On March 7, 2019, Venezuela was plunged into darkness. What was initially thought to be just another blackout extended: one hour, two, five; a day, two, three… Amid accusations of sabotage, the Chavista government moved stealthily and sought the help of some allies it had cultivated over decades, including a group of Mexicans. Initially, the plan was to explore how they could bring electricity plants to Venezuela to mitigate the effects of the energy crisis. However, during their first trip to Caracas, it became evident that the intentions for business went far beyond merely acquiring generators. Several members of the Venezuelan government and operators from the Chavista elite proposed what would become the seed of an international scheme to create business transactions that left no trace. EL PAÍS and Armando.info possess thousands of documents and numerous interviews, including some with involved parties who requested anonymity out of fear of retaliation, that demonstrate how this opaque network was created and evolved. The scheme initially exchanged oil for food and potable water tankers, and later moved to collect payment for oil exports through financial circuits outside U.S. control. All the involved parties share a common link: Alex Saab, a Chavista contractor since 2011 and alleged frontman for Nicolás Maduro, who is currently awaiting extradition in Cape Verde to face money laundering charges in the United States.
Alex Saab, alongside Mexican businessmen, crafted a business network to transport Venezuelan commodities and millions of dollars under the guise of humanitarian aid.
The origin of this network can be traced back to the sanctions imposed on Venezuela since late 2014, primarily by Washington, meant to pressure Maduro’s government into halting its human rights violations. Initially under Obama and later under Trump, these sanctions openly pushed for a political change that never materialized. Today, with Joe Biden newly installed in the White House, sanctions are a bargaining chip in potential negotiations between the opposition and Chavez’s successor, aiming for a solution to the country’s crisis.
These pressures have indeed succeeded in diminishing the Chavismo’s scope for doing business with many companies, due to their fears of being targeted by the Treasury Department. At the center of this pressure has been PDVSA, Venezuela’s primary source of foreign currency, which holds the world’s largest proven oil reserves and has been sanctioned since early 2019 by the Trump administration. After the state-owned petroleum company reached a point where foreign currency became scarce, exhausted by the government on various operations, Chavismo resorted to commercial transactions where they could pay with oil instead of cash.
Delcy Rodríguez Gómez played a crucial role in activating the Mexican connection. Together with her brother Jorge, the current president of the National Assembly and a former minister several times over, they constitute one of the pillars of Nicolás Maduro’s government. Rodríguez organized a series of meetings in April 2019 with state officials and key players close to the Chavista elite for a group of Mexican businessmen, including the politician José Adolfo Murat, whom she recognized from international forums held by leftist organizations like that of Biarritz. Together with Simón Zerpa, who was the Economy Minister at the time—now diminished due to accusations of disloyalty—they explored the possibility of achieving an exchange of crude oil for potable water tankers and food. Furthermore, the minister asked the Mexicans whether it would be possible to secure a significant position in Veracruz, the main port in Mexico, where companies linked to Alex Saab dispatched millions of overpriced and low-quality food items in CLAP boxes for Venezuela between 2016 and 2018, which would allow them to move large shipments in and out.
In April 2019, after Venezuela’s blackout, Delcy Rodríguez organized meetings between state officials and a group of Mexican businessmen. Credit: Yamil Lage de AFP.
The return meeting for the Mexicans took place with Ricardo Morón and José Luis Sandoval—the former sanctioned by Washington in July 2020, is a businessman close to Nicolás Maduro Guerra, the president’s son; the latter a PDVSA official—who put forth the need to swap oil for white corn and hard wheat, via Colombia: the price and payment would be in gold. Another person they met was Omar Abou Nassif, brother of a businessman tied to Delcy Rodríguez. Nassif proposed the Mexicans the possibility of moving certain food items, with transactions to be carried out through Hong Kong, assuring them he had the collaboration of some suppliers in Mexico. Nassif’s statement was not trivial: he had also taken part in the CLAP scheme since 2016, specifically with companies registered in Hong Kong. Between 2016 and 2018, Alex Saab and his partner, Colombian Álvaro Pulido Vargas—whose real name was Germán Rubio but changed it after being involved in a 2000 narco-trafficking operation linked to the Bogotá cartel—crafted a structure of shell companies in Hong Kong, Turkey, and the United Arab Emirates, benefiting Mexican businessmen, several of whom, as it has been verified, were linked to the new network that began weaving in April 2019. The figure of Alex Saab was also present in those meetings in Caracas, where the Mexican businessmen interacted with one of his operators.
