Is $29 billion missing from Hugo Chavez's Fonden development fund?

Our guest blogger and his colleague look into why money in a massive fund in Venezuela is unaccounted for. Their efforts also shine light on a day of Venezuelan bureaucracy.

Miraflores Palace/Reuters
Venezuelan President Hugo Chávez talks during a television broadcast about Ciudad Caribia 'Caribia City' located outside Caracas, in this Aug. 27 photo.

About two weeks ago, I told the story of Deputy Carlos Ramos of the National Assembly who provided us with an Excel spreadsheet of the projects financed by Fonden – the “development” fund that President Hugo Chávez created and uses as his sort of petty cash fund for immediate needs – after I wrote to him.

The sequence of how this spreadsheet came about was somewhat unclear, the congressman saying that there was some $29 billion, give or take a billion, simply missing.

He made this discovery when he added all of the numbers provided by Minister of Finance Jorge Giordani and realizing the total was different, the minister saying $69 billion had been approved for projects, but the addition of the numbers totaling only about $40 billion.

Blogger Quico at Caracas Chronicles then decided to call the deputy’s assistant to see if we could obtain the original information. But it just so happens that 21st Century Socialism uses 19th or 20th century tools.

There isn’t a scanner to turn the 30 or so pages turned in by Minister Giordani to the National Assembly into digital form. Thus, unless Quico, who lives 2,448 miles away from Caracas, could drop by and pick them up, he (and we) were out of luck.

Fortunately, I had to go to Caracas and could go get the papers.

Thus began my trek to the Pajaritos building. The building (pictured at original post) is actually called the Jose Maria Vargas building, but nobody calls it that, everybody calls it Pajaritos, the name of the “Esquina” (corner) where the building is.

I made the mistake of showing up five minutes past noon, which meant that I could not enter the building. (The building is shared by the administrative offices of the Judiciary and the National Assembly. Each has its own reception, which opens into the same hall, but while you can get into the Judiciary at any time, not to the Assembly between noon and 1:30 PM)

I called Deputy Ramos's office and they told me they would come down and give me the info we had requested.

Waiting there was an experience in itself. I could not go in, but the guy in the mortuary suit that controlled the people allowed a few ladies, buddies, and officials to go through. While I waited (he asked me three times what I was doing standing around there), I studied the dozens of people who showed up looking for help. Quite an experience, from Guajiro Indians to students wanting to talk to their deputy, mostly to see if they could get some money (preferably cash).

Finally, the extremely efficient assistant of the deputy came down and gave me a folder with a copy of all the material. You can find the projects all here.

Essentially, the story is that Deputy Ramos, as a member of the Comptroller’s Commission, requested on April 6 that Minister Giordani give him a full list of projects approved not only for the development fund Fonden, but also for the Chinese fund, the Fondo Chino.

On April 28, Giordani sends the info to the head of the Comptroller’s Commission, Hector Navarro, and on Aug. 2, Deputy Ramos sent Giordani a letter asking about the fact that there seems to be some $29 billion missing from the project list.

The problem is that, as you can see in the link, Giordani provided the complete list of 140 projects, giving the name, the ministry, the amount awarded, the amount disbursed over the years, and the amount disbursed in 2010 (which is actually the only thing the deputy was asking for). But Giordani sent all of of the info, and when you add up the total amounts approved and disbursed historically, the information provided says that projects were awarded some $69.4 billion (down to the cent as Quico shows) of which $66 billion has been disbursed and $9.6 billion was disbursed in 2010.

Except…that if you create an Excel spreadsheet, put all 140 numbers and add it all up, the total is “only” $29 billion short, as discovered by Deputy Ramos. Now the deputy is asking for even more information, including who got the contracts for each project.

It’s interesting to note that the total given by Giordani is roughly what was contributed by the Venezuelan Central Bank, under the screwed up concept of excess reserves, and PDVSA, whose contributions are now set by law, as shown in the table below, where I have used all public sources from the BCV, Fonden, and PDVSA to come up with the grand total of $69.8 billion contributed to Fonden. (See spreadsheet at original post.)

We can speculate all we want: Were projects removed from the list? Was the total simply faked? Was this intentional? Was it sloppiness? Can they provide the information or they just don’t have it? Is the money somewhere else? Is the money missing?

But no matter what, the point is the same, $29 billion is currently “missing” or unaccounted for from the parallel fund Fonden, which is managed by President Chavez and Giordani at will and in an extremely discretionary fashion. (They used part of the money to buy a new embassy in Russia, for example.)

This would be a scandal in any country in the world, but apart from Deputy Ramos and a couple of nutty bloggers, it just seems to have not even induced a yawn in Venezuelan politics.

Hopefully, we will help bring the issue more into the spotlight.

And again, kudos to the deputy and his efficient and diligent assistant!

--- Miguel Octavio, a Venezuelan, is not a fan of Venezuelan President Hugo Chavez. You can read his blog here.

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