rate) in unrepatriated profits deposited with entities like Banco Provincial, Banco de Venezuela, Banco Caribe and Banco exterior, among others.

The company’s policy, until Moratinos visited Caracas last week, has been to accumulate its profits locally until it can obtain dollars or euro at the official exchange rate.

Until Moratinos visited Caracas, Movistar’s top management also had declined to buy foreign exchange in the “permuta” (parallel) market during the past 12-18 months.

However, since 5 August 2009 Movistar has withdrawn almost BsF 1 billion which it had deposited in three banks (over $465.1 million at the official Bs.2.15:$ exchange rate). These funds were then deposited in an account that Movistar opened at Banco Confederado within the past day or two.

Why is Movistar suddenly, and secretly, buying a shipping company through a bankrupt Venezuelan bank owned by a Panama-based Venezuelan-Colombian “entrepreneur” who is known to be a senior business associate of Diosdado Cabello?

The Telefonica/Movistar-Banco Confederado shipping company deal reportedly was finalized last week, while Moratinos was in Caracas.

Why wasn’t the Movistar-Banco Confederado deal announced publicly with the other commercial agreements signed during the visit by Moratinos?

After all, Telefonica is a publicly traded company. Its president and board of directors are required to answer to the company’s shareholders and to Spain’s telcomm, tax and other regulatory authorities.

So, here are some questions concerned shareholders might ask Telefonica’s president and board of directors:

What role did Foreign Minister Moratinos play in this dubious transaction? It’s a valid question, given that Moratinos declared to the world from Caracas that press freedom in Venezuela is acceptable in the opinion of Spain’s government.

Why is Movistar (Telefonica) buying a shipping company? Who owns the company? How much is Movistar paying for the company?

Why did Movistar transfer its deposits from respectable, well-managed, solvent Venezuelan banks to a demonstrably bankrupt Banco Confederado?

Where are the feasibility studies, financial statements, audited reports, due diligence documentation, and other essential data required legally by an allegedly serious multinational like Telefonica to justify the acquisition of a shipping company by its Venezuelan subsidiary?

Who made the decision at Telefonica to authorize this strange transaction? Caracas Gringo knows for a fact that within Movistar it’s being said that “orders from above” set things in motion. Whose orders?

There are two possible explanations. One: corruption in which Moratinos could be implicated, at least tangentially. Two: extortion by the Chavez regime. Movistar could be “purchasing” a shipping company through Banco Confederado, which is owned by Cabello’s close business associate, because that’s the price Telefonica must pay to guarantee its assets in Venezuela are not nationalized.

Why a shipping company? Under Venezuelan law, investments in the shipping industry are exempt from corporate income taxes. Does the nature of this shady deal imply that Movistar (Telefonica) is cheating the venezuelan (and Spanish) tax authorities?

Telefonica says on its web site that it is “a 100% private company. It has more than 1.5 million direct shareholders. Its share capital consists of 4,704,996,485 ordinary shares traded on the continuous market on the Spanish Stock Exchanges (Madrid, Barcelona, Bilbao and Valencia) and on those of London, Tokyo, New York, Lima, Buenos Aires and São Paulo.”

With respect to its operations in Latin America, Telefonica says its “main activity is the exploitation of fixed, mobile and broadband services… achieving a presence in all of the key Latin American markets. Argentina, Brazil, Chile, Colombia, Ecuador, El Salvador, United States, Guatemala, Mexico, Nicaragua, Panama, Peru, Puerto Rico, Uruguay and Venezuela. Telefonica’s Latin America division also runs the Telefónica office in China and the alliance with China Netcom.”

But Telefonica’s web site doesn’t say anything about any business interests other than telcomm, and certainly nothing about shipping.

The Movistar-Banco Confederado deal is the third major strange deal involving a Spanish company since May:

In May, La Electricidad de Caracas announced that Spanish contractor Duro Felguero had been granted a turnkey contract worth $2.1 billion to build the 1,620 MW Termocentro thermal power plant in the Tuy Valleys near Caracas. There was no bidding.

In July Spanish contractors Iberdrola and Elecnor announced that PdV had granted them a turnkey contract worth about $1.5 billion to build a 1,000 MW thermal power plant in Cumana. There was no bidding, either.

