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<h1 id="reader-title">Venezuelan Private Sector Siphoned Off
$259B in Public Funds</h1>
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<p>June 19, 2016<br>
</p>
<p>Critics of the Venezuelan government have repeatedly
accused it of <a target="_blank"
href="http://www.telesurtv.net/english/news/Venezuela-Sacred-Heart-Sisters-Deny-Govt-to-Blame-for-Shortages-20160610-0048.html">failing
to take measures</a> to deal with shortages, but an
investigation by teleSUR reveals that the private sector
may have siphoned off up to US$259 billion from state
coffers by taking advantage of different exchange rates
and failing to produce the goods they claimed they
would. </p>
<p>The economy of Venezuela, which holds the world's
largest oil reserves, is intimately tied to oil
production. </p>
<p>As is common with states that have economies built
around a single commodity, the availability of dollars
means it was often cheaper to import goods instead of
producing them domestically. </p>
<p>Despite its fertile agricultural lands, this meant food
was also imported from its neighbors. </p>
<p>In order to keep prices for essential goods at an
affordable level, the government implemented an exchange
rate system that effectively subsidized the provision of
dollars for imports of key goods. </p>
<p>A private business would request cheap dollars from the
Venezuelan Central Bank with the stated aim of using
them to import food or raw material for food production.
The Central Bank would provide the dollars at the
preferential rate reserved for essential goods of 6.3
Bolivars to one U.S. dollar. </p>
<p>These private business would then lie about what was
imported or produced in order to allegedly stash dollars
away in offshore accounts or sell the goods at the
illegal black-market rate of approximately 500 bolivars
to one U.S. dollar. </p>
<p>The Venezuelan government claims that in some cases,
business that were given dollars never imported anything
at all, hoarding the cash instead. </p>
<p>This kind of illegal behavior repeated thousands of
times by the private sector is in many ways responsible
for the shortages seen on shelves and the exorbitant
prices. </p>
<p>In 2013, the then head of the Venezuelan Central Bank,
Edmee Betancourt, said that the country had lost between
$15 and $20 billion the previous year through such
fraudulent import deals. </p>
<p>In total, government supporters estimate that US$259
billion were lost or siphoned away between 2003 and
2013. </p>
<p>The Central Bank's own figures show that between 2003
and 2013, the Venezuelan private sector increased its
holdings in foreign bank accounts by over US$122
billion, or almost 230 percent. It is likely that many
of the 750 offshore companies linked to Venezuela in the
database released from the Panama Papers have been used
to recycle this money. </p>
<p>Venezuela's largest food manufacturer, Polar, whose
owner is opposes the government, has interrupted
production several times in recent weeks because, it
says, the government hasn't given it the dollars it
needs to import its raw materials. </p>
<p>However, over the years Polar has been one of the very
biggest recipients of preferential dollars for imports.
</p>
<p>Indeed, one of the challenges facing the government is
that Venezuela's traditional elite still own most of the
companies that do the importing, giving them ammunition
in its economic war against the government. </p>
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<div class="moz-signature">-- <br>
Freedom Archives
522 Valencia Street
San Francisco, CA 94110
415 863.9977
<a class="moz-txt-link-abbreviated" href="http://www.freedomarchives.org">www.freedomarchives.org</a>
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