This series of contacts took shape upon their return to Mexico. Then, according to the reconstruction made by this investigation by EL PAÍS and Armando.info, Joaquín Leal, a 29-year-old businessman sanctioned since June 2020 by the U.S. Treasury for his dealings with Venezuela, entered the scene. At that time, he was working with Diversidad, the company mentioned earlier linked to José Adolfo Murat, and began to develop the businesses proposed to him.
In May 2019, Murat flew to Caracas with Leal. The Mexican entrepreneurs once again met with Simón Zerpa. The goal was to finalize the operations they had previously only discussed. Although Zerpa proposed that the Mexicans receive direct payments in rubles or euros, the formula that prevailed was to exchange oil for food and potable water tankers.
The selected formula, to be carried out a month later but without Murat, only with Leal as the counterpart, meant that the Venezuelan side would ask a third party to present itself and make a 70% payment in advance, ultimately in euros. In the two contracts for the operation, amounting to €200 million, there was no account number for the recipient specified for the payment. “Before the competent authorities” is the strange wording used in both cases, which also points out that this payment can be made “in installments” with the option to terminate the contract in 90 days. The remaining 30% of the payment, according to the contracts, “will be processed by the buyer through competent financing entities,” without ever clarifying who this refers to.
After signing the commercial agreements, Leal sought advice and took charge of acquiring the trucks and coordinating the transport of the food from Mexico. He also negotiated with his Venezuelan contacts the price of oil. In emails, he presented himself as the legal representative of Libre Abordo, the company through which the Venezuelan government conducted the business. After closing the deal, the Venezuelan oil company sent a series of invoices to Libre Abordo “in consideration” of Olga María Zepeda Esparza, director and partner of the company—now also sanctioned by the U.S.—detailing the equivalent in barrels of oil and the millions of euros that the oil company required as payment to the Mexican firm, aside from the exchanges for food and in-kind products. For instance, in an invoice dated June 19, 2020, for €32.9 million (which was then equivalent to $36.3 million), it indicated that the destination of the oil was the port of Singapore.
The operation of exchanging oil for food and potable water tankers was the trigger for the U.S. Treasury Department to sanction Libre Abordo, Joaquín Leal, and Zepeda Esparza in June 2020. Subsequently, the Mexican Financial Intelligence Unit (UIF), led by Santiago Nieto, launched an investigation to trace the money trail. However, the results have been minimal. Just on May 18, the UIF filed a complaint with the Prosecutor’s Office, which has been accessed for this report, and requested the seizure of nearly a hundred accounts of Libre Abordo, Leal, Zepeda Esparza, and her mother Verónica Esparza, a partner in the company.
That spring was the only trip Murat and Leal made together to Caracas. Murat, consulted for this report, claims he left the business in Leal’s hands upon returning from Venezuela. When Leal told Murat that the Venezuelans insisted on including an oil swap as part of the business, he asked him not to pursue it. “I told him there were U.S. sanctions and that we couldn’t get involved in that mess,” he recounts. According to his version, he broke off with Leal months later in 2019, upon realizing that despite the warnings, he had continued with the business through Libre Abordo.
Leal, for his part, declined to offer his version or respond to interview requests for this investigation.
The ‘humanitarian’ excuse was just a cover
Following the operations for the water tankers and corn, Leal, alongside Alex Saab, organized a secret network from Mexico to assist the Maduro government in selling Venezuelan oil outside of U.S. sanctions. To try and obscure the money trail, dozens of companies were created, and a network of financial partners was woven across thirty countries. The scheme connected entities worldwide, some offshore, in Switzerland, Luxembourg, Malta, Curacao, the UK, Sweden, Norway, Greece, the U.S., Singapore, Bangladesh, China, Malaysia, Mexico, among others across Europe, Asia, the Americas, and tax havens like the Isle of Man and the British Virgin Islands.
The modus operandi reconstructed in this investigation shows that the provision of humanitarian aid was merely a pretext. The Mexican side would ship the products in kind while PDVSA paid them with oil and logistics to remove it from the country on vessels. However, behind this operation was another more complex scheme that raked in millions of profits for those involved through the resale of crude at prices below market value, with money that eventually returned to PDVSA as payment for the merchandise. The Venezuelan oil company ended up collecting invoices sent to Libre Abordo in accounts of Russian banks, such as Gazprombank and Evrofinance Mosnarbank. This way, they managed to concretize transactions outside the U.S. banking system and avoid involving citizens from that country. The documents accessed in this investigation confirm that oil dealings extended between November 2019 and May 2020. In the vast majority of cases, the barter of food was sidelined, and oil was sold directly to the Mexican intermediaries.
