For those of us tracking corruption in Venezuela, the Derwick Associates case is, one might say, unique. It’s hard to find similar instances, and coming from a country where corruption is ingrained in its culture, like Venezuela, that’s quite a statement. To put it simply: Derwick Associates secured 12 contracts in 14 months during the electricity crisis declared by the late Hugo Chavez in 2009. This number of contracts, with a total value only known to Derwick and the chavista regime, could very well exceed $3 billion. What’s extraordinary is that Derwick Associates has been sued in New York by none other than Otto Reich, a former Assistant Secretary of Hemispheric Affairs at the State Department and former U.S. Ambassador to Venezuela. Reich accuses them of violating the Racketeer Influenced and Corrupt Organizations Act, the Foreign Corrupt Practices Act, the Travel Act, and federal wire fraud statutes.
Reich claims to have lost thousands of dollars due to the intrigues of Derwick Associates, suggesting that besides being corrupt, the bolichicos were also gossipy. It turns out that Derwick Associates sued the Venezuelan Bank of Credit (BVC) and Oscar Garcia Mendoza in 2012 in Miami for $300 million, alleging that both BVC and Garcia Mendoza were behind the website wikiantocorrupcion.org, which published, among many other things, details about Derwick Associates’ “businesses.” This legal activity in Miami led federal agencies and American institutions, such as the State Department, the Treasury Department, the FBI, and the Securities and Exchange Commission, to take an interest in the case and begin investigations.
In the meantime, Reich was helping Eligio Cedeño (another boliburgués of dubious reputation) secure refuge in the U.S. This relationship was generating $20,000 monthly for Reich. When Derwick initiated the lawsuit against BVC and Garcia Mendoza, the bank was considering hiring Reich’s services. Derwick then attempted to bribe him with promises of “lots of money.” When that failed, they spread the rumor that Reich was actually working for them, which, according to the lawsuit, not only led to Reich’s termination by Cedeño but also made it impossible for BVC to hire him (for another $20,000).
After the sale of these bonds, of course, any questioning regarding funds from JP Morgan is misplaced. Thus, Derwick legitimized millions of dollars stolen in Venezuela through JP Morgan. Sometimes to pay American subcontractors like ProEnergy Services, other times for the services of “public relations” people like Republican Al Cardenas and FTI Consulting, and others to pay their legal guard dog Hector Torres, who has threatened and intimidated journalists like Cesar Batiz, bloggers like Miguel Octavio and Steven Bodzin, financial analysts like Toby Bottome from Veneconomía, and digital media like Forbes.
But the ill-gotten money also funded jets, luxury apartments in New York, hunting estates in Spain, and lavish weddings. The spectacle of nouveau riche behavior from the bolichicos is such that no one, anywhere, observing their actions can conclude, as they try to make people believe, that they come from wealthy families. They thought it was a good idea to sue BVC, allegedly on orders from Jose Vicente Rangel, and as expected, they ended up with their tails between their legs. They tried to threaten the press, bloggers, and journalists, even using SEBIN as a sort of private security service. Their impunity is so pronounced that they sent SEBIN and a private security company named SERSECO to investigate Batiz, intercept his communications, invade his home, place a satellite tracker on his car, call his mother, and follow him. But it doesn’t stop there: Reich alleges that documents related to Derwick’s lawsuit against BVC “disappeared” from the public court archive in Miami-Dade.
It seems no one told these freshly minted upstarts that attacking the press is bad business, and messing with internationally acclaimed journalists is even worse. Sending SEBIN to intimidate people in Venezuela is almost normal, but orchestrating the disappearance of public documents from a U.S. court? They also thought it was a good idea to invent things and spread rumors about one of the longest-serving, well-connected officials at the State Department, and it can already be stated that what’s coming for them is trouble. All this comes with a questionable track record. It seems there’s no clear-minded or sensible voice in Derwick’s environment; no one has told these exemplary businessmen, as PDVSA President Rafael Ramirez likes to say, that those with something to hide should keep their distance from the fire. By the way, Ramirez is also mentioned in the lawsuit, as are Nervis Villalobos, Rodolfo Sanz, Javier Alvarado, Francisco Convit, and another one of the regime’s favorite banks: DAVOS Financial of David Osío. The name of Diosdado Cabello will also show up. All these individuals seem to be embroiled with the inexperienced ones at Derwick, whether it’s in the embezzlement of millions of dollars through the awarding of contracts without bidding, collaboration in money laundering from corruption, bribing public officials for illegal contracts, or accepting bribes.
Reich’s lawsuit will have significant repercussions, and a lot of them. It’s not Luisa Estela Morales who will see this case…