Money. That was the first game Miguel Ángel Capriles López asked his father for when he received his first electronic device. Miguel Ángel Capriles López* (also known as Michu) is possibly the most influential Venezuelan you’ve never heard of. The only son of newspaper magnate Miguel Ángel Capriles Ayala* and Carmen Cecilia López Lugo (who had six other daughters), Michu was taken under his father’s wing. His father’s business empire, built from scratch, included the most read newspapers in Venezuela (Últimas Noticias, along with El Mundo and Líder grouped in Cadena Capriles), the largest shareholding in Electricidad de Caracas (EDC) (13.6%), and stakes in banks and many other businesses. In 1967, Michu’s parents separated and legally divorced in 1980. Between 1967 and 1980, his father began another relationship with Magaly Cannizaro (in 1969), which had a son: Miguel Angel Capriles Cannizaro.* What followed after the patriarch’s death in 1996 between the two families became perhaps the best case study of due process violations, theft, corruption, and collusion at the highest levels of government and the judiciary seen in contemporary Venezuela. A fortune of over $700 million is at stake, the control of which was ultimately secured through bribery and fraudulent means by Michu, his divorced mother Cecilia, and his six sisters.
Venezuelan law states that when a couple divorces, all existing assets acquired up to that moment (family patrimony) must be accounted for and divided. In 1980, after 41 years of marriage, Ayala’s first wife received several valuable assets, her fair share of the family estate at that time. In Caracas records, there are documents showing that a pair of buildings (Disconti and Granales), two houses, and an apartment suitable for Cecilia’s “socioeconomic level” were transferred to her in 1980 when signing an agreement with Ayala. All properties were located in Caracas. Additionally, monthly cash disbursements were provided to Cecilia.
In 1996, hours before Ayala’s death on May 30, Michu moved to gain absolute control of the family empire, which had grown exponentially between 1980 and 1996, i.e., during Ayala’s second marriage to Cannizaro.
According to Venezuelan inheritance law, in the absence of a will, 50% of family patrimony goes to the spouse, and the other 50% is divided equally among the children and the spouse. This meant that Cannizaro, as Ayala’s wife, was legally entitled to 50%, plus one of the nine shares of the remaining 50%, giving her and her son Miguel Angel Capriles Cannizaro the right to 61.1% of all of Ayala’s assets at the time of his death.
Before 1996, Michu was nothing more than Miguel Angel Capriles Ayala’s son. He made some shady deals with his buddy Carlos Acosta López, and even took a shot at the “banker” Juan Carlos Escotet, who was then a protégé of Orlando Castro. His role within Vadesa (his father’s holding conglomerate) was certainly not at the decision-making level, and his labor input did not contribute to his father’s wealth in any way. However, Michu’s actions to wrest control from his father’s second wife and half-brother were nothing short of diabolical. Two days before his father’s death, Michu had his mother (who had lived in Franco’s Spain since 1967) file a legal complaint against his father, claiming that in 1980—16 years earlier—she hadn’t received her 50% of the marital inheritance, and therefore had the right to 50% of Ayala’s estate in 1996, an estate that would be shared between the Cannizzaro family and all of Ayala’s children from his first marriage.
It didn’t matter that by 1996, Ayala had been legally married to another woman for 16 years. It also didn’t matter that during this time, Ayala’s conglomerate had grown exponentially. More importantly, how could such a claim be justified, or even considered by the courts, given the statute of limitations? If Michu, or his mother, were so unhappy with how the family patrimony was distributed in 1980, why wait 16 years, until 1996, to make a claim?
Michu’s mother argued that, despite receiving millions of dollars in cash and assets upon divorcing Ayala in 1980, they had an agreement—a verbal one since no written evidence to prove its existence has ever been presented—that gave her the entitlement, in perpetuity, to 50% of all businesses, profits, and future assets Ayala would generate starting from 1980, i.e., AFTER their divorce.
Any judge would have questioned such a ludicrous claim and demanded a copy of this agreement, an agreement that would have effectively stripped Cannizaro of any future rights to Ayala’s fortune since 1980. The alleged verbal agreement would have amounted to a de facto prenuptial agreement between Ayala and Cannizaro, although Ayala never signed a prenuptial agreement with Cannizaro, nor did he ever inform her that such a verbal agreement existed with López. Additionally, by 1980, Ayala had not yet acquired stakes in EDC, Banco Mercantil, Sivensa, etc.
As absurd and unfounded as the lawsuit was, the courts accepted it, despite the existence of a properly registered legal document signed by Cecilia and her four oldest daughters (Mayra Capriles de Sanson, Tania Capriles de Brillembourg, Miska Capriles de Machado, and Perla Capriles de Morrison) in September 1979, waiving any future claims over the family patrimony as it existed at the time of signing (September 1979).