After Libre Abordo finalizing the exit of the oil from Venezuela, it resorted to a group of intermediaries to continue reselling the barrels. Generally, they looked for buyers within the same consortium involved in the scheme or directed themselves to refineries located abroad. For instance, a shipment delivered in Malaysia to a Chinese company was resold by Orin Energy, a holding company focusing on commodities. The network involving Leal and Libre Abordo had its principal clients in Asia. Corporate presentations revealed that two of the main buyers of Venezuelan oil were Chinese firms PetroChina and Sinopec. The bulk of their shipments also went to Singapore and Malaysia, two vital global refining centers.
In the initial stage, Libre Abordo sought clients and ways to place oil in the global energy market. When the Mexican company was sanctioned in June 2020, the Treasury Department indicated that it utilized the same international routes, the same shipping processes, and the same clients as had been previously managed by two Swiss subsidiaries of Rosneft, the major Russian oil company that was one of PDVSA’s primary partners but exited the business in February 2020 after being sanctioned by Washington for dealings with Venezuela. Leal and his partners also consulted others participating in the scheme designed by the Maduro government, such as Alessandro Bazzoni, an Italian with an extensive history of dealings with PDVSA, and Philipp Apikian, a Swiss involved in the sale and shipment of Venezuelan oil. Both were sanctioned in January 2021 by the White House for being participants in the same scheme that has shifted millions of barrels of Venezuelan crude under the radar of U.S. sanctions.
The oil-for-food scheme
The U.S. has imposed economic restrictions on Venezuela since 2014 to suffocate Maduro’s government
U.S. sanctions
The U.S. shuts down the international market for Venezuelan Oil (PDVSA). The country loses its main source of foreign currency.
The Venezuelan government
evades sanctions
The Nicolás Maduro government uses the routes of Russian oil companies to continue trading its crude with other nations.
Payments are made in euros or rubles to avoid U.S. banking
Venezuela needs new partners
The Mexican company Libre Abordo agrees to an exchange of corn and water tankers for PDVSA oil.
In a more advanced stage, Mexican trading companies sign contracts to extract oil from Venezuela and resell it
Source: own preparation.
N. CATALÁN / EL PAÍS
The oil-for-food scheme
The U.S. has imposed economic restrictions on Venezuela since 2014 to suffocate Maduro’s government
U.S. sanctions
The U.S. shuts down the international market for Venezuelan Oil (PDVSA). The country loses its main source of foreign currency.
The Venezuelan government
evades sanctions
The Nicolás Maduro government uses the routes of Russian oil companies to continue trading its crude with other nations.
Payments are made in euros or rubles to avoid U.S. banking
Venezuela needs new partners
The Mexican company Libre Abordo agrees to an exchange of corn and water tankers for PDVSA oil.
In a more advanced stage, Mexican trading companies sign contracts to extract oil from Venezuela and resell it
Source: own preparation.
N. CATALÁN / EL PAÍS
The oil-for-food scheme
The U.S. has imposed economic restrictions on Venezuela since 2014 to suffocate Maduro’s government
U.S. sanctions
The U.S. shuts down the international market for Venezuelan Oil (PDVSA). The country loses its main source of foreign currency.
The Venezuelan government evades
sanctions
The Nicolás Maduro government uses the routes of Russian oil companies to continue trading its crude with other nations.
Payments are made in euros or rubles to avoid U.S. banking
Venezuela needs new partners
The Mexican company Libre Abordo agrees to an exchange of corn and water tankers for PDVSA oil.
In a more advanced stage, Mexican trading companies sign contracts to extract oil from Venezuela and resell it
Source: own preparation.
N. CATALÁN / EL PAÍS
The oil-for-food scheme
The U.S. has imposed economic restrictions on Venezuela since 2014 to suffocate Maduro’s government
Venezuela needs
new partners
The sanctions from
the United States
The Venezuelan government
evades the sanctions
Payments are made in euros or rubles to avoid U.S. banking
In a more advanced stage, Mexican traders sign contracts to extract oil from Venezuela and resell it
The U.S. shuts down the international market for Venezuelan Oil (PDVSA). The country loses its main source of foreign currency.
The Maduro government uses the routes of Russian oil companies to continue trading its crude with other nations
The Mexican company Libre Abordo agrees to an exchange of corn and water tankers for PDVSA oil.
