Crooked in Caracas

CARACAS — Facing flagging popularity and increased discontent over his government’s economic policies, Venezuelan President Nicolas Maduro is turning to a tried-and-true formula to reverse his political fortunes: He’s launching a full-scale attack on corruption. And he’s looking to use it to cudgel his opposition ahead of the must-win local elections on Dec. 8, which are being cast as a referendum on his first months in office.

"The era of institutional corruption should come to an end in Venezuela," boomed Maduro in a three-hour address before the country’s National Assembly, broadcast live across all television and radio stations on Oct. 8. Promising to show "zero tolerance" for corruption, Maduro, who succeeded Hugo Chávez in March, is seeking special powers from the National Assembly to allow him to govern by decree to root out the country’s endemic corruption. Although Maduro pledged to arrest any violators regardless of party affiliation, he made it clear that he considers the problem to be more prevalent among his political opponents and the country’s business elite.

If he can muster 60 percent support from the deputies in the National Assembly, Maduro would be allowed to govern by decree for one year, bypassing the need for legislative approval for the laws he would enact.

But for many Venezuelans, Maduro’s posturing on clean government and an end to corruption rings hollow.

"If he wants to clean up corruption, he needs to start with his own cabinet, and his people in the National Assembly," said Roberto Diaz, a 33-year-old teacher in Caracas. "This is just a circus to keep our minds off the economy and crime."

The timing of Maduro’s campaign has raised eyebrows, especially given the proximity of elections and past boasting that corruption had been greatly reduced under the Chávez presidency. In March, Maduro proclaimed in a newspaper interview that the top echelons of his government were free of graft, thanks to his late predecessor’s determination to root it out as part of his socialist revolution.

"Corruption is tied to capitalist values," Maduro said. "The values that Chávez promoted are fighting absolutely against those who desire quick riches, personal wealth, theft, embezzlement. Anyone who participates in anything for personal enrichment, anyone who put his hands on public money is betraying Chávez’s legacy."

Speaking of his ministerial team, Maduro said that "I can guarantee that there is no corruption for the first time in the history of Venezuela."

Maduro has taken a few symbolic steps against a few lower-level members of his party. The mayor of Venezuela’s third-largest city, Valencia, and his son, were arrested for allegedly stealing millions. A former state governor was also arrested. Probes have also been launched into alleged graft at the state iron ore company, Ferrominera, where up to $1.2 billion may have been stolen, as well as at the Bandes development bank and a Chinese-Venezuelan investment fund, where the losses are pegged at $84 million.

However, the corruption campaign has avoided big names in the government, instead concentrating the attack on the opposition.

"The anti-corruption drive is targeting opposition leaders, such as Miranda state Gov. Henrique Capriles Radonski, and Lara state Gov. Henri Falcon, as well as various opposition deputies in the National Assembly," says Caracas-based historian Margarita López Maya.

Maduro’s anti-corruption drive comes as Venezuela’s economy shows signs of falling apart after 14 years of Chávismo. Inflation is expected to end the year at above 50 percent, the highest in the hemisphere. Oil production continues to fall, even though the country has the world’s largest crude reserves.

Shortages of basic foodstuffs — such as corn meal, wheat flour, meat, and milk — abound. And the bolivar continues its freefall: Although officially pegged at 6.3 to the dollar, the black market rate has fallen to almost five times that as Venezuelans bet that the government will have no choice but to devalue in January.

And if the economy isn’t bad enough, most people here agree that corruption has gotten worse under Maduro and his team.

According to a poll undertaken by the polling firm Keller y Asociados, 70 percent of those polled in a nationally representative sample said that corruption has gotten worse in the last 12 months. Only 10 percent of respondents said that government efforts in rooting out corruption, including the arrests of mid-level officials, had produced positive results.

Capriles, who Maduro defeated in April, has been one of the most vocal critics of Maduro’s initiative. "A true fight against corruption would lead to the end of the government," Capriles tweeted. "The big shots aren’t going to fall."

Capriles and other opposition figures have repeatedly said that Maduro’s close colleague, Diosdado Cabello, the National Assembly president, is one of the more corrupt members in the president’s entourage. Cabello, who preceded Capriles as governor of Miranda state, is the subject of more than a dozen complaints alleging that he stole government funds during his term. The government’s chief prosecutor, who has opened similar investigations into allegations about opposition figures, has taken no action.

Capriles, on the other hand, has made a show of being clean. He immediately sacked one of his close colleagues from his presidential campaign this year after allegations were leveled that the aide had engaged in influence peddling.

"Maduro’s anti-corruption fight is an electoral and political strategy," says Tarek Yorde, a Caracas-based political consultant. "He’s trying to shore up his position before the vote."