That’s $3.6 billion worth of contracts awarded to three Spanish contractors in Venezuela without any public bidding…which, by the way, supposedly is illegal, not that the rule of law means much in Bolivarian Venezuela.

And now, immediately after Moratinos visited Caracas a week ago, Movistar (Telefonica) is transferring its accumulated profits from solvent banks to a bankrupt Banco Confederado owned by Cabello’s good friend and business associate, as part of a deal to buy a shipping company?

Maybe it’s all just one big coincidence, but from Caracas it appears that there could be something very rotten inside the Zapatero government in Madrid.

About Caracas Gringo

Representing less than 0.00000000001515152% of the world population as of 31 December 2011.
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5 Responses to Movistar (Telefonica), Banco Confederado and Shipping

  1. Everyone in Caracas knows part of the story Gringo is telling, he has the guts to tell it and has pieced it together very well. When you deal with thugs, you have to be careful, gringo has been careful so far. The thugs would love to know where this is coming from, but they can’t. It pays to claim to be a gringo in Caracas, but maybe he is Jose in Pensacola.


  2. Juan Largo says:

    Buenas, Caracas Gringo:

    I’m somewhat amazed that I haven’t stumbled across your blog earlier, given how much I trowl around looking for even moderately objective POVs on El Presidente Hugo’s Circus.

    Now the basic facts about this screwy transaction described above might never be fully known. What is known is that Chavez particularly loathes anyone but “the nation” making a profit on services or manufacturing within Venezuela extant. He considers such profiteering a form of extortion, as though the forengn businesses were bilking Venezuela of what is rightfully “ours,” namely, all the profitts.

    So here we have a Spanish company stockpiling their profits – a fortune exceeding 400 million US – in solvent Venezuelan banks (if such institutions truly exist), and this is something too tempting for Chavez to brook. He simply HAD to get his hands on that dinero, especially given the current crunch and the certain and calamitous devaluation of the preposterously overvalued Bolivar that is forthcoming sure as el sol follows la luna. So Chavez forces the Spainard’s mano, almost certainly threatening to not only nationalize their holdings in Venezuela, but pulling shenanagans with their 400+ million as well. Recall the credo of 3rd World Leaders (from Nixon, believe it or not): “What is Yours is Mine.”

    Anyhow – Viola! Let’s “sell” them a shipping company – a likely enough transaction for a phone and internet company -to transport all those cell phones and Blackberries to Bolivia and beyond. And why not dump the “sale price” into a “demonstrably bankrupt” bank where the socialist leaders of the revolution can loot it shamelessly. That’ll get even with those goddam Ibaros, who had the gall to once tell El Presidente to shut his pie hole.

    Ah, Venezuela! It’s a thing of wonder and beauty. But it’s also very sad.

    My question to you, Caracas Gringo, is how you manage to find out such volatile information “for a fact” without getting a bullet in the head the moment you serve this stuff up for public consumption? You’d pretty much have to be here to glean such inside info, so how do you keep your operation on the low down?


    Juan L.


  3. OA2 says:

    wow. why haven’t i read this site before. outstanding reporting.


  4. “Something very rotten”? Only something? Hahahaha!! Lord, here EVERYTHING is rotten: Zapatero, in the middle of a crisis and with huge amount of fires here, has gone to the Canary Islands on holidays with 2 planes full of aids, because in one… one was not capable of transporting so many people. Well, the protests are very tiny… even when as I say, the economic situation can’t be worse.

    I’m not the least surprised by this that you point out here. Corruption is eating Spain nowadays. For example, some days ago we knew that a Socialist ex-Major had received €700,000 from an Italian mob boss. Isn’t it marvellous?

    But the MSM are 24-7 explaining why Zapatero is soooo marvellous. Moratinos is considered an idiot. But he just works for his Lord Zapatero.

    It’s really exasperating. But there is nothing Spanish decent people can do, except protesting in Internet for the time they let us.


  5. Excellent Gringo! And so pertinent to the way things are evolving… the final looting before it all collapses. Though that might be wishful thinking from my part….


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