Trump Targets Venezuela Food Corruption09/24 05:48
PANAMA CITY (AP) -- The June meeting was conducted behind closed doors far
from the klieg-light attention normally focused on Venezuela.
Around a U-shaped table in a hotel towering above the Panama Canal, U.S.
Treasury Department officials distributed a list of suspected shell companies
that they believe senior Venezuelan officials have used across the globe to
siphon off millions of dollars from food import contracts amid widespread
starvation in the oil-rich nation.
The two-day meeting, and several others that have taken place since April,
are part of a sustained campaign by the Trump administration to pressure
President Nicolas Maduro by striking at the wallets of the top officials in his
"They know we're after them, and they know we're after them on a
multinational basis because we're beginning to see the networks morph and new
shell companies stand up and existing ones wound down," Marshall Billingslea,
the assistant Treasury secretary for terrorist financing, said in an interview
on the sidelines of the meeting.
At that gathering, financial forensic investigators from the U.S. and three
conservative Latin American allies --- Mexico, Panama and Colombia --- traced
transactions by companies believed to be controlled by a government-connected
businessman, according to several participants who spoke to The Associated
Press on the condition of anonymity because the deliberations were private.
Since Donald Trump became president, dozens of senior Venezuelan officials,
including Maduro himself, have been sanctioned by the Treasury Department over
allegations of corruption, human rights abuses and drug trafficking.
Last year, Trump even threatened a "military option" to remove Maduro and,
with senior aides and Latin American leaders, raised the possibility of
invading the South American country. As the country's economic troubles mount,
he has sought to rally regional pressure as well.
The focus on food is deliberate, said Billingslea, a key driver of U.S.
policy toward Venezuela who led Trump's national security transition team.
A story published by the AP in 2016 revealed how senior Venezuelan officials
and members of the military were enriching themselves by diverting money from
food contracts. Since then, as hunger has spread, Maduro has moved to assert
even greater control over food distribution, handing out monthly boxes of
staples that critics label a form of dictatorial social control.
Maduro said he began distributing the so-called CLAP boxes --- a Spanish
acronym for Local Committees for Supply and Production --- as a way to
circumvent the "economic war" being waged by the U.S. and opponents seeking to
oust him from power.
As Venezuela has fallen deeper into political and economic turmoil, the CLAP
program has become a tenuous lifeline for millions of citizens suffering due to
barren supermarket shelves and hyperinflation estimated by the International
Monetary Fund to soon reach 1 million percent.
Critics say Maduro has essentially weaponized food, distributing the boxes
primarily to government workers and supporters. According to an April survey by
the local pollster Datanalisis, more than 60 percent of Venezuelan households
said they received CLAP box in the previous three months --- about the same
percentage that helped re-elect the embattled leader in May presidential
elections boycotted by the opposition.
The allegations are fueling calls from Latin American leaders, including the
heads of Argentina, Colombia and Chile, for Maduro to be tried in an
international court for crimes against humanity.
"This goes beyond just corruption," said Billingslea, who led the U.S.
delegation to Panama with Kenneth Blanco, the director of the Treasury
Department's financial crimes enforcement network. "This is literally looting
the one social safety-net program left in Venezuela."
On a recent weeknight, word quickly spread among employees of a
government-supported cultural center about the downtown Caracas location where
they could collect their monthly CLAP ration. Within a few hours, everyone from
museum curators to janitors waited in line to sign a clipboard before
government loyalists slid a box across the table.
Once outside, some workers tore open the boxes, transferring the contents
--- cooking oil, flour, rice, canned tuna --- to backpacks for fear of becoming
walking targets in one of Latin America's most violent cities. Some said they
planned to resell the food on the black market, where a single bag of sugar can
easily fetch more than 100 times the heavily subsidized price of the entire
"When the food boxes first came out, we used to get a kilogram of meat or
chicken, but we never saw that again," said Marcos Inojosa, an electrical
technician who has been receiving the handout for about a year. "The president
turns a blind eye and pretends that everything is working well. But everything
is in the dumps."
Among those under scrutiny by the coalition of countries is an obscure
Colombian businessman who struck gold selling to Maduro's government.
Alex Saab, from the Caribbean city of Barranquilla, was a major focus of the
closed-door meetings in Panama City, the participants who spoke on condition of
anonymity told the AP. At one point they even studied the movements of a
U.S.-registered private jet to identify his current whereabouts: Caracas,
Paris, or Lebanon.
