Report: Chavista officials may be involved in money laundering scandal

Excerpt from Sepblac report on Banco Madrid accounts points to million-dollar commissions for high-ranking members of Venezuelan government

Venezuela excerpt from Sepblac report on Banco de Madrid.
Venezuela excerpt from Sepblac report on Banco de Madrid.

According to an excerpt from a report by Comisión de Prevención de Blanqueo de Capitales e Infracciones Monetarias (Sepblac) obtained by EL PAÍS, several high ranking officials from the Hugo Chávez administration are on the list of Banco Madrid clients whose accounts have raised suspicions about possible money laundering schemes.

The report points to possible multimillion-dollar commissions paid to former high-level Venezuelan officials in exchange for large public contracts. Two cases in particular drew special attention. A deal for a 5.5 percent commission on a contract worth 1.5 billion euros awarded to Duro Felguera to build a power plant or 82.5 million euros in commission (more than $100 million at the going exchange rate). Then there were other contracts stipulating a 4.8 percent commission rate to be paid by several Spanish companies who won a public works contract worth 1.85 billion euros on a project to remodel Caracas’ metrorail or $88.8 million in commission. In both cases, remittances were made to former high-ranking officials of the Venezuelan government.

Sepblac has been investigating Banco Madrid since April 2014 but the bank continued to operate as usual and the Spanish government had not taken any measures based on the investigation until the United States published a harsh report against its Andorran parent company, BPA. Then the Bank of Spain intervened in the Spanish affiliate and investigators decided to suspend payments thus freezing the savings accounts of thousands of customers.

The report makes note of commissions from Duro Felguera and other Spanish entities

The Sepblac report includes operations involving several Venezuelan nationals which should have been reported to Spanish authorities and subject to special inquiry on suspicion of possible money laundering activities. Former energy vice minister and ex-president of the public company Cadafe Nervis Gerardo Villalobos is mentioned in the excerpts shared with EL PAÍS. Other prominent names include Javier Alvarado Ochoa, former vice minister of electrical development and ex-president of Electricidad de Caracas (EDC); Carlos Luis Aguilera Borjas who, according to the report, “is an old captain of the Venezuelan army and member of Hugo Chávez’s inner circle, whom he served as bodyguard” According to El Mundo newspaper, which broke the news of the Venezuelan officials implicated in the Banco Madrid corruption case, former interior vice minister Alcides Rondón is also under investigation though his name does not appear in the excerpts obtained by EL PAÍS.

“Evidence of money laundering”

Sepblac, which falls under the leadership of the Ministry of Economy, lists the evidence against Banco Madrid’s clients and highlights six operations that show “evidence of money laundering.”

Sepblac says Nervis Gerardo Villalobos justified the funds sent to his Banco Madrid account by producing two consulting contracts for work done in the electricity sector for two companies he and his wife own - operations which confused investigators. The first contract was signed in 2010 between Kingsway Lda, a company held by Villalobos, and the American firm Miami Equipment & Export which hired Kingsway to provide consulting services worth $9.5 million. “The fact that the bills were paid to a bank account in Spain and that there is no movement on that account to point to the existence of real consulting services provided to Kingsway Lda draws attention,” the report says.

In 2011, a Villalobos-owned company called Ingrespre signed a second contract ceding its position in a previous deal with Técnicas Reunidas Terca, C. A. to the Spanish company Duro Felguera. The original contract was signed in 2008 to assist the Spanish firm with “a possible contract for the construction of a combined-cycle thermoelectric power plant of 1,080 MW (Termocentro).”

Two multimillion-dollar commissions

“Despite the fact that consulting is an activity in which the experience and professional profile of the consultant are fundamental elements, neither the contract nor any other document at Banco Madrid offers any reasonable justification for such an important alteration in the contract such as a change of consultant,” Sepblac notes. The report also says the fact that the contract stipulates that “the substance of the advice subject to this contact will be, generally, delivered orally” was a red flag. The 4-page 2008 contract calls for $50 million in payments to be made to Duro Felguera. The possible public works contract for the thermoelectric power plant from Electricidad de Caracas carried a 5.5 percent commission rate. Yet, according to a 2009 addendum by Duro Felguera, the contract was worth 1.5 billion euros which means commission would have reached 82.5 million euros, more than $100 million at the going exchange rate.

According to Sepblac former vice minister of electrical development Javier Alvarado appears to have ties with Villalobos based on media reports. And, given their relationship, the fact that he has been a civil servant in his country and offers no explanation for opening a Banco Madrid account, his banking operations should have been reported to Spanish authorities and subject to special inquiry on suspicion of possible money laundering activity.

Carlos Luis Aguilera Borjas, another client who has come under suspicion, “is an old captain of the Venezuelan army and a member of Hugo Chávez’s inner circle whom he served as bodyguard.” He also served as intelligence service director. Aguilera Borjas reportedly holds a 40 percent stake in two companies, Servicios para Metros (Semeca) and Tecnotren de Venezuela.

Semeca has formed two temporary mergers with Spanish-owned CAF, Dimetronic, Cobra, an ACS affiliate, and Constructora Hispánica, which has been implicated in the Gürtel corruption case. Tecnotren provides services to these same companies, having signed contracts with Cobra, Dimetronic and Constructora Hispánica to assist them on a project to remodel and modernize metro Line 1 in Caracas. The contracts stipulated a 4.8 percent commission for Aguilera’s company. “The fact that three companies contracted the same consultant, though for different purposes, and that all three settled on a variable compensation rate and not a fixed one even though remuneration is identical, among other factors, draw attention.”

On October 3, 2008, the Venezuelan government awarded a contract worth $1.85 billion to a consortium headed by CAF in which Dimetronic, Cobra and Constructora Hispánica participated to remodel Caracas metro Line 1. A 4.8 percent commission would mean $88.8 million.

The Sepblac document also shows other suspicious operations - some of which involve clients who had already closed their accounts before the organization opened its investigation.


Translation: Dyane Jean François


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