Maduro has reason to worry. According to the latest poll from Datanalisis, a Caracas-based polling firm, only 41 percent of Venezuelans say he is doing a good job, compared with 55 percent who give him negative marks. Publicity fiascos, like his claim that the late Chávez once visited him in the guise of a bird, have let the opposition ridicule Maduro as an inept buffoon.

Still, corruption is a real problem.

State funds have been stolen, diverted, or misused by those in power for decades. "Corruption is a perennial problem in Venezuela,” says historian López Maya. "Venezuelans are willing to ignore it when times are good. But when there are periods of fiscal problems like now, then there’s always an outcry against it. This is a cycle that has been repeated for years."

The opportunities for corruption are myriad given Venezuela’s centralized economy and rich oil reserves, which are the largest in the world. And relatively high oil prices have only increased incentives to steal as there are more funds to pilfer. Oil didn’t create the recent problem, though. Sweeping state controls over the disbursement of dollars for imports, travel, and remittances has created an intractable state bureaucracy, in constant need of greasing to get requests for dollars processed and approved.

Chávez, when he was still in power, laid the groundwork for this pervasive corruption. In an attempt
to stem capital flight during a 2002-2003 nationwide strike to force him from office, the former president created increasing demand for foreign currency by tightening access to dollars, all while eliminating key checks on spending . In efforts to alleviate the plight of the country’s poor, Chávez often tried to expedite solutions by throwing money at problems outside established administrative channels. A score of "missions," or social programs, that dot the countryside operate with almost no oversight, encouraging graft. And while Chávez imposed stricter controls over prices and currency, he left crucial loopholes, allowing for enterprising Venezuelans to take advantage of the system. He also curtailed the autonomy of the state comptroller general and attorney general, making them appendages of his administration. Not surprisingly, investigations into Chavez’s closest colleagues have gone nowhere.

Billions of dollars have been stolen. Last year, the Comisión de Administración de Divisas (CADVI), which controls access to dollars, authorized imports of $59 billion. Up to a third may have been handed over to fake corporations, created specifically to siphon off dollars, according to statements from Planning Minister Jorge Giordani and the former Central Bank Governor Edmee Betancourt. Other scammers pad import invoices to qualify for more dollars.

Some of the worst abuses have been perpetrated by Chávistas, according to an audio tape that was made public by opposition deputy Ismael Garcia in May. Mario Silva, a moderator on state television and a close confidant of Chavez, told a Cuban agent in a recorded telephone call that corruption and dollar scams were rampant in the highest echelons of the government, including by Cabello. The charges were never investigated by the state prosecutor. Silva lost his job and has since disappeared amid rumors that he may have been sent packing to Cuba. Cabello said the tape was a fake and has accused opposition lawmakers of corruption.

And yet, on the street, corruption impacts everyone. In a recent poll, one out of every five Venezuelans admitted to paying a bribe to a government official in the last 12 months. According to Berlin-based Transparency International, Venezuela is the 10th most corrupt country in the world. In the Western Hemisphere, only Haiti ranks lower.

Ironically, the flagging poll numbers that have led Maduro to this populist fight against corruption might also be fueling the problem, encouraging his supporters to be more rapacious, says David Smilde, a senior fellow at the Washington Center on Latin America."There is a perception of some in the government that they are in the end game, and they are grabbing what they can, while they can,” he says. "And with Venezuela’s currency problems, the temptations are great."

Maduro is desperate for his United Socialist Party of Venezuela (PSUV) party to win the Dec. 8 vote, though he isn’t on the ballot himself. Recent polls show that support for Maduro and the PSUV is falling, and if current trends hold, the country’s opposition could make big gains.

"Of the 33 largest cities, the opposition should win easily in 20 to 25 of them," says Yorde. Currently, the opposition holds 14 of these 33. And the opposition is in a good position to win the overall popular vote, says Yorde, which would be a setback for Maduro and usher in a new period of increased political tensions and instability, encouraging the opposition to ratchet up their pressure on the government by taking to the streets to press for change.

But Maduro also needs the Special Powers Act, or ley habilitante, to shore up his own political position, says Smilde.

Venezuela is in talks with China for billions of dollars of loans to cover its burgeoning budget deficit, made worse by off-the-books spending on the December election and government social programs, which target the poor. The Chinese may have second thoughts about advancing Maduro fresh credit if his party does poorly in the vote and doubts about his long-term survival continue to mount.

"The ley habilitante is a way for Maduro to consolidate his power in the government, while showing the Chinese that he has the power, that he is in control," says Smilde.

Like previous presidents and their anti-corruption crusades, few expect Maduro to continue his battle once the elections are over and the holidays arrive. It’s probably just as well that his promised new laws are likely to remain that: promises.

"The last thing we need to combat corruption is more laws,” said Alberto Barrera Tyszka, a columnist for El Nacional newspaper. "What we need is for those laws already on the books to be enforced." That campaign, it seems, is one that Maduro doesn’t have much use for.