INFODIO / [english] @alekboyd - who is Miguel Angel Capriles Lopez ? (Michu)

Miguel Angel Capriles Lopez: the thug who stole over half a billion dollars and got away with it.

Money. That was the first game that Miguel Angel Capriles Lopez asked his father for, when he was gifted his first electronic gadget. Miguel Angel Capriles Lopez* (aka Michu) is, quite possibly, the most powerful Venezuelan you never heard of. Only son of newspaper mogul Miguel Angel Capriles Ayala's* marriage with Carmen Cecilia Lopez Lugo (there were six other daughters), Michu was taken under his father's wing. His father's business empire -built from scratch- included Venezuela's most-read newspapers (Ultimas Noticias, together with El Mundo and Líder grouped under Cadena Capriles), Electricidad de Caracas' (EDC) largest block of shares (13.6%), and interests in banks and many other businesses. In 1967 Michu's parents separated, and in 1980 they legally divorced. In the period between 1967 and 1980, his father started another relationship with Magaly Cannizaro, that produced one son: Miguel Angel Capriles Cannizaro.* What would follow upon the patriarch's passing in 1996 between the two families, would become perhaps the best case study of violation to due process, theft, corruption, and collusion at the highest levels of government and judiciary seen in contemporary Venezuela. At stake a fortune of over $700 million, whose ultimate control was guaranteed through bribes and fraudulent means by Michu, his divorced mother Cecilia, and his six sisters.

Venezuelan law establishes that when a couple divorces all existing assets acquired up to that point (family estate) must be accounted for and divided. In 1980, after 41 years of marriage, Ayala's first wife received a number of valuable assets, her fair share of the family state at the time. Sitting in Caracas' registries there are documents demonstrating that a couple of buildings (Disconti and Granales), two houses, and a flat suited to Cecilia's “socioeconomic status” were transferred to her free and clear in 1980, upon signing an agreement with Ayala. All properties were located in Caracas. In addition, monthly cash disbursements were given to Cecilia.

In 1996, hours before Ayala's death on May 30th, Michu moved to gain absolute control of the family empire, one that had grown exponentially between 1980 and 1996, that is, during Ayala's second marriage with Cannizaro.

As per Venezuelan inheritance law, in the absence of a will, 50% of a family estate goes to spouse, and the other 50% is to be divided in equal parts between children and spouse. That meant that Cannizaro, as Ayala's wife, was the legal owner of 50%, plus one of nine parts of the other 50%, which, together with her son, Miguel Angel Capriles Cannizaro, entitled them to 61.1% of all assets owned by Ayala at time of death.

Before 1996, Michu was nothing more than Miguel Angel Capriles Ayala's son. He did a few dodgy deals with his sidekick Carlos Acosta Lopez, and even tried his hand with “banker” Juan Carlos Escotet, back then Orlando Castro's protégé. His role within Vadesa (his father's holding conglomerate) was most definitely not at the decision-making level, his work input did not, in any way, added to his father's estate. However Michu's actions to wrest control from his father's second wife and his half brother was nothing short of diabolical. Two days before his father's death, Michu had his mother (who had been living in Franco's Spain since 1967) file a legal complaint against his father, claiming that in 1980 -16 years before- she had not received her 50% of the marriage's estate, and therefore, she was entitled to 50% of Ayala's estate in 1996, an estate that was to be shared between the Cannizzaros and all children from Ayala's first marriage.

Never mind the fact that by 1996 Ayala had been legally married to a different woman for 16 years. Never mind the fact that in that period the size of Ayala's conglomerate had grown exponentially. But, more importantly, how could that claim be possibly justified, or indeed entertained by the courts, considering statute of limitations? If Michu, or his mother, were so dissatisfied with the way in which the family estate was distributed in 1980, why did they wait 16 years, until 1996, to make a claim?

Michu's mother argued that, despite having received millions of dollars in cash and assets upon divorcing Ayala in 1980, they had an agreement, a verbal agreement as no documentary evidence to prove its existence has ever been presented, that entitled her, in perpetuity, to 50% of all future businesses, gains, and assets that Ayala would have made from 1980 onwards, that is AFTER their divorce.

Any judge would have questioned such a ludicrous claim, and would have demanded a copy of such agreement, an agreement which effectively stripped Cannizaro, since 1980, of any future claim to Ayala's fortune. The claimed verbal agreement amounted to a de facto prenuptial between Ayala and Cannizaro, alas Ayala never signed a prenuptial with Cannizaro, nor Cannizaro was ever made aware by Ayala that such verbal agreement existed with Lopez. Furthermore, by 1980 Ayala hadn't yet acquired interests in EDC, Banco Mercantil, Sivensa, etc.

