infodioLeaks continues to provide some truly shocking leaks about corruption in Venezuela. One of the first questions directed at Derwick Associates, once it became known that they had been awarded 12 contracts through non-bid processes, was to present copies of those contracts. After all, it was believed that Derwick was a Venezuelan private company, run by Venezuelans, that had been hired by state institutions and paid with public funds. Of course, it’s not illegal for a private company, whether Venezuelan or not, to contract with the state. What is extremely rare, and illegal, is for the Venezuelan government to award contracts without bidding to companies with no background, and when asked how public funds have been spent, it refuses to respond. Exactly this happened to César Batiz, the journalist who uncovered the mega-corruption scandal involving Derwick Associates and BARIVEN (a subsidiary of PDVSA) back in 2011. PDVSA is a state corporation. By law, it is open to financial scrutiny, as long as such scrutiny takes place. Thus, it cannot excuse itself from revealing expenditures based on contractual confidentiality agreements. There is nothing in the legislative body of Venezuela that permits any public institution to essentially reject accountability through appropriate mechanisms and do whatever it wants with public funds. For instance, when a journalist submits an information request regarding contracts signed by a particular public institution, those institutions must comply. It’s not about whether the institution wants to comply; it must, as long as public funds are at stake.
Batiz’s requests were never granted. When he contacted the parties involved in the deal, all gave the same response: due to confidentiality clauses, we cannot disclose any information related to the contracts. Now, thanks to a source and infodioLeaks, we know why.
As can be seen, the third clause of the Letter of Intent between BARIVEN and Derwick Associates S.A. prohibits either party from disclosing any information regarding the contract without written consent from the other party. What a beauty, right? BARIVEN, a subsidiary of PDVSA, gives a Panamanian whistleblower represented by an Italian citizen the right to block the publication of information related to state spending. I might be wrong, but this could be the first of its kind. Derwick has permission from BARIVEN to disclose contractual information only to service providers: that is, ProEnergy Services.
But what about the fourth clause?
Disputes related to the contract will be resolved between the highest authorities related to each of the parties. That is, Rafael Ramírez as the general director of PDVSA for BARIVEN, and Leopoldo Alejandro Betancourt López, described in the contract as an Italian citizen with sufficient powers to represent Derwick Associates, registered in Panama. Balances? Misappropriation of funds? Malfeasance? Not delivering on time? Poor selling? Misrepresentation? Hundreds of millions of dollars at stake? All of that, and more, will be resolved “amicably” between Ramírez and Betancourt, as agreed. There’s a pattern here. In the $172 million contract awarded to ALBET of Cuba for the supply of identification technology, there’s a clause (14.1) that sets similar conditions. Chavismo has surrendered the jurisdiction of Venezuela and the power of its courts to settle disputes with the thugs it does business with. If any of them defaults, there is absolutely nothing that legally ties the breach of contracts. Isn’t this also a first?
The object of the contract is the eventual acquisition, by BARIVEN from Derwick Associates S.A., of the equipment described below:
– Two Pratt & Whitney turbo-generators (50 MW);
– Four GE TM 2500 turbo-generators (22 MW);
– Four Rolls Royce Trent 60 turbo-generators (58 MW);
– One GE LM 2500 turbo-generator (22 MW);
– Two GE LM 6000 turbo-generators (48 MW);
– Two GE Frame 7E-A turbo-generators (84.4 MW);
– Three GE Frame 7F turbo-generators (170 MW).
The combined electrical generation of the equipment described above is 1,216.8 MW. The contracting party is BARIVEN, PDVSA and its subsidiaries. Now let’s go to Derwick Associates’ announcements page on Wikipedia, or to this article published by Europa Press, to contrast the previous calculations of overs with the claims made by Derwick regarding “executed” projects: 1,216 MW. Besides the previously leaked invoices, I think this is a good corroboration of the validity of the leaked contract, which can be seen in full below. The contract was signed in Caracas on November 30, 2009, about a month after Derwick Associates was registered as a company in Venezuela. Its registered counterpart in Panama was established in 2003, but had not won a single contract anywhere.