Source: own preparation.
N. CATALÁN / EL PAÍS
The various networks operated in 30 countries through over 50 companies
Source: own preparation.
EL PAÍS
The various networks operated in 30 countries through over 50 companies
Source: own preparation.
EL PAÍS
The various networks operated in 30 countries through over 50 companies
Source: own preparation.
EL PAÍS
Key players in the scheme
Delcy
Rodríguez
Vice President
Nicolás
Maduro
President
Tareck
El Aissami
Minister of Oil
Venezuelan Corporation
of Foreign Trade
Álex Saab
Alleged frontman.
CLAP Business*
Program
Oil for
Food
Verónica Esparza
(Mother)
Olga M. Zepeda Esparza
(Daughter)
Shipping intermediaries
and financial players
MORE THAN 50 COMPANIES
IN 30 COUNTRIES
* Subsidized food boxes distributed by the CLAP
(Local Committee for Supply and Production)
Source: own preparation.
EL PAÍS
Key players in the scheme
Delcy
Rodríguez
Vice President
Nicolás
Maduro
President
Tareck
El Aissami
Minister of Oil
Venezuelan Corporation
of Foreign Trade
Álex Saab
Alleged frontman.
CLAP Business*
Program
Oil for
Food
Verónica Esparza
(Mother)
Olga M. Zepeda Esparza
(Daughter)
Shipping intermediaries and financial players
MORE THAN 50 COMPANIES IN 30 COUNTRIES
* Subsidized food boxes distributed by the CLAP
(Local Committee for Supply and Production)
Source: own preparation.
EL PAÍS
A Familiar Face at PDVSA
One of the main intermediaries Leal used to resell crude was Elemento, a company established by Bazzoni in Malta in March 2015, with subsidiaries in Curacao and the UK, which had previously marketed Venezuelan oil in association with an American firm. Between February and December 2019, Elemento moved at least thirteen shipments of PDVSA. Following dealings with Leal, Bazzoni’s firm took charge of one of the first two shipments that Libre Abordo extracted from Venezuela. The goods resold by Elemento were delivered in Singapore to a company from Macao—formerly a Portuguese enclave in China, now with a sovereignty status similar to Hong Kong— in April 2020, nearly a year after departing from the Caribbean nation.
This was not Elemento’s first occasion helping Maduro’s government to export hundreds of millions of barrels of oil from the South American country’s coasts, according to the thousands of documents accessed by both media outlets that form part of this investigation. To resell the shipments, Elemento utilized Swissoil Trading S.A, an energy firm founded in Switzerland in 1998, which has acted as a reseller of commodities in the Middle East and Asia, with Apikian serving as the sole administrator. Aiming to replicate the scheme devised by Elemento and reduce losses and legal issues from using other intermediaries for crude reselling, Leal founded Cosmo Resources in Singapore on February 11, 2020. The intent, according to a flowchart designed by Leal himself, was to share the board of directors of the firm with his partner Bazzoni to continue oil marketing in Asia and elsewhere.
Through Cosmo, the Mexican entrepreneur explored the idea of absorbing Libre Abordo and its subsidiary Schlager Business Group, responsible for providing administrative support to its parent company’s operations. On February 16, 2020, Leal wrote an email indicating that he was considering having Cosmo buy Libre Abordo. The following day, Hugo Villaseñor, Cosmo’s financial director and Leal’s close associate, coordinated the opening of a bank account for the firm. In an email sent to an executive at Alpha FX, a London-based bank specializing in foreign currencies that provides services internationally to “companies and institutions affected by currency volatility,” Villaseñor requested the account’s opening, estimating a monthly cash flow of between €15 and €50 million. The account was opened on the recommendation of Richard Rothenberg, the financial director of Elemento.
Cosmo’s role is crucial to understanding how oil exchanges were capitalized under the guise of humanitarian aid. In the request to open the account, the company stated that its primary income came from payments made by PetroChina and Sinopec refineries for oil shipments leaving Venezuela. Another one of their revenues came from payments made by other raw material intermediaries like Beaconsfield Commodities Trading, a consortium by Bazzoni constituted in Switzerland with subsidiaries in the Cayman Islands, South Africa, Switzerland, and Sweden. In contrast, Cosmo primarily had its expenses in payments made to Elemento and Libre Abordo, which dealt with extracting oil from Venezuela. One of the young Mexican entrepreneur’s plans was to conduct the same businesses he had set up with PDVSA with other Latin American oil companies, such as Pemex, Colombia’s Ecopetrol, and Petroamazonas.