However preposterous and meritless the claim was the courts entertained it, despite existence of a properly registered legal document, signed by Cecilia and her four eldest daughters (Mayra Capriles de Sanson, Tania Capriles de Brillembourg, Miska Capriles de Machado and Perla Capriles de Morrison) in September 1979, renouncing any future claim to the family estate as it existed at date of signing (Sep. 1979). 

Click on image or here to read highlighted text and commentary on pages 3 and 4 of linked pdf, where Cecilia explicitly renounces, in 1979, to any future claim on Ayala's estate.

The courts wilfully ignored this crucial document, as well as subsequent transfer to a purpose-registered company (Inversiones Perkyta) of ownership of buildings, houses and flat (free and clear as described) as agreed with Cecilia -all duly and legally recorded in registries- due to Michu's political manoeuvring, assisted along the way by his father's trusted, in-house legal counsel (Victor Sierra), two of Caracas' most reputed law firms (Allan Brewer Carías and Angel Bernardo Viso), a group of friendly judges (led by Rafael Solorzano Escalante and a gang known as the Damascus Cartel), and contacts at the highest levels of Venezuela's government and judiciary.

In 1996, Ayala held all the stock of Valores y Desarrollos S.A. (Vadesa), a holding company with interests in many others. Michu's mother knew that when Ayala died, which happened on 30th May 1996 only two days after she filed her complaint against him, Michu and her other six children would become defendants in her action, together with Magaly Cannizaro and her only son. Cecilia (Michu's mother) was represented by Brewer Carias' law firm; six of her seven children were defendants represented by Viso's law firm; and her seventh child was represented by another firm (Aguilar), purporting in turn to be opposed to her six other siblings. The Viso firm prepared pleadings to be used by both Brewer Carias and Aguilar, who were meant to be opponents of Viso's clients. This included Viso's preparation of a complaint filed by Brewer Carias on behalf of his client. So three different law firms, pretending to represent opposing interests, colluded to obtain a default judgment for Michu's mother.

The way the fraud was perpetrated was this:

- the law firm representing Michu and five of his sisters (Viso), filed powers of attorney and defence letters at intervals, rather than in one go. The goal was to confound the Cannizaros.

- One lawyer from the Viso firm (Carolina Solorzano), representing at that time three of Viso's six clients, had requested some document from the court on July 11, 1996. Solorzano claimed she was acting on “behalf of the Lopez defendants”. Note that by July 11, 1996, the Viso law firm had not yet filed power of attorney for all six clients.

- The last of the six attorney's powers and defence (from Adelaida Capriles Lopez) was filed on September 17, 1996. That would have given Cannizaro and her son 20 court days to file their answer.

- The Cannizaros filed their answer within the established period starting on September 17, 1996.

- However, Brewer Carias' firm, representing Michu's mother Cecilia, moved for a default judgement, upon Adelaida's power of attorney filing, on the basis that answer from Cannizaro & son had not been filed within the allowed 20 court days, which they thought had started on September 17, but the court counted since July 11, as per Carolina Solorzano's actions purportedly on “behalf of the Lopez defendants.”

- None of the Lopez defendants ever bothered filing answers to their mother's claims.

- The court never informed the Cannizaros, nor issued requests for an answer, after Solorzano's request of July 11.

The judge that granted the default judgement on November 28, 1996 (Carlos Rafael Guia Parra) would later be discharged with the largest amount of accusations of corruption, misconduct and impropriety in Venezuela's legal history.

The Cannizaros appealed to no avail: the judge presiding the appeal process (Rafael Solorzano Escalante) was the father of the lawyer from Viso (Carolina Solorzano) that had misled the court claiming that she was representing Michu and five of his sisters ("the Lopez defendants"). The Cannizaros challenged this again, by requesting a panel to revise the decision. However, given that both Cannizaros and Lopez were all lumped together as co-defendants against Michu's mother, those on the majority (Michu and his six sisters) got to elect the panel, which reaffirmed the default judgement.

Then the Cannizaros went to the Supreme Court, to request another review, alas case was taken by Justice Rueda, another chum of Allan Brewer Carias with a remarkable record of sentences favouring the latter. Since the lower court had disregarded the answer filed by the Cannizaros due to its alleged lateness, Justice Rueda decidedly ignored pleas for revision, arguing the decision could only be revised on the basis of contested issues, and as no issues had been put forth by the Cannizaros and therefore not admitted in the lower court, no review could be made.

Having gained control of $700-million-plus Vadesa conglomerate, one of Michu's first moves was to remove the Cannizaros from Vadesa's board and those of its companies. Then stripping of assets and funds started in earnest.

