Venezuela: Chinese Companies Paid Large Bribes to Win Major Infrastructure Bids
Chinese companies paid millions of dollars in bribes in order to win large scale contracts in Venezuela's infrastructure and energy sectors.
By Josefina Blanco
As if the corruption scandals of the Venezuelan regime that have come to light in recent days were not enough, the Spanish newspaper El País has revealed yet another scandal. During the presidency of the late Hugo Chávez Frías, companies from the People’s Republic of China paid USD $200 million in bribes to obtain contracts in the South American country.
On November 27, the former treasurer of Venezuela and former Chavez deputy, Alejandro Andrade, was sentenced to ten years in prison by a US court for money laundering. The retired lieutenant confessed to receiving USD $1 billion in bribes.
Now it has been revealed that a Chavista businessman, Diego Salazar, took advantage of a megacontract amounting to USD $20 billion, to personally enrich himself. The massive deal was signed in 2010, by China and Venezuela. Despite all the support that the government of Beijing has given to the Chavez regime, their companies were not exempted from having to pay large scale bribes in order to win contracts in Venezuela.
The binational agreement involved the construction of energy infrastructure in the South American country and is known as the “Great Volume.” The development was part of a plan conceived in 2007, when both countries signed the Binational Cooperation Fund agreement.
According to the agreement, China granted a loan to Venezuela through the Development Bank of China (BDC), while the Economic and Social Development Bank (Bandes) was in charge of managing the funds.
This new development was part of the investigations carried out by the authorities of the Principality of Andorra during the investigation into Banca Privada d’Andorra (BPA), an entity that was closed in 2015 for money laundering.
Businessman Diego Salazar and his co-conspirators put USD $200 million in 11 accounts at BPA, money which came from bribes charged to five Chinese companies.
Salazar, who is in custody in Venezuela, was prosecuted in September for plundering 2 billion euros from state-owned Petróleos de Venezuela (PDVSA) along with 27 other people, including Nervis Villalobos and Javier Alvarado, Chavez’s former energy ministers.
But this Venezuelan insurance entrepreneur did not pilfer this gargantuan amount thanks to his skills as a businessman, but rather by virtue of his close connections with high-ranking figures in the Chavez government. He is the cousin of Rafael Ramírez, who was Minister of Energy and Petroleum of Venezuela between 2004 and 2012 and also presided over PDVSA.
Ramírez, now a staunch opponent of the Maduro regime, lives in exile, and constantly criticizes the Venezuelan dictatorship under the argument that Maduro is destroying the “legacy” of Hugo Chávez.
According to El País, Andorran judge Canòlic Mingorance revealed that Salazar contacted Chinese companies to facilitate business agreements in exchange for illegal bribes. To do this, he used the first secretary of the Venezuelan embassy in Beijing, Luis Enrique Tenorio. To hide the ill-gotten proceeds, Tenorio created a Panamanian company, Phomphien Corporation, and opened an account in the BPA of Andorra.
Salazar hid the Venezuela-China-Andorra bribery network through the company Highland Assets and a collaborator, who signed a confidential agreement with the Chinese company Camc Engineering by which it “advised” the company during the course of obtaining the millionaire contracts with the PDVSA and Corpoelec (state electric power company), within the framework of “Great Volume” projects.
The text of this confidential agreement was used by Judge Mingorance to form the basis of the state’s accusations, and to prosecute Salazar for money laundering.
According to this document, if the Chinese obtained contracts worth USD $200 million, Highland Assets would receive a net 10% of the revenues generated for Camc Engineering. “This is a totally abnormal contractual relationship for the consultancy sector, where the payment in question is not for the preparation of reports or consulting assistance, but an arbitrary amount to be awarded,” says a recent decision of the Andorran judge reviewed by El País.
The flow of millions of dollars
According to the Spanish newspaper, for each project awarded, a new deposit was made into the Andorran account: USD $1,000,000 for the Orinoco Delta project; USD $400,000 for the Guárico River project; USD $600,000 and USD $1,000,000 for the Orinoco River project; and a further USD $3,000,000 for various other projects in Fábrica, Tiznado, Píritu Becerrra, Delta Orinoco, and Guárico. Between 2011 and 2012 the accumulated amount totaled USD $106 million.
Other similar contracts signed between Chinese companies and Salazar, together with his collaborator, Luis Mariano Rodríguez, include one with China Machinery Engineering Corporation (CMEC) for the construction of the emergency electric station in the state of Zulia, for which Salazar was rewarded with USD $55 million and Rodriguez with USD $9.5 million. The money was deposited into the Andorran account of the Dutch company Investments and Consulting, according to El País.
As if this were not enough, Salazar also collected USD $50 million after signing a contract between Sinohydro Corp. Ltd and PDVSA for the construction of the La Cabrera plant. Using a company he created in Panama, he jointly signed a contract with Francisco Jiménez Villaroel, manager of the PDVSA office in China, to help Asian companies enter the Venezuelan market. Eudomario Carruyo, the then CFO of PDVSA, also received USD $7 million in his BPA account.
Salazar received other “commissions” from Chinese bus manufacturer Yutong Hongkong Ltd (USD $11 million) and oil company Shandong Kerui Petroleum (USD $17 million).
The gall was that, in 2015 during the Andorran investigation, Salazar evaded the accusations against him saying that it was the Chinese authorities who had “the power to decide which companies were awarded the projects.” But as the facts show, apparently Salazar and his henchmen had the real power.