The courts deliberately ignored this crucial document, as well as the subsequent transfer to a shell company (Inversiones Perkyta) of the ownership of buildings, houses, and apartments (clear and free as described) as agreed with Cecilia—all duly and legally recorded—due to Michu’s political maneuvers, assisted along the way by his father’s trusted internal lawyer (Víctor Sierra), two of the most reputable law firms in Caracas (Allan Brewer Carías and Ángel Bernardo Viso), a group of friendly judges (led by Rafael Solorzano Escalante and a gang known as the Damask Cartel), and contacts at the highest levels of the Venezuelan government and judiciary.
By 1996, Ayala owned all the shares of Valores y Desarrollos S.A. (Vadesa), a holding company with stakes in many others. Michu’s mother knew that upon Ayala’s death, which occurred on May 30, 1996, just two days after filing a complaint against him, Michu and his other six siblings would be sued in this action, along with Magaly Cannizaro and her only son. Cecilia (Michu’s mother) was represented by Brewer Carias’ law firm; six of her seven children were represented by Viso’s law firm; and their seventh child was represented by another firm (Aguilar), which in turn intended to oppose the other six siblings. The Viso firm prepared pleas to be used by both Brewer Carias and Aguilar, who were set to be opponents of Viso’s clients. This included the preparation by Viso of a complaint filed by Brewer Carias on behalf of his client. Thus, three different law firms, pretending to represent opposing interests, colluded to obtain a default judgment for Michu’s mother.
The method of perpetuating the fraud was as follows:
– the law firm representing Michu and five of his sisters (Viso) submitted powers and defense letters at intervals instead of all at once. The goal was to confuse the Cannizaros.
– A lawyer from Viso (Carolina Solorzano), who at that time represented three of Viso’s six clients, requested a document from the court on July 11, 1996. Solorzano claimed she was acting “on behalf of the López defendants.” Note that by July 11, 1996, the Viso law firm had yet to submit the power of attorney for the six clients.
– The last of the six powers of representation and defense (from Adelaida Capriles López) was entered on September 17, 1996. That would have given Cannizaro and her son 20 business days to file their response.
– The Cannizaros filed their reply within the allowed timeframe starting from September 17, 1996.
– However, Brewer Carias’s firm, representing Michu’s mother Cecilia, requested a default judgment after Adelaida submitted a power of attorney, arguing that the Cannizaro’s response had not been submitted within the allowed 20 judicial days, claiming they believed the period began on September 17, but the court counted from July 11 based on Carolina Solorzano’s actions supposedly in “name of the López defendants.”
– None of the López defendants bothered to respond to their mother’s claims.
– The court never informed the Cannizaros nor issued requests for responses after Solorzano’s request on July 11.
The judge who issued the default judgment on November 28, 1996 (Carlos Rafael Guía Parra) would later be acquitted amid the most significant corruption charges, misconduct, and irregularities in Venezuela’s legal history.
The Cannizaros appealed in vain: the judge presiding over the appeals process (Rafael Solorzano Escalante, note his name in the previous paragraph regarding judges with many misconduct complaints) was the father of Viso’s lawyer (Carolina Solorzano) who misled the court alleging that she represented Michu and five of his sisters (“the López defendants”). The Cannizaros questioned this again, requesting a panel to review the decision. However, since both the Cannizaros and López were grouped as co-defendants against Michu’s mother, the majority (Michu and his six sisters) were able to choose the panel, which upheld the default judgment.
Then the Cannizaros went to the Supreme Court, seeking another review. Unfortunately, the case was handled by judge Rueda, another accomplice of Allan Brewer Carias with a notable history of rulings favoring the latter. Since the lower court had dismissed the Cannizaros’ response due to its alleged delay, Judge Rueda willfully ignored the requests for review, arguing that the decision could only be reviewed based on disputed issues and given that no questions had been raised by Judge Cannizaros and therefore not admitted in the lower court, no review was possible.
Having gained control of the $700 million Vadesa conglomerate, one of Michu’s first moves was to remove the Cannizaros from the Vadesa board and its companies. Soon began the serious plundering of assets and funds.