While the Cannizaros desperately tried to have the courts revert the default judgement decision, Michu got his partner in crime, Carlos Acosta Lopez, to negotiate “sale” of 13.6% of EDC to Brown Brothers Harriman (BBH) of New York. The purpose here was simple: to move assets quickly out of Venezuela's jurisdiction, so that any reversal at the courts could not impede stripping of funds and assets. Through a Caracas brokerage firm controlled by Acosta Lopez (La Primera Casa de Bolsa), BBH “bought” Vadesa's 13.6% EDC stake for $158 million in November 1999. The transaction was riddled with irregularities. Although no money was ever paid, the deal was concluded in one day, when normally such transactions would take the better part of a week to clear. Caracas' stock market authorities, perfectly aware of the protracted legal battle for control of Vadesa assets, approved the deal, knowing that Vadesa's EDC stake was the crown jewel, the most valuable asset the holding had at the time.

Behind the scene, Michu had instructed a lawyer (Gustavo Mata Borjas) to form two BVI corporations (Allied Capital Investment Inc. and Power Eagle International Ltd.) that would ultimately receive all EDC shares purportedly bought by BBH. As instructed by Michu, BBH then converted EDC stake into American Depositary Shares (ADS), and transferred the lot to Allied Capital Investment Inc. and Power Eagle International Ltd. Thus the deal was nothing but a momentary parking of Vadesa's EDC stake through a pretend sale to BBH, which turned the stake over to the two vehicles Michu created to gain ultimate control. This achieved the purpose of taking Vadesa's EDC stake out of its board's control and Venezuela's jurisdiction, placing it directly into Michu's hands.

Then in June 2000, AES Corporation acquired Vadesa's EDC stake from the two BVI corporations controlled by Michu, for $269 million. Neither the $111 million difference, nor the original $158 million ever made it back to Vadesa's banks accounts. Despite having “sold” Vadesa's EDC stake to BBH in November 1999, AES Corporation negotiated the purchase of EDC shares in June 2000 with Michu, not with BBH. Furthermore, Michu was reconfirmed in March 2000 as chair of EDC board after having “sold” EDC stock to BBH.

Furthermore, one of the most important individual shareholders of EDC after Vadesa was Mr. Melchor Perusquia, holder of 4% of EDC. There's an affidavit from Mr. Perusquia (see pdf below) stating that on April 28th, 2000, the date in which AES made the first bid for EDC, he called Michu to ask what was Vadesa going to do with its stake in EDC. At that time Michu recommended Mr. Perusquia to tender his 4%, and said that Vadesa was going to tender its 13,6%, notwithstanding the fact that the holder in record of the shares was the Bank of New York and that the holder in record of ADS representing that percentage were Allied and Power. How could Michu be possibly negotiating and making such recommendations / claims to other shareholders at the end of April 2000, if he had “sold” Vadesa's EDC stake to BBH in November 1999?

To this day, BBH provides the Cannizaros with yearly tolling agreements related to its involvement in pretend purchase of Vadesa's EDC block of shares. BBH obviously knows what went on.

But Michu's plain robbery would not end just there. Other transactions also took place, namely Vadesa had an account with Lehman Brothers from which a sum exceeding $23 million vanished; Vadesa's account in Banco Mercantil Venezolano, N.V., exceeding $70 million also disappeared; Inversiones Capriles , C.A. a Vadesa-owned company, held money placements in Merrill Lynch worth in excess of $21 million as of May 1999; by June 1999 $15 million were withdrawn and by July 1999 the account balance showed $0.81 cents; Vadesa also had investments in Banco Provincial Overseas N.V., with some $37.9 million as of August 1999, which also went missing. The argument that Michu used with all the banks mentioned was that he needed the funds to meet obligations pertaining construction of a new building for El Mundo newspaper. Needless to say that stolen funds covered many times over Vadesa's real responsibilities in Venezuela at the time.

The numbers above would bring total of funds that Michu stole from Vadesa to some $420.9 million.

But then, Cadena Capriles, Vadesa's newspaper conglomerate behind Ultimas Noticias, El Mundo and Líder, was recentlysold by Michu, allegedly to an English group (Hanson Asset Management) for some $140 million. As with all things related to this case though, reality is rather different. One of the most corrupt Bolivarian “bankers”, Victor Vargas of Banco Occidental de Descuento (BOD), “bought” Cadena Capriles from Michu, through an arrangement that served three purposes: the first to obscure identity of ultimate controlling party of Cadena Capriles (i.e. the Maduro regime); the second to get Maduro's regime approval for a merger between BOD and CorpBanca (another Vargas bank) that had been frozen for a while; and the third a Supreme Court reversal of a divorce ruling against Vargas.

