Sun, May 12, 2019 - Page 7 News List

How a Chinese venture in Venezuela made millions while locals grew hungry

Caracas and Beijing agreed to hundreds of projects to kickstart growth in Venezuela, but after billions in investments, little has materialized

By Angus Berwick  /  Reuters, TUCUPITA, Venezuela

Illustration: Kevin Sheu

The project was meant to feed millions.

In Delta Amacuro, a remote Venezuelan state on the Caribbean Sea, a Chinese construction giant struck a bold agreement with then-Venezuelan president Hugo Chavez. The state-run firm would build new bridges and roads, a food laboratory and the largest rice-processing plant in Latin America.

The 2010 pact with China CAMC Engineering Co Ltd (中工國際工程) would develop rice paddies twice the size of Manhattan and create jobs for the area’s 110,000 residents, the contract said.

The underdeveloped state was an ideal locale to demonstrate the socialist Venezuelan government’s commitment to empower the poor. The deal would show how Chavez and his eventual hand-picked successor, Venezuelan President Nicolas Maduro, could work with China and other allies to develop areas beyond Venezuela’s bounteous oil beds.

Chavez tweeted at the time: “Rice Power! Agricultural power!”

Nine years later, locals are hungry. Few jobs have materialized and the plant is only half-built, running at less than 1 percent of its projected output.

The plant has not yielded a single grain of locally grown rice, a dozen people involved in or familiar with the development said.

Yet, CAMC and a select few Venezuelan partners prospered.

Venezuela paid CAMC at least US$100 million for the stalled development, project contracts and sealed court documents from an investigation by prosecutors in Europe showed.

The thousands of pages of court papers were filed in Andorra, the European principality where prosecutors allege Venezuelans involved in the project sought to launder kickbacks paid to them for helping secure the contract. The material on the China deal, reported here for the first time, includes confidential testimony, wiretap transcripts, bank records and other documents.

An Andorran high court judge in September last year said in an indictment that CAMC paid more than US$100 million in bribes to various Venezuelan intermediaries to secure the rice project and at least four other agricultural contracts.

The indictment charged 12 Venezuelans with crimes including money laundering and conspiracy to launder money. Among those indicted was Diego Salazar, a cousin of a former oil minister who, investigators said, enabled the contracts. Also indicted was the top representative in China at the time of state-run oil company Petroleos de Venezuela SA (PDVSA).

Sixteen people of other nationalities were also charged and at least four other Venezuelans — one of whom was formerly ambassador in Beijing and is now the country’s top diplomat in London — are under investigation, the documents said.

The indictment, the names of those charged and their association with Chinese companies were last year reported by the Spanish newspaper El Pais.

A review of the case files, which are still under seal in Andorra, gleaned how CAMC and other Chinese companies forged ties with many of those charged and paid to win projects that the companies often did not complete.

The result was a far-reaching culture of kickbacks, paid through offshore accounts, in which well-connected Venezuelan intermediaries milked and ultimately crippled projects that were meant to develop neglected corners of the country, prosecutors said.

Among other findings reported here for the first time:

‧ CAMC agreed to at least five agricultural projects in Venezuela, valued at about US$3 billion, that it never completed.

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