President Hugo Chavez says that he ordered the intervention of Ricardo Fernandez Barrueco’s banks on 20 November because Fernandez Barrueco broke the law repeatedly and could not justify the sources of the funds he used to purchase Bancos Banpro, Bolivar, Confederado and Canarias.
Chavez also threatened that any bank owners who break the law will lose their banks and could be jailed. Will Fernandez Barruecos (and his onetime banking colleague Eligio Cedeno) soon have more cellmates at Disip’s Helicoide headquarters?
If President Chavez is serious about cracking down on crooked bankers, a bunch of Bolibourgeois bankers could land behind bars soon. The banks most likely to be seized by the regime for insolvency and lawbreaking are all Bolibourgeois-owned banks.
But how many banks are potentially at risk of government takeover based strictly on technical and legal merits? For informed and sophisticated insights on financial skullduggery in Venezuela, we read Devil’s Excrement and Venepiramides.
Venepiramides says there are only seven “refuge” (i.e. solid) banks in Venezuela, solvent and professionally managed by real bankers: 1-Banco Venezolano de Crédito, 2-Banco Exterior, 3-Citibank, 4-Banco Provincial BBVA, 5-Banco del Caribe, 6-Banco Mercantil, and 7-Banco Plaza.
A second category of seven banks which Venepiramides describes as “NiNi” (would that translate into English as “iffy”?) includes: 1-Banesco, 2-CorpBanca, 3-Banco Fondo Comun, 4-100% Banco, 5-Banco Nacional de Credito, 6-Banco Caroni, and 7-Banco de Venezuela.
But “iffy” appears to be a bit of an understatement.
Four of these banks – Banesco, Corpbanca, Caroni and Nacional de Credito – are being investigated by US Treasury’s OFAC or the DEA, apparently with good cause. Where there’s smoke, there’s sure to be a fire with these banks.
A third category that Venepiramides calls “zombie” banks – i.e. walking dead – groups the rest of Venezuela’s banking system.
These are the garbage banks, whose owners survive mainly on government deposits and bonds – meaning corruption, because to do “negocios” with the regime one always has to “bajarse de la mula.” There are absolutely NO exceptions to this criminal/corrupt revolution’s “pay to play” rules.
All of the banks and brokerage firms owned by Bolibourgeois impresarios like Arne Chacon Escamilla, Pedro Torres Ciliberto, Gonzalo Tirado, etc. are “zombie” banks. There also are numerous “zombie” banks owned by old Fourth Republic wizards of financial scams who reinvented themselves as Bolivarian entrepreneurs. How insolvent are the zombie banks?
Hard to say, but Fernandez Barrueco’s banks reportedly are among the worst.
The four banks seized by the regime on 20 November 2009 have a combined negative equity of over BsF 909 million; that’s over $423.1 million at the official rate and $168.5 million at the current swap rate. The “rights” which Fernandez barrueco’s banks acquired from Inverfactoring and Activos Corporativos AG wiped out the equity of the intervened banks.
Where did all this money go?
Caracas Gringo found what appears to be an Internet link between Inverfactoring and Inverunion, which reportedly was purchased from Ignacio Salvatierra by regime bagman Gonzalo Tirado.
But a reader says that Inverfactoring is owned by Bolivar Banco’s president, which suggests the chief scammer was Fernandez Barrueco. And if the reader’s comment is accurate, it could help to explain why the banks were intervened: Fernandez Barrueco may have stolen (or lost through bad investments) hundreds of millions of dollars that belonged to his corrupt Bolivarian associates.
There’s also a persistent buzz that the intervention of the four banks is the public symptom of a bitter power struggle within the regime between “Socialist” and “Capitalist” chavistas, in which the more revolutionary faction (the Socialists) has strong military support. But the capitalist chavistas also have a very substantial militarist component.
Caracas Gringo suspects that apparent internal power struggles which the intervention of Fernandez Barrueco’s banks may reflect are not about ideological differences, but instead about political competition for economic power between organized crime groups within the regime.
It’s impossible to predict how the financial/political corruption scandal which is just starting to erupt in the Bolivarian revolution will play out over the coming weeks and months. But President Chavez has a potentially strong election campaign issue in hand. Venezuela has a long history of corrupt bankers who enriched themselves by hustling the State and looting the savings of depositors – and who got away with their crimes.
Imagine if Chavez seizes more banks, and jails more bankers who are condemned publicly by the regime as organized gangsters. The regime’s propaganda machine ties the failed Bolibourgeois banks and jailed bankers to the corruption of the old Fourth Republic “escualidos.” And Chavez uses the regime’s control of 80% of Venezuela’s media outlets to market the bank seizures and jailed bankers politically as part of his Bolivarian revolution’s successful anti-corruption offensive.
Would this win Chavez political points with at least some voters ahead of the National Assembly elections in September 2010?
President Chavez can easily dispose of the Fernandez Barruecos and other Bolibourgeois impresarios of his corrupt Bolivarian revolution. The Bolibourgeois elites at this level of the revolution are all politically, and physically, expendable in the execution of Chavez’s core objective of being President-for-Life of Venezuela.
But the regime’s top gangsters, who enriched themselves doing corrupt business with Bolibourgeois impresarios like Fernandez Barrueco and his ilk, won’t get touched even “con el petalo de una rosa.” Chavez cannot easily dispose of senior regime officials like Diosdado Cabello, Jesse Chacon, Jose Vicente Rangel (aka Grima Wormtongue) and others of their caste.
These hard men have been among the president’s most loyal cohorts – even his partners-in-crime in planning/executing strategies and tactics which culminated in the lethal political violence of 11-14 April, 2002. But Cabello and JVR, particularly, have always been potential threats to Chavez because of their closeness to the Bolivarian Caesar of a revolution born in treachery and betrayal.
When folks talk about chavismo without Chavez, they mean the “capitalist” chavistas represented by Cabello, JVR and others who have substantial personal interests at stake in practically all of the Bolibourgeois banks associated publicly with the revolution – including Fernandez Barrueco’s intervened banks. Et tu, Diosdado?