Mexicans Replacing Russians
The exit of Rosneft from Venezuela propelled Leal’s and his partners’ businesses. With the departure of the Russian giant, one of PDVSA’s main partners, the volume of crude available to the Mexican network surged. By April 2020, the Mexican entrepreneurs received approximately 40% of PDVSA’s exports, as per the Treasury Department. However, as their businesses flourished, Leal became increasingly concerned about the legal forms of the transactions his companies were engaging in with Venezuela. In December 2019, he approached the U.S. law firm Pillsbury Winthrop Shaw Pittman LLP for counsel. By March 2020, when Leal was already on the U.S. radar, a Mexican law firm also provided legal advice regarding the potential sanctions Leal and Libre Abordo could be subjected to.
From Mexico, Leal structured various schemes to solidify his dealings with Venezuela, using financial engineering to manage his assets while attempting to erase the money trail. The documentation in possession of EL PAÍS and Armando.info contains thousands of emails exchanged among members of the plot involving Leal: there are spreadsheets with the crude value and monthly cash flows obtained from trading shipments, as well as export contracts, invoices for buy-sell operations, and financial advisory services. Additionally, there are banking references, business plans exploring entry into copper and aluminum markets, and records of payments for general and administrative costs associated with various firms in the network, including disbursements for rent, utilities, and international travel expenses.
A document detailing the recorded income for 2019 from Leal’s companies illustrates the spectacular ascent of a group of entrepreneurs who had been almost unknown until that year. Five companies related to the young businessman collected over $107 million in that year alone, before reaching peak levels of business with Venezuelan oil. The highest salary payments in these firms were allocated to Leal’s wages, which accounted for him paying himself 750,000 Mexican pesos per month (a little over $37,000), as well as to his mother and sister, who earned half a million pesos (around $25,000). The account records for that year also note the salary for Leal’s grandmother, who received 30,000 pesos per month ($1,500).
EL PAÍS and Armando.info have confirmed that Leal and his close circle utilized at least 50 companies to conceal the money trail. Behind every business plan, there was a company to execute their projects. In most cases, Leal didn’t appear as a partner but as a legal representative. Typically, Verónica Esparza and her daughter Olga María Zepeda Esparza or other family members were behind the firms. In their extensive portfolio, they also created structures in tax havens, where partners’ identities aren’t publicly listed, making it easy to hide large cash flows while avoiding tax liability. One such business was JLJ Technologies LLC, established in Wyoming—essentially a tax haven—on March 20, 2019, where Leal was registered as the sole administrator. This company had no real operations but allowed Leal to obscure the identities of the partners behind his firms.
He also established Mystic Universe, a company in the British Virgin Islands—the largest tax haven in the world by business volume and the number of registered firms—which had a mirror company in Ontario, Canada. Both firms were incorporated by Leal in May 2019 during his first trips to Caracas. According to the reviewed incorporation documents, Leal owned 90% of the shares, while his mother, María Teresa Alfaro, and his sister, Carlota Jiménez, each held 5%. On August 5, 2019, Mystic began operating as a holding that took control of other firms linked to Leal.
One presentation made by Leal’s team claims that Mystic invested in technology, energy, and commodities companies both in the Americas and beyond. “The goal of Mystic Universe is to change the world, so we focus on essential industries: energy, technology, commodities, finance, and health,” the document notes. In its former website, Mystic claimed to have invested over $300 million. However, all beneficiaries of Mystic’s investments were other companies owned by Leal.
Mystic was presented in the Mexican media as a Canadian investment fund focusing on socially impactful projects. In news articles published between August and September 2019, it was indicated that the firm would invest in Hábitos Luzy, the Mexican subsidiary of Luzy Technologies, which has been on the Treasury Department’s blacklist since June 2020. On paper, the company specializes in providing health and nutrition consultations through a mobile app, managing industrial cafeterias, and reselling sanitary materials.
Leal, who constantly devised ways to reorganize his extensive portfolio of companies through trusts, shell companies, and frontmen, visited Morgan Stanley on April 16, 2020, to explore going public for Mystic Universe. The financial director of Mystic was José Luis Chávez Calva, who was previously the general coordinator at the state-run Energy Regulatory Commission (September 2016-June 2017). He was one of two suggested to lead the Federal Electricity Commission, the primary government-run company in the sector. For this position, the president López Obrador ultimately designated Manuel Bartlett, a politician who has served in almost all administrations since Luis Echeverría’s (1970-76) up to the present.