Profiles in Kleptocracy – Hugo Chávez

Profiles in Kleptocracy – Hugo Chávez

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February 28, 2017

He came to power as a populist, on promises to work for the people who catapulted him into the presidency. And he did—creating programs to feed and pension the poor. But he also swept aside established norms, ignored aspects of the country’s constitution, and used his popularity to expand and entrench his political power.

Critical to his success was oil. Between 1998 and 2007, the country’s income from oil was about US $300 billion. The money was used, among other things, to pay for farms and food, build schools, run a factory, and subsidize oil shipments to Cuba and the Dominican Republic. The vehicle for this funding was the state-owned oil company, Petróleos de Venezuela S.A. (PDVSA), over which Chávez had asserted near-complete control by firing two-thirds of its employees and replacing them with loyalists. While PDVSA is considered the country’s economic engine, it is also a hallmark of the corruption that grew and spread during Chávez’s tenure.

His family benefitted from his position of power. His father served three terms as governor of his home state and then became a real estate developer; one of his brothers served as the country’s energy minister; and others have acted as elected officials, bankers or political fixers. Despite their modest background, at the time of Hugo Chávez’s death in 2013 his family reportedly owned more than 100,000 acres of farmland and liquid assets of US $500 million.

His family were not the only ones to benefit from Chávez’s presidency. A number of private companies that contracted with the government were owned by government officials. Approximately US $11 billion was looted from PDVSA, and the company is believed to have been used to hide and launder money earned from the trafficking of cocaine through Venezuela by Colombian guerrillas. The U.S. government is investigating whether former PDVSA executives accepted bribes for inflated or fraudulent contracts; one contractor has already pleaded guilty to corruption charges. Brazilian and Venezuelan authorities are also investigating whether Venezuelan officials accepted approximately US $98 million in bribes from Odebrecht—the Brazilian construction company—which has agreed to pay at least US $2.6 billion in criminal penalties for bribery schemes throughout Latin America. 

FOR MORE ON THIS TOPIC, PLEASE SEE THE FOLLOWING RESOURCES:

TRACE Matrix: Venezuela
TRACE Compendium: Grupo Odebrecht S.A.
The Corruption of Democracy in Venezuela
Hugo Chávez revolution mired by claims of corruption

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