While the Cannizaros desperately tried to get the courts to overturn the default judgment, Michu got his accomplice, Carlos Acosta López, to negotiate the “sale” of 13.6% of EDC to Brown Brothers Harriman (BBH) in New York. The aim here was simple: quickly move assets out of the Venezuelan jurisdiction, so any court revocation could not stop the plundering of funds and assets. Through a Caracas brokerage firm controlled by Acosta López (La Primera Casa de Bolsa), BBH “bought” the 13.6% of EDC from Vadesa for $158 million in November 1999. The transaction was riddled with irregularities. Although no money was ever paid, the deal was concluded in a day, while normally such transactions would take most of a week to settle. The Caracas stock market authorities, well aware of the ongoing legal battle for control over Vadesa’s assets, approved the agreement knowing that Vadesa’s stake in EDC was the crown jewel, the most valuable asset the holding had at that time.
Behind the scenes, Michu had instructed a lawyer (Gustavo Mata Borjas -counsel for the “buying party” behind the recent sale of El Universal) to form two BVI corporations (Allied Capital Investment Inc. and Power Eagle International Ltd.) that would eventually receive all shares of EDC supposedly bought by BBH. Under Michu’s instructions, BBH converted the EDC stake into American Depositary Shares (ADS) and transferred the lot to Allied Capital Investment Inc. and Power Eagle International Ltd. Thus, the agreement was nothing more than a temporary parking of Vadesa’s EDC stake through a fake sale to BBH, which transferred the stake to the two vehicles Michu created to secure final control. This achieved the goal of removing Vadesa’s stake in EDC from the control of its board and the jurisdiction of Venezuela, placing it directly into Michu’s hands.
Then, in June 2000, AES Corporation acquired Vadesa’s EDC stake from the two BVI corporations controlled by Michu, for $269 million. Neither the difference of $111 million nor the original $158 million ever returned to Vadesa’s bank accounts. Despite having “sold” Vadesa’s EDC stake to BBH in November 1999, AES Corporation negotiated the purchase of EDC shares in June 2000 with Michu, not BBH. Furthermore, Michu was reconfirmed in March 2000 as chairman of EDC’s board after having “sold” EDC shares to BBH.
Moreover, one of the most significant individual shareholders of EDC after Vadesa was Mr. Melchor Perusquia, holding 4% of EDC. There’s an affidavit from Mr. Perusquia (see pdf below) stating that on April 28, 2000, when AES made its first offer for EDC, he called Michu to ask what Vadesa was going to do with its EDC stake. At that time, Michu recommended Mr. Perusquia to offer his 4%, saying that Vadesa was going to offer its 13.6%, despite the fact that the registered holder of the shares was the Bank of New York and that the holder in the ADS register representing that percentage were Aliados and Poderosos. How is it possible that Michu was negotiating and making such recommendations/claims to other shareholders in late April 2000 if he had “sold” Vadesa’s stake in EDC to BBH in November 1999?
To this day, BBH provides the Cannizaros with annual toll agreements related to their supposed participation in the sham purchase of Vadesa’s block of EDC shares. BBH obviously knows what happened.
But Michu’s simple robbery wouldn’t end there. Other transactions were also carried out; Vadesa had an account with Lehman Brothers from which over $23 million mysteriously vanished; Vadesa’s account in Banco Mercantil Venezolano, N.V., over $70 million also vanished; Inversiones Capriles, C.A., a company owned by Vadesa, made placements of money in Merrill Lynch worth over $21 million by May 1999; by June 1999, $15 million was withdrawn and by July 1999 the account balance was $0.81 cents; Vadesa also had investments in Banco Provincial Overseas N.V., with about $37.9 million in August 1999, which also disappeared. The argument Michu used with all the banks mentioned was that he needed the funds to fulfill obligations related to the construction of a new building for El Mundo newspaper. Needless to say, the stolen funds far outweighed Vadesa’s actual liabilities in Venezuela at that time.
The above figures would bring the total amount Michu stole from Vadesa to approximately $420.9 million.
Then, Michu recently sold Cadena Capriles, the newspaper conglomerate behind Últimas Noticias, El Mundo, and Líder, supposedly to an English group (Hanson Asset Management) for around $140 million. Carlos Acosta López—remember him?—was named a member of the new board. However, as with all things related to this case, the reality is quite different. One of the most corrupt “Bolivarian” bankers, Víctor Vargas from Banco Occidental de Descuento (BOD), “bought” Cadena Capriles from Michu through an arrangement that served three purposes: the first, to hide the identity of the final controlling party of Cadena Capriles (i.e., the Maduro regime); the second, to secure Maduro’s approval for a merger between BOD and CorpBanca (another bank of Vargas) that had been frozen for some time; and the third, a Supreme Court revocation of a divorce ruling against Vargas.
