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Court Case in Miami Casts Light on Corruption in Venezuela

By Juan Forero
Washington Post Foreign Service
Friday, October 24, 2008

The Miami trial of a Venezuelan entrepreneur who grew rich doing business with President Hugo Chávez's populist administration has exposed how some top government officials have profited from a corrosive web of corruption in the oil-rich country.

Kickbacks, bribes and secret payoffs have become a feature in the socialist administration, which had claimed a break from the past but instead has seen several officials implicated in multimillion-dollar corruption schemes, according to testimony and conversations taped by the FBI. The trial has also revealed the Chávez government's determination to funnel state funds to its allies in Latin America and the lengths it will go to to keep the aid secret.

"This shows that the charges made over the last few years about the profound nature of corruption were not some invention," said Teodoro Petkoff, an editor in Caracas whose newspaper, Tal Cual, opposes Chávez and has uncovered corruption scandals. "It shows that it is very hard to hide the big-time theft that has been going on."

The eight-week trial centers on whether the Venezuelan government dispatched five men to Miami to coerce and cajole a Venezuelan American man into keeping quiet about $800,000 in Venezuelan state funds that Chávez's associates allegedly tried to channel to political allies in Argentina.

In August 2007, customs agents in Argentina detained the man, Guido Alejandro Antonini, after he arrived at the Buenos Aires airport with the cash. Antonini, who had been close to the Chávez government, was soon released and went home to Miami. But as rumors swirled that the money had been designated for the presidential campaign of Cristina Fernández de Kirchner, the Venezuelan government sent operatives to Miami to urge Antonini never to reveal the truth, U.S. prosecutors said.

The Venezuelan operatives met with Antonini in cafes and restaurants to urge him to stay quiet, expressing concern that Fernández de Kirchner would lose the presidency if it became known that the money had been destined for her campaign.

"The truth can cost her the election," one of the operatives, Moisés Maiónica, told Antonini. Fernández de Kirchner, a close ally of Chávez's, won the presidency in October 2007.

Maiónica and other Venezuelans did not know, however, that Antonini was cooperating with the FBI and had secretly taped their meetings and phone conversations.

Maiónica, along with another Venezuelan, Carlos Kauffmann, and an Uruguayan national, has pleaded guilty to the unusual charge of operating in the United States as unregistered agents of the Venezuelan state. U.S. prosecutors are searching for Antonio José Canchica, a high-level operative in Venezuela's intelligence service who was indicted in the case.

The defendant in the trial, Franklin Durán, 41, a business associate of Antonini's, was among those allegedly sent to launch the coverup. If convicted, he could face up to 15 years in prison.

"The Venezuelan government had a problem, directed Franklin Durán to assist, and he did so," Assistant U.S. Attorney John Shipley told jurors during closing arguments Thursday.

Durán's attorney, Ed Shohat, said his client was no Venezuelan agent and went to Miami to help a friend in trouble, Antonini.

In Venezuela, the state media have largely ignored the case and the government has scoffed at the revelations, which officials have cast as part of a Bush administration plot to smear Chávez.

Bernardo Álvarez, who until last month was the Venezuelan ambassador to Washington, criticized prosecutors' reliance on Antonini to build a case against Durán. "It's shocking that a man who committed a crime in Argentina becomes a protected witness in Miami to make all kinds of accusations against the Venezuelan government," Álvarez said in an interview.

In Argentina, Fernández de Kirchner has dismissed the case as "garbage." But the trial has generated front-page news there for months.

Transcripts of the taped conversations reveal intricate details of the collaboration between Venezuelan businessmen and government officials during Venezuela's recent oil boom as they pilfered public funds through no-bid contracts, kickbacks and secret commissions.

"It's basically a bunch of guys in their late 30s, all of whom saw an opportunity when Chávez went into power," said Kenneth Rijock, financial crime consultant for World-Check, a London-based firm that provides risk analysis for banks and other institutions. "They've been riding his coattails since, benefiting from sweetheart deals, kickbacks and other corrupt practices."

In one case, Kauffmann said he and Durán bought a $4 million building in Caracas and sold it to the Finance Ministry 15 days later for $9.5 million. About $5 million of that went to top officials in the Finance Ministry, Kauffmann said, including then-Minister Tobias Nóbrega. Venezuelan officials charged Nóbrega this year in connection with that case and others.

Kauffmann said he and Durán limited their earnings in that swindle as a way of ingratiating themselves with Nóbrega and his associates, "to create a bond with them . . . to do more business."

Kauffmann described another scheme in which a $100 million bond sale netted $25 million for Finance Ministry officials and how he and his associates managed bribes by companies to the National Guard.

Maiónica testified that as the scandal spiraled out of control, Chávez assigned the Venezuelan intelligence chief, Gen. Henry Rangel Silva, to launch an operation to silence Antonini.

Those who participated in the alleged coverup expected to be paid handsomely for their work. Maiónica said he would earn $400,000. Kauffmann said the Venezuelan ambassador in Bolivia offered to pay him from a $100 million fund set up to aid President Evo Morales's government.

"We were going to receive big payment for this, big contracts and big favors," Kauffmann said.

For the Bush administration, the revelations at the trial have provided a glimpse of the Venezuelan government's reliance on business associates to channel money and avoid detection, a senior administration official in Washington said. The United States has long warned that Venezuela was becoming a hotbed of corruption and drug trafficking involving armed forces officers.

"They're expected to move money when Chávez wants," said the official, who spoke on the condition of anonymity because of the delicate nature of U.S.-Venezuelan relations. "They're moving around money to launder it and to meet off-budget expenses, whether in Bolivia or wherever."

Special correspondent Brian Byrnes in Buenos Aires contributed to this report.

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