@AlekBoyd / INFODIO: How to steal 70 Million dollars in a day: Derwick Associates Style

There are many things we still don't know about Derwick Associates, but there's one we do know: Alejandro Betancourt (left), Pedro Trebbau and Jeff Canon (right) swindled -at the very least- $70 million USD from the Venezuelan State.

Do readers remember Adam Kaufmann? Former New York's District Attorney's Office über prosecutor cum Derwick Associates lawyer, who went on the record, on the Wall Street Journal no less, saying "We are a transparent company and have nothing to hide"? Well, vindication's a bitch, isn't Adam? As it turns, someone has leaked documents straight from within Derwick Associates' office in Caracas, and what do we find about this "transparent company"? We find a $277 million purchase order from BARIVEN (a PDVSA subsidiary), addressed to Pedro Trebbau (one of Derwick Associates main execs) for a bunch of turbines. We also find a $207 million "Equipment Purchase Agreement" between Alejandro Betancourt (another of Derwick Associates execs) and Jeff Canon from Energy Parts Solution (a division of ProEnergy Services). What else do we find? We find that both documents refer to the same equipment and have the same date: December 30, 2009. Which means, in Kaufmann's own words, it is "transparent" that in concurrent transactions that took place the same day Derwick Associates stole $70 million from BARIVEN. Take it away Adam, all the way to discovery mate!


UPDATE: in my inbox this morning a link to an article (in Spanish) about another $66 million deal between Jeff Canon's Energy Parts Solution and CORPOELEC, where it is laid out, transparently, how Canon's company paid $9.3 million worth of commissions to Omar Petit ($1.3 million) and Khaled ($8 million). Long time readers of my blogs perhaps will remember who that Khaled may be. But the interesting point is the booking of that bribe payment in the pricing summary provided by Canon's Energy Parts Solution (see below). How will Jeff Canon justify / explain to U.S. authorities currently probing his ProEnergy company those payments? Furthermore, if evidence of payment of bribes has already emerged in a different deal, who is to believe that Canon, and/or Betancourt, and/or Trebbau, and/or Francisco D'Agostino, and/or some other associate in their stead, did not incur in exactly the same practice of paying bribes to Venezuelan officials to get contracts without bidding? Derwick claims in its defense in various lawsuits that all contracting done with the Venezuelan State was above board, open, public and legitimate, despite the fact that there is no evidence to support that claim anywhere. Derwick could have well been contracted under special circumstances (emergency decree), which allow officials to grant contracts directly, without much ado. But if that was the case, the question -considering Derwick's absolute lack of a verifiable track record- is: if not through nepotism and bribe payment, how come 12 contracts worth billions were granted to them directly?

INFODIO / [english] NY District Court Judge orders discovery in lawsuit against Derwick Associates by @alekboyd

A tweet alerted me yesterday to the latest on the Otto Reich lawsuit against Derwick Associates in New York. District Judge Paul Oetken on 18 of August dismissed "Claims I and II (RICO) and VII (civil conspiracy)." And added in his conclusions: "Defendant D’Agostino’s motion for leave to file a sur-reply (Docket No. 57) is granted. The parties shall confer on the appropriate scope and schedule for jurisdictional discovery and submit a joint letter to the Court with a proposed schedule on or before September 12, 2014."

I am not a lawyer, and I don't claim to be an expert on legal matters. However I find surprising how Judge Oetken's decision has been reported in Venezuelan media. Those following the case in Venezuela must be thinking that Derwick Associates actually won the case, when what I think happened is quite the contrary.

Derwick Associates' strategy all along has been to have the whole thing dismissed, precisely to avoid discovery. Why? Because discovery can shed light on tonnes of dirt. Discovery can uncover, for instance, all of Derwick's dealings with JP Morgan prior to Eduardo Travieso's sacking, i.e. money laundering. Similarly, it can reveal exact amount of money wired by Derwick to ProEnergy Services, which will give an inkling on differential between monies charged to the Venezuelan State and monies paid for the actual work, i.e. overprice. It could potentially show transfers to and from other banks into Derwick's, i.e. Davos Financial, Banesco, and crucially from Derwick's to those of corrupt Venezuelan officials. Discovery could also reveal exact nature of contracts with ProEnergy Services, and its subsidiaries, and other American companies that have been contracted by Derwick. 

Discovery allows for depositions, and also opens up the possibility to present questions, ask for documents, etc. What's Derwick going to do when asked to provide contracts with Venezuelan institutions, that according to some illegal arrangement it can not do so due to equally illegal "confidentiality clauses"? 