Saab gained some prominence in 2011 after signing an agreement to build
social housing for the Venezuelan government on behalf of a Colombia-based
construction company. He appeared on Venezuelan state television alongside
Maduro, the late President Hugo Chavez and then-Colombian President Juan Manuel
Investigators say Saab entered the food business through a Hong Kong-based
company, Group Grand Ltd., which they say bears the hallmarks of a shell
company, including no known track record in the food business, a rudimentary
webpage that is now inaccessible and an address in Caracas shared with Saab's
Group Grand has been awarded contracts to provide at least 11.5 million CLAP
boxes, according to a Venezuelan Food Ministry spreadsheet obtained by the AP.
Luisa Ortega, who was ousted as Venezuela's chief prosecutor and exiled last
year after breaking with Maduro, has called for an investigation into Saab,
alleging --- so far without evidence --- that he and Group Grand are fronts for
Billingslea would not discuss specific individuals or entities on the task
force's radar, but said going after what he believes is money stolen from food
imports by Maduro and first lady Cilia Flores is a top priority.
Prosecutors in both Miami and Colombia have been investigating Saab for more
than a year, four U.S. and Colombian officials with knowledge of those
investigations told the AP. All spoke on the condition of anonymity because of
the sensitive political nature of the ongoing probe.
Saab's Miami-based lawyer, Richard Diaz, rejected allegations of any
wrongdoing, saying that Saab has been subjected to undue scrutiny and harsh
media coverage because of false testimony leveled against him. He said that if
the U.S. had cause to believe the allegations were possibly true, his client
would have been charged long ago.
Saab said in a statement that he is being targeted by government opponents
looking to sabotage the economy.
"Instead, they should be thankful that despite so much bad press and
international blockade there are still businessmen willing to invest and
believe in the country," he said.
The U.S. Treasury estimates that at least 70 percent of the CLAP program is
being gutted by corruption, citing evidence of overbilling.
Among the transactions that have raised red flags is a September 2017
invoice presented to Venezuela's food ministry by Group Grand for $41 million
worth of powdered milk at a price of $6,950 per metric ton, or more than double
the market price at the time. A copy of the invoice was provided to the AP.
"Never have we seen prices that high, not even in times of crisis," said
Roger Figueroa, president of the Venezuelan dairy industry's lobby group.
A study conducted by Figueroa's group also found that the powdered milk
distributed in the CLAP boxes regularly contained a third of
government-mandated protein levels and twice the level of recommended
The investigative cooperation between the U.S. and other countries began
about a year ago at the urging of Trump officials, and already has yielded some
On May 17, three days before Maduro was re-elected, then-Colombian President
Santos, acting on information provided by the U.S., announced the seizure of 15
shipping containers filled with more than 25,000 CLAP boxes stamped with
Chavez's image and containing beetle-infested rice and other spoiled food.
In testimony to police obtained by the AP, the owner of a Colombian company
said he was hired by another firm to assemble and ship the boxes to Venezuela's
Corporation of Foreign Trade, or Corpovex, which had for years been under the
stewardship of an air force general.
A U.S. Treasury advisory last year warned American banks about the risks of
doing business with Venezuelan clients, citing Corpovex as a vehicle frequently
used by corrupt officials for embezzling state funds through shell companies.
The seized CLAP shipment, which was valued at over $500,000, was never sent.
It spoiled sitting on the docks because the firm that ordered it, a Portuguese
company called Agrovarius, said its bank accounts had been frozen and it could
not pay its bills, according to the police testimony.
Little is known about Agrovarius, which is located behind a high white wall
in a Lisbon suburb. One of the company's listed owners, Joao Rosa, denied
having anything to do with the Colombian shipment and insisted all the
company's vendors had been paid.
Agrovarius also was implicated in what has come to be called the so-called
pork revolution, which took place last Christmas when angry Venezuelans took to
the streets when Maduro failed to deliver on a promise to provide thousands of
free hams to poor neighborhoods.
Maduro accused Portugal's government of "sabotaging" the holiday gift, but
the long-established Portuguese meatpacker Raporal pinned the blame on
Agrovarius, saying it was never paid the more than 6 million euros needed to
supply Venezuela's government with the meat.
A spokesman for Raporal said the company is now suing Agrovarius for breach
of contract. Rosa said Agrovarius had nothing to do with the botched Christmas
Billingslea, meanwhile, said that Maduro has repeatedly sought to deflect
blame for his own mismanagement and refusal to address mounting hunger.
"If they really wanted to feed people, they'd let in the foreign aid that's
been offered," he said.