Like BBH before, Vargas is just a mere front, this time for the Maduro regime in this “acquisition.” Chavista regulators ignored explicit prohibitions against banker ownership of media and foreign ownership of Spanish-language printed newspapers. Every single existing law regulating media ownership in Venezuela was violated in the process. Surprisingly, no international media has taken notice of this.
The sale of Cadena Capriles would elevate the amount of assets and funds stolen by Miguel Ángel Capriles López to the staggering total of $560.9 million. Just to clear doubts and as with all amounts quoted, these are U.S. dollars. More than half a billion U.S. dollars.
Meanwhile, Hugo Chávez happened. Michu’s politicking was exposed not too long ago by former Supreme Court Justice Luis Velásquez Alvaray (currently exiled in Costa Rica), admitting that Chávez had given him precise instructions during a phone conversation to rule against the Cannizaros in another appeal. This order may be due to the fact that for years, Chávez’s government printed as much as 80% of its political propaganda in the Cadena Capriles newspapers, by far the most read in Venezuela. The amounts generated during that time, which should have formed part of Vadesa’s revenues through its newspaper business, were never properly communicated to the Cannizaros. Michu never paid dividends, neither to the Cannizaros nor to his own sisters.
Needless to say, the Cannizaros, legitimate owners of 61.1% of Vadesa, have never obtained remedy in Venezuelan courts, nor a fair share of what legally belongs to them.
The Nicolás Maduro regime is acutely aware of this situation. In a private meeting last October, Communications Minister Delcy Rodríguez offered the presidency of the new Cadena Capriles board to Miguel Ángel Capriles Cannizaro, claiming that “President Maduro knows that there was never justice in your case. This is your chance to get compensation.”
Michu has maintained all along that the Cannizaros have failed in all attempts to overturn the initial default ruling. What he doesn’t say is that ever since he took control of Vadesa and other family businesses through fraud in 1996, he has attempted many different approaches with the Cannizaros, including offers of millions of dollars—a fraction of their legitimate stake—made directly or through proxies, like the über chavista Jorge Rodríguez. If he is so sure of the legality of the initial process by which he took control of Vadesa, why would he even bother to offer money and bribes for the Cannizaros to cease their attempts to obtain what is legally theirs?
This is how “entrepreneurs” in Venezuela make money. Those who don’t loot the public coffers, like Derwick, steal from their own families. Michu may be unique in the sense that he has embezzled millions from both public and private sources (his financial dealings with Escotet, Armando “Pelón” Capriles, and the Brillembourgs; remember the Torre de David? will be exposed in later publications). Except for a handful of notorious examples, the common denominator of the “entrepreneurial class” in Venezuela is that they never add value. That is the curse of the petrostate, or the curse of the conquerors: everyone feels entitled to plunder the riches, no matter how or where.
Nowadays, Michu is invested in banks (with former crime partner Escotet in Abanca in Spain, Banco Mercantil in Venezuela and the U.S., and Legacy Bank also in the U.S.); continues to chair Grabados Nacionales in Venezuela; his name is associated with Siapa Rentals, Fernando VI 10, Invecap Inversiones Inmobiliarias, Oikos Cap Gestiones Inmobiliarias, Inmobiliaria El Platanal, Inmobiliaria Atabapo, Inmuebles Padamo, Ultimeña, Ventuari Rentals, and MACL Castellana, all real estate companies in Madrid; Empresas Leblac in Panama; Unit 702 Tower Residences, Morrison Properties, and Saludarte in Miami; it’s rumored that he is financing Nelson Bocaranda’s website (interestingly, Bocaranda did not respond to my inquiries about this) and he is said to be looking to acquire a major media publication in Spain; in short, there’s a lot to do with someone else’s five hundred million dollars.
After perpetrating what may be the largest fraud against a private corporation by an individual—instead of the State—in Venezuelan history, Michu goes about his affairs, both nationally and internationally, as if he were a legitimate businessman. No Venezuelan newspaper or website has dared to publish the sordid tale of intrigue, collusion, corruption, conflict of interest, and brazen theft that defines Michu’s career, a clear sign of a press that has never been truly independent. If Rupert Murdoch and Robert Maxwell could have produced an heir, it would be Michu.
*Note the difference between the three main characters: 1) Miguel Ángel Capriles Ayala, patriarch and founder of Vadesa; 2) Miguel Ángel Capriles López (Michu), the only male among seven children from Ayala’s first marriage to Cecilia (known as Perla); 3) Miguel Ángel Capriles Cannizaro, the only son from Ayala’s second marriage to Magaly.
* Update: Michu is currently in a relationship with Paula Quinteros, CEO of El Estimulo Media, who helps him polish the image of all his real estate investments in Madrid.