Corruption on a Bolivarian scale

There wasn’t much that set Aban Pearl apart from any number of oil and gas exploration rigs — that is, until the massive structure sank off the coast of Venezuela in April 2010. More than two years after the fact, an investigation has shown that Venezuela’s state-owned oil giant, PdVSA, agreed to pay more than ...

626288_aban_pearl.jpg
626288_aban_pearl.jpg

There wasn't much that set Aban Pearl apart from any number of oil and gas exploration rigs -- that is, until the massive structure sank off the coast of Venezuela in April 2010.

More than two years after the fact, an investigation has shown that Venezuela's state-owned oil giant, PdVSA, agreed to pay more than twice as much for the rig's services than its owners stood to receive in rental fees. In fact, PDVSA agreed to pay $700 million to an intermediary that turns out to be a shell corporation controlled by well-connected players within the Bolivarian elite (some of whom, interestingly enough, now work out of New York City).

It should, by any reasonable reckoning, be a massive scandal. But in fact, the revelations have caused barely a ripple. No ministers have been called to testify, no officials exposed to public scrutiny.

There wasn’t much that set Aban Pearl apart from any number of oil and gas exploration rigs — that is, until the massive structure sank off the coast of Venezuela in April 2010.

More than two years after the fact, an investigation has shown that Venezuela’s state-owned oil giant, PdVSA, agreed to pay more than twice as much for the rig’s services than its owners stood to receive in rental fees. In fact, PDVSA agreed to pay $700 million to an intermediary that turns out to be a shell corporation controlled by well-connected players within the Bolivarian elite (some of whom, interestingly enough, now work out of New York City).

It should, by any reasonable reckoning, be a massive scandal. But in fact, the revelations have caused barely a ripple. No ministers have been called to testify, no officials exposed to public scrutiny.

Why? Because in the upside-down world of Bolivarian petro-kleptocracy, it wasn’t Venezuela’s anti-corruption agency that uncovered the scandal, or the police, or a newspaper’s investigative staff, or a major news network: It was just a single blogger looking up public records online from an old laptop.

A geologist who once worked for PdVSA long before the Chávez era, and now a U.S.-based blogger, Gustavo Coronel, specializes in reading PdVSA’s annual reports for signs of corruption. He pieced together a detailed map of the Aban Pearl scam — on a budget of zero dollars. Asked about the official government reaction to the revelations he has revealed about the case, Coronel responds laconically: "In a single word: Nothing."

And here we get to the core of the corruption problem gnawing away at Chávez-era Venezuela. It’s not just that the huge sums of money that flow through the oil industry render corruption on a frightening scale entirely commonplace; it’s that the government’s all-out assault on national institutions make it virtually cost-free to steal on such a scale, too.

To get a sense of the dynamics at play, look through Human Rights Watch’s latest report on Venezuela. The painstakingly-researched study documents the autocratic juggernaut that has left bloggers like Coronel powerless against the machinery of a corrupt state.

On the one hand, chavismo has worked to ensure tight political control of the country’s judicial institutions, from the Supreme Court on down. It has packed the National Prosecutor’s office with political loyalists, eliminated the National Comptroller’s Office’s capacity, and actually made Chávez chief of the Investigative Police (imagine President Obama appointing himself FBI director). The nation’s judicial institutions, in other words, are entirely neutered, leaving a whole caste of well-connected cronies effectively above the law.

At the same time, HRW documents the way the government has set out to achieve "communicational hegemony" by vastly expanding the number of state broadcasters, shutting down opposition TV and radio stations, and bullying those that persist into a cowed silence. What remains of Venezuela’s independent media simply cannot act as an anti-corruption watchdog anymore — broadcasters are simply too vulnerable.

And so the hallowed caste of above-the-law operators who set up obvious scams like the Aban Pearl are not just immune from official investigations — they’re immune from press scrutiny as well.

Coronel is not naïve about any this: He knows full well the scale of the apparatus he’s taken on. "I know the government isn’t going to investigate any of this," he says. "I just want to document what’s going on, to leave the evidence in place so that some day, in the future, somebody new can come in and do something about it." He’s certainly done his job as a documenter. As for the future he speaks of, looks like we’ve still got some waiting to do.

More from Foreign Policy

A propaganda poster from the 1960s shows Chinese leader Mao Zedong.
A propaganda poster from the 1960s shows Chinese leader Mao Zedong.

Xi’s Great Leap Backward

Beijing is running out of recipes for its looming jobs crisis—and reviving Mao-era policies.

A textile worker at the Maxport factory in Hanoi on Sept. 21, 2021.
A textile worker at the Maxport factory in Hanoi on Sept. 21, 2021.

Companies Are Fleeing China for Friendlier Shores

“Friendshoring” is the new trend as geopolitics bites.

German children stand atop building rubble in Berlin in 1948.
German children stand atop building rubble in Berlin in 1948.

Why Superpower Crises Are a Good Thing

A new era of tensions will focus minds and break logjams, as Cold War history shows.

Vacationers sit on a beach in Greece.
Vacationers sit on a beach in Greece.

The Mediterranean as We Know It Is Vanishing

From Saint-Tropez to Amalfi, the region’s most attractive tourist destinations are also its most vulnerable.