And bear something in mind: all of this will be reported by non-embedded media, like the Wall Street Journal, whichrecently revealed what I have been saying all along: that US Federal Agencies are on Derwick's case. Whatever El Nacional and others publish in Venezuela, for internal consumption, is utterly irrelevant. For this lawsuit is not being dealt with by Luisa Ortega Diaz, but by truly independent courts that won't bend to telephone calls from above.

More ominous still, Judge Oetken allows the case to proceed while Derwick is under investigation by Federal and New York State authorities (so there is jurisdiction). This is far from over for Derwick...

INFODIO / why are boligarchs are getting a free pass [English] by @alekboyd

Imagine you are Victor Vargas, and you get up one morning to read a piece in Bloomberg Week that claims that your bank has $19.3 billion worth of assets, when in reality your bank's assets are $2.4 billion. Imagine you are Juan Carlos Escotet, and after you've lied your way through a rather trying bidding process that ended up with an acquisition in Europe, you find out that actually everyone took your word about your own wealth at face value without question.

It is difficult to imagine what goes for good old journalism these days in newsrooms manned by people that should know better. Or for scrutiny in official institutions. But the fact is that we are seeing a worrying trend. Boligarchs are rapidly engaging in Slimification (the process by which well connected people legitimize their ill gotten wealth in the developed world) without trouble. Of course, money has no odour and not a single enemy these days, alas laundering corruption money robs the future of millions across the developing world.

Imagine now what could be done, for instance, in a place like Venezuela, if all the capital that has been siphoned out of that country would have been invested and kept there. Bloomberg Week quoted a Vargas' yesman (Diego Lepage) claiming that Vargas' bank employs 15,000 people in Venezuela. How many more could have been employed, had Vargas invested all of his ill gotten wealth in Venezuela? How many more jobs could Juan Carlos Escotet had created had he decided to invest his "billions" at home, rather than in Spain?

It is painful to see these thugs, going about their international affairs as if they were proper, upstanding, captains of industry. As if they had actually created wealth, rather than stealing it. We aren't talking about Steve Jobs types here, for the characteristic that defines the entire Boliburgeoisie is its ability to exploit Venezuela's mercantilism. That's it. There's no wealth creation, only patronage. Given the Venezuelan State control of the country's oil and its income, what we have is an "entrepreneurial class" modeled by Russia's post-Perestroika, getting their official chums to give them, without any form of transparent oversight or bidding, access to huge amounts of public money. Any imbecile can make a fortune playing with State's resources.

The truism that Victor Vargas has been rich all his life, or that Juan Carlos Escotet is a born again Rockefeller doesn't have a leg to stand on. Amoral opportunism is what defines them. Again and again they have bitten the hand that fed them. Neither can say that they built their fortunes from scratch (Vargas on the back of the Santaellas and Escotet on the back of Orlando Castro). When Spanish press, or indeed Bloomberg, print as legitimate the fictitious exchange rate of $1 = 6.3 BsF fed to them, chances of accountability take another hit. By way of example: it would have been very different if Spanish and EU authorities would have assessed Escotet's bid for Novagalicia taking the actual SICAD 2 rate of $1 = 49.97 BsF, rather than the impossible to obtain $1 = 6.3 BsF. Had that rate been applied to Escotet, his banks assets aren't "$35 billion" but rather $4.8 billion. Ditto with the $19.3 billion worth of assets that Bloomberg Week assigned to Vargas' BOD.

Years ago there was a joke in some Caracas circles about Gustavo Cisneros' yearly tantrum due to Forbes' underestimation of his fortune. Vargas and Escotet aren't suffering that, are they? Still, we must wonder what sort of play is going on behind scenes. Recently, El Universal (Venezuela's oldest newspaper) was sold to a dodgy €3,500 Spanish company, whose only shareholder didn't even know he was involved in the deal. Interestingly, Escotet's Banesco pops up in that network. Before that, Cadena Capriles (Venezuela largest newspaper conglomerate) was sold to Hanson Asset Management, a little English firm. In this instance Vargas' lieutenants and bank were involved. Current Venezuelan legislation explicitly prohibits foreign ownership of newspapers printed in Spanish, or indeed involvement of banks/bankers in media. And yet, those irresponsibly attributing size of fortunes don't seem to have an interest in reporting illegal major media acquisitions. 

So why are Boligarchs getting a free pass?