Venezuela says 40 percent of dollar buyers are shell companies

CARACAS (Reuters) - Phantom businesses account for about 40 percent of buyers of dollars through Venezuela’s currency control system this year in a massive fraud costing the OPEC nation billions of dollars, the country’s intelligence chief said.

Miguel Rodriguez Torres, who is also interior minister, said a new crackdown on the currency con would spare neither corrupt officials nor unscrupulous businessmen.

State currency agency Cadivi sells dollars at the official rate of 6.3 bolivars through a cumbersome application process.

But greenbacks fetch 10 times that on the black market - offering astronomical returns for well-connected fraudsters who offer bribes to Cadivi officials to obtain licenses and buy dollars for largely fictitious imports.

The government says Cadivi has sold some $33 billion to local businesses so far this year to import goods, and officials have acknowledged that corrupt Caidivi officials take kickbacks from those.

“From the information I have, I think ‘briefcase companies’ must be reaching more than 40 percent,” Rodriguez, an army major-general, told Reuters in an interview using the local term for phantom or shell firms.

“What a lot did was just take the dollars and bring absolutely nothing, or bring half of the goods, or falsify the prices ... They did thousands of tricks.”

All businessmen who received Cadivi dollars in 2012 and 2013 would have to produce tax and sales documents to prove they had in fact imported goods, he said.

“It’s a massive drain. A disaster for the economy ... Without a doubt, there must be (Cadivi) officials who are accomplices.”

President Nicolas Maduro blames the problem on capitalist profiteers he says are in league with right-wing politicians and ideological adversaries in Washington.

But he steadfastly refuses to consider lifting the mechanism that is seen as the lynchpin of late socialist leader Hugo Chavez’s state-driven economic policy.

The government acknowledges that Cadivi officials take kickbacks to authorize dollar sales to merchants who flip the greenbacks for as much as 1,000 percent profit, diverting hard currency from imports of machinery and raw materials.

That fuels embarrassing shortages of products ranging from auto parts to wheat flour to toilet paper while reducing the incentive for businessmen to make an honest living.


Maduro recently named a presidential commission to investigate Cadivi fraud.

As part of that sweep, Rodriguez said he plans soon to expose two Venezuelan businessmen secretly filmed in Miami boasting of their multi-million currency fraud operations.

All businessmen who received Cadivi dollars in 2012 and 2013 would have to produce tax and sales documents to prove they had in fact imported goods, he said.

Maduro last month ordered merchants to slash prices of consumer goods in an effort to slow annual inflation of 54 percent, accusing importers of getting dollars through Cadivi and then marking up products as if they had been acquired with black market dollars.

In the interview, conducted Wednesday, Rodriguez said 30 businessmen were in jail while another 63 were awaiting trial on charges ranging including usury.

Critics say the government has not published a list of which companies received dollars through Cadivi this year, making it impossible to know who is over-charging and who is simply struggling with a spiraling black-market exchange rate.

Others point out that legitimate businesses seeking Cadivi dollars almost always have to pay copious bribes and hire “fixers” to speed up requests, meaning even the cheapest dollars can cost double or triple the official exchange rate.

Opponents say Maduro’s policies are short-term populism bound to create shortages in early 2014. But polls indicate they helped him achieve relatively healthy results in last weekend’s local elections.

Editing by Brian Ellsworth and W Simon