Reports from Cuba’s Venezuela: There’s too much money to be made in the Bolivarian Revolution Part II: The Cadivi Rackets

Via The Devil’s Excrement:

There IS Too Much Money To Be Made In The Bolivarian Revolution Part II: The Cadivi Rackets


The Cadivi rackets are much harder to quantify. It has a long history of schemes and variety, but each one of them has its peculiarities and details that make it difficult to quantify. There is, of course, the statement made by both former Minister Giordani and the former President of the Venezuelan Central Bank Edmee Betancourt, that in 2012 alone, “briefcase companies” (Compañías de Maletín) had received US$ 20 billion for imports that never materialized in what is in the end the ultimate corruption scam: Get foreign currency at Bs. 6.3 to import stuff that you will not even attempt to bring into the country. Sell enough of the foreign currency at the parallel rate, which is about ten times larger to pay the Bolívars and you keep the rest in foreign currency.

Nice work if you can get it.

But let’s look a little bit at the history of rackets within Cadivi. There are many stages in them. Like so many of the rackets of the Bolivarian revolution, they started small and grew and became even more daring:

-The bring the empty container racket.

This is the earliest racket I remember hearing about. You would get some foreign currency to import something, say barrels of some expensive chemical compound use in some industrial process. Bring a few hundred barrels of the stuff with invoices and bills of lading and the like, but the containers only have water. Or bring containers of empty computer boxes. Something that has value added, so the profit is maximized.

This particular racket required little or no participation of Government authorities at CADIVI. You brought bona fide import permits; you maybe even brought a small fraction of the stuff. You just needed to pay the National Guards and the custom employees when the stuff arrived so that it would no be checked thoroughly (A couple of times mistakes were made, empty containers were discovered).

My favorite anecdote of this was overheard in a business class commercial aircraft leaving Hong Kong by a Venezuelan flying next to some pro-Government importers who had no inkling there was another Venezuelan nearby. One guy explained to the other one how he had imported 400,000 key chains made in China with a Chavez’ figurine, for which he got from Cadivi two dollars a piece. The key chain actually cost only 10 or 15 cents, giving the loudmouth a huge profit. On top of that, he boasted, he gave the key chains to the same military official that helped him get the foreign currency for the racket, to use in Chavez’ 2006 Presidential campaign.

You see, in these earlier rackets, those involved had to basically fake the imports, because the difference between the official rate of exchange and the parallel arte was not huge, thus leaving little room for charging commissions and the like.

These type of racket is very hard to quantify but at some point the Government claim to be investigating some of them in the 100-200 million dollar range. How many were there? Hard to tell. Let’s say only a few, five to six in the US$ 100 million range. Total, less than a billion. Let’s round it off at a billion.

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