London | According to reports from The Miami Herald, on Friday, October 17, 2008, at 10 a.m., 15 shots were fired at a woman driving in Carrasquilla, Panama City. Eight shots hit the woman; one bullet entered her temple and exited through her eyelid, causing permanent blindness in her left eye. Miraculously, the woman survived.
This was not just another instance of common crime in Latin America, where theft is the common objective, but a carefully planned assassination attempt. The woman was the wife of Luis Castro, a former security consultant for Ricardo Fernández Barrueco, the disgraced oligarch who faced multiple financial crimes under the regime of Hugo Chávez in Venezuela.
The Herald states that Castro requested a formal investigation into Fernández Barrueco, his brothers Felipe and Gustavo, as well as other staff and managers from Fernández Barrueco’s companies, due to the assassination attempt on his wife. While Castro’s accusations did not include evidence of direct involvement from Fernández Barrueco, they provided a glimpse into the world of this upstart billionaire and his close connections with the regimes of Venezuela and Cuba. Ultimately, Fernández Barrueco was the only oligarch in Venezuela to whom Chávez personally answered calls. The trust that the leader had in him was so great that he was asked to devise a “economic recovery” plan to revive Cuba’s economy, according to reports from The Herald. This request allowed him to maintain good relations with the Castro brothers and high officials of the Cuban dictatorship.
Despite reports commissioned by FTI Consulting, which were always favorable to Chávez at the time and aimed at whitewashing the image of Fernández Barrueco, the reality is far less glamorous: son of a Spanish immigrant, Fernández Barrueco, who held the concession to operate the parking lot of the former Hilton Hotel in Caracas, was a nobody in the Venezuelan business world. In fact, he worked for his father and often parked cars to earn a living. Through this, he met all sorts of people, including Adán Chávez, Hugo’s older brother and mentor. This, and only this, was the reason he began to secure government contracts, small at first, then more substantial as time went on. He started in food-related businesses, then distribution, through a loan that he supposedly obtained from Sarkis Arslanian. By the 2002 general strike, Fernández Barrueco had a fleet of trucks and some agribusinesses. He made good use of this by siding with Chávez and using his distribution network and food-producing companies to evade the general shutdown. This brought tremendous dividends. Fernández Barrueco became Chávez’s preferred partner for all imports and sales to MERCAL, Venezuela’s billion-dollar subsidized food program. His gamble was so successful that a 2005 audit by the Venezuelan representative of KPMG concluded that the man was worth $1.6 billion and owned 41 companies in the sectors of services, fishing, distribution, agriculture, food, and forestry. From parking cars before 1998 to 41 companies and a personal fortune of $1.6 billion in 2005. Not bad; even Russian oligarchs would be envious.
However, the 2002 gamble was mutual: Chávez began to use Fernández Barrueco and his dubious businesses as representatives to undermine Empresas Polar, the largest private corporation in Venezuela. By channeling all MERCAL purchases to Fernández Barrueco’s companies, Chávez thought it would only take a little time to topple an empire that had been producing and selling leading food and beverage brands in Venezuela for over 50 years.
But Fernández Barrueco, like all bullies of his kind, became greedy and decided to diversify into banking. That was to be his downfall. He bought four banks: Bolívar Bank, Banco Confederado, Banco Provivienda, and Banco Canarias. He then used his contacts to get Venezuelan public institutions to move part of the state’s money into accounts at these banks. Reports indicated that, at one point, Fernández Barrueco’s banks held 18% of all state money deposited in private banks. With these deposits, Fernández Barrueco devised a scheme to finance his operations, which worked as follows:
Reflect the deposits on the balance sheets, so that his banks appeared financially healthy; Use the funds from deposits to back the purchase of bonds by companies under his control, through his own brokerage firms (U21 and Interbursa); Use bonds as collateral for future loans to his companies without the required guarantees from his banks; or sell bonds to third parties and funnel money out of the country;
None of these operations appeared on the balance sheets, making it seem as if billions from the state and other clients had never been spent.
Fernández Barrueco’s financial creativity -also known as theft, misappropriation, etc.- diverged from other methods used by Venezuelan bankers aligned with the regime. In the case of the latter, through well-placed government contacts, the “bankers” would use legitimate funds to buy bonds in bolivars (the value of the bonds would be stated at the official exchange rate), exchange them internationally for USD, sell USD in the local black market, and pocket the huge differential after giving a portion of the illicit profits to Chavista contacts (after all, someone somewhere must decide the allocation of bonds). The latter, according to a local source, involves buying bonds, selling them, and transferring them locally (all in bolivars, thus avoiding regulators’ attention) and cashing in abroad in dollars.
For his involvement in the described scheme, Fernández Barrueco was charged, arrested, and has remained in prison since November 2009. The actual charges are undefined: embezzlement of savers’ funds, misappropriation of credits, and criminal association. At the time of his arrest, Fernández Barrueco’s empire had turned into a multinational conglomerate of over 250 undefined companies in Venezuela, Panama, Curacao, Spain, Ecuador, Guatemala, the U.S., the U.K., and even Hong Kong undefined. His staff, for example, would instruct that millions of dollars be transferred from the brokerage firm U21 in Caracas to the HSBC branch in Bristol in the U.K. undefined, to credit the account of The Winterbotham Trust (Alrena Moxey as front) to further credit the undefined account of Antora Finance. Other court documents show that Fernández Barrueco’s Galopy Corporation International NV, sole shareholder of the aforementioned banks undefined, had requested the transfer of $60 million in bonds from Banco Occidental de Descuento undefined (owned by Víctor Vargas, another Bolivarian “banker”) to a deposit account (no. 026513265700) at Deutsche Bank Trust Co..
Tanker F and Broker F registered in Panama were used as guarantors for multibillion-dollar loans granted to another myriad of companies based in Venezuela owned by Fernández Barrueco. Other companies mentioned in relation to undefined were: Galino undefined, Grufer Holding undefined, and Comercial Atunera. These companies received $200 million in illegal transfers and deposits, only in September, October, and November of 2009. While Fernández Barrueco was sent to prison in Caracas, his brothers had control over 29 companies just in Panama.