Thursday, June 11, 2015

Venezuelan development funds allegedly misused in Nicaragua (June 11, 2015)

Since 2007 Venezuela has provided Nicaragua with subsidized oil, allowing the impoverished country to raise funds for development projects. But the agreement has also created lucrative business opportunities for President Daniel Ortega and his family, according to an in-depth investigation by Nicaragua's Confidencial and Venezuela's Armando.

Through Venezuela's Petrocaribe program, Nicaragua receives 10 million barrels of subsidized oil from Caracas. Fifty percent of the cost must be repaid in 90 days, while the other half is a long term loan to Nicaragua to finance infrastructure and social spending.

Albanisa (Alba de Nicaragua, S.A.) was created in 2007 to manage the Venezuelan oil shipments. It was constituted as a private company in order to circumvent congressional oversight of how it spends the development funds, according to the investigation. 

Albanisa dominates several key industries in Nicaragua, according to the report, including gas sales and generation and distribution of electricity. It's a key player in food exports to Venezuela, a major client of Nicaraguan producers. Authors Octavio Enríquez, Iván Olivares, and César Bátiz allege that in the past eight years the Ortega administration has privatized $3,047 million coming from Venezuela, from a total of $3,423 million in state cooperation (which includes funds from the Venezuelan Development Bank, Bandes). They say the Venezuelan administration is complicit in this cooptation.

Since 2010, just over 60 percent of the Venezuelan oil funds are used for investment in private enterprise. An average of $302 million per year were invested into for-profit enterprises between 2010 and 2014, according to one of the report's sources. The remaining $155 million were destined to social projects according to the government, but are called "cuasi-fiscal operations" by the IMF.

Venezuelan Pdevesa holds just over half of Albanisa's stock. The government is represented on the board by former president Hugo Chavez's cousin and the current Minister of Oil.

The report details loans tendered to Ortega family memebers in order to purchase a three star hotel in Managua and develop a cattle raising enterprise. Over $10 million were used to purchase two television channels, which are run by Ortega's offspring, according to the report.

News Briefs

  • Perú's Convoca published an in-depth report on allegations of mismanagement regarding the construction of the Interoceanic highway, built by Brazilian companies which received support from the Brazilian Development Bank (BNDES). It's part of an investigation into BNDES by BRIO (see Tuesday's briefs).
  • Peruvian President Ollanta Humala is seeking powers to rule by decree on issues ranging from mining projects to Amazon river-boat services, an attempt to revive an economy that still has the lowest income per capita of any major Latin American nation, reports Bloomberg.
  • Demonstrators in favor and against a new inheritance law in Ecuador took to the streets for a third consecutive night in Quito. Though police tried to keep the factions separate, there were reports of conflicts, according to AFP.
  • The U.S. House of Representatives voted to eliminate country-of-origin labels on beef, pork and chicken sold in the U.S., hoping to avoid a legal battle with Mexico and Canada. A series of rulings by the World Trade Organization found that labeling discriminates against animals imported from those countries, reports the Wall Street Journal.
  • Brazil's Workers' Party is kicking off a three-day convention today as internal divisions give conservative parties an edge in Congress and in upcoming municipal election, reports the Wall Street Journal.
  • Brazilian President Dilma Rousseff rejected sanctions against Venezuela at a meeting of the EU with the Community of Latin American and Caribbean States (CELAC) in Brussels. "We Latin American and Caribbean nations will not permit unilateral measures aimed at promoting a coup, nor policies aimed at isolation. We know that such measures are counterproductive, ineffective and unjust. As such, we reject the adoption of any kind of sanction against Venezuela," Rousseff said, according to Folha.
  • Despite huge demand for opium paste, which is used to produce heroin, poppy growers in Mexico say they are squeezed by cartels that force them to sell at whatever price they dictate. The poppy business has become more lucrative and violent as a result of gang fragmentation and pressure from the authorities, reports the Los Angeles Times.
  • Brazil's Supreme Court struck down a law that allowed subjects of unauthorized biographies to block publication of or have removed from store shelves any book about their lives that was created without their consent, according to an AP piece.
  • Brazil’s Supreme Court voted unanimously Wednesday to strike down a sweeping 2003 law that empowered the subjects of unauthorized biographies to quash works they disapproved of.
  • U.S. remittances, sent through Western Union, are helping fuel micro-businesses in Cuba, according to the Miami Herald
  • And the New York Times has a piece on web entrepreneurs who hope to export their services to the U.S. -- if they can get a reliable internet source.
  • The Association of American Chambers of Commerce in Latin America will be holding a regional conference in Port-au-Prince, gathering 23 different American Chambers, which together represent more than 20,000 companies and 80 percent of U.S. investment in the region, reports the Miami Herald.
  • Mexico’s PEMEX has discovered significant oil fields in the shallow waters of the Gulf of Mexico and expects to quickly increase production to an estimated 200,000 barrels of crude oil a day, according to the Wall Street Journal.
  • Citizens of Peru and Colombia will be able to visit Europe without a visa thanks to an agreement between the two countries and the EU. The agreement is something of a European vote of confidence in the two countries, reports the Wall Street Journal, as it means EU officials concluded risks such as illegal immigration and violent crime were low.
  • Argentina and U.K. leaders crossed verbal swords over the Falklands/Malvinas. U.K. Prime Minister David Cameron said it was unacceptable for Argentina to threaten companies seeking to invest in in the seas around the islands. Argentina has started legal actions against companies drilling for oil and gas off the Falklands, which the U.K. characterizes as bullying. Reuters reports that Argentine President Cristina Kirchner said "the prime minister's response was irate, almost ill-mannered."

  • Jailed Venezuelan opposition leader Leopoldo Lopez is refusing to attend his court dates, due to his deteriorating health after 17 days of a hunger strike demanding release of political prisoners and an election date, reports AP.

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