As BBH previously, Vargas is but a mere front, this time for the Maduro regime in this “acquisition”. Explicit prohibitions about bankers owning media, and foreigners owning newspapers printed in Spanish were disregarded by chavista regulators. Every single piece of current Venezuelan legislation regulating ownership of media were violated in the process. Amazingly, no international media outlet has picked up on this.

The sale of Cadena Capriles would bring amount of stolen assets and funds by Miguel Angel Capriles Lopez to a staggering $560.9 million. That, in case of doubt and as all quoted amounts, is U.S. dollars. Over half a billion U.S. dollars.

All the while, Hugo Chavez happened. Michu's politicking was exposed not long ago by former Supreme Court Justice Luis Velasquez Alvaray (currently exiled in Costa Rica), admitting that Chavez had given him precise instructions during a telephone conversation to rule against the Cannizaros in another appeal. This order may have been due to the fact that, for years, the Chavez government printed up to 80% of its political propaganda in Cadena Capriles' newspapers, by far the most-read in Venezuela. The amounts made during the period, which should have made part of Vadesa's income through its newspapers commercial operations, have never been duly reported to the Cannizaros. Dividends were never paid by Michu, neither to the Cannizaros nor to his own sisters.

Needless to say that the Cannizaros, rightful owners of 61.1% of Vadesa, have never gotten redress in Venezuelan courts, nor a fair share of what's legally theirs.

Nicolas Maduro's regime is well aware of this situation. In a private meeting last October, Minister of Communications Delcy Rodriguez offered the chair of Cadena Capriles' new board to Miguel Angel Capriles Cannizaro, claiming “President Maduro knows no justice was ever made in your case. This is your chance to get some redress.”

Michu has maintained all along that the Cannizaros have lost every single attempt at reverting the initial default judgement. What he fails to say is that since getting control of Vadesa and other family companies through fraud in 1996, he has tried many different types of rapprochements with the Cannizaros, including offers of millions of dollars -a fraction of their rightful stake- made either directly, or through proxies, such as über chavista Jorge Rodriguez. If he's so confident of the legality of initial process by which he got control of Vadesa, why would he even bother to offer hush money and bribes, so the Cannizaros ceased in their attempts to get what's legally theirs?

This is how Venezuelan “businessmen” make their money. The ones that don't loot public coffers, like Derwick, steal it from their families. Michu could be unique in that he has misappropriated millions from both public and private sources (his financial deals with Escotet, Armando "Pelón" Capriles and the Brillembourgs -remember the Tower of David?- will be exposed in subsequent posts). Save a handful of notorious examples, the common denominating factor of Venezuela's “entrepreneurial class” is that value is never added. That's the curse of the petrostate, or the curse of the Conquistadors: everyone feels entitled to plunder the riches, no matter how or where.

Nowadays, Michu is invested in banks (with former partner in crime Escotet in Abanca in Spain, Banco Mercantil in Venezuela and the USA and Legacy Bank also in the USA); he continues to chair Grabados Nacionales in Venezuela; his name appears associated with Siapa Rentals, Fernando VI 10, Invecap Inversiones Inmobiliarias, Oikos Cap Gestiones Inmobiliarias, Inmobiliaria El Platanal, Inmobiliaria Atabapo, Inmuebles Padamo, Ultimeña, Ventuari Rentals and MACL Castellana, all real estate companies in Madrid; Leblac Enterprises in Panama; Unit 702 Tower Residences, Morrison Properties and Saludarte in Miami; gossip has it that he is funding Nelson Bocaranda's website (oddly Bocaranda wouldn't reply to my questions in this respect) and is said to be looking to acquire a major media publication in Spain; in sum, there's a lot that can be done with someone else's half a billion dollars.

After pulling what amounts to perhaps the largest fraud done to a private corporation by an individual -rather than by the State- in Venezuelan history, Michu goes about his affairs, both domestically and internationally, as if he were a legitimate entrepreneur. No Venezuelan newspaper or website has ever dared print the sordid tale of intrigue, collusion, corruption, conflict of interests and outright theft that defines Michu's career, a sign, no doubt, of a press that has never been truly independent. If Rupert Murdoch and Robert Maxwell could have ever produced an heir it would be Michu.

*Please note difference between the three main characters: 1) Miguel Angel Capriles Ayala, patriarch and founder of Vadesa; 2) Miguel Angel Capriles Lopez (Michu), only son among seven children from Ayala's first marriage with Cecilia (known as Perla); 3) Miguel Angel Capriles Cannizaro, only son from Ayala's second marriage with Magaly.