Otto Reich, a
former high officer of the U.S. government and owner of a consulting firm
called Otto Reich and Associates, ORA, has sued Derwick Associates, a
contractor to the Venezuelan government for damages against his company. The
legal action sheds considerable light on the nature of the perverted confabulation
of government officers and well-to-do young members of Venezuelan high society
to sack Venezuelan resources at the expense of the people. It shows how the Venezuelan
problem is not only one of extreme corruption among the “socialist” and “revolutionary”
members of government but also among members of traditional or very
rich but immoral families. This explains
why the Venezuelan corrupt government of Hugo Chavez/Nicolas Maduro is still in
power. The people who would be the natural opponents of their perversion are
their allies in the sacking of the nation!
We have
extracted, for the information of the readers, the essential contents of the
suit in order to understand how Reich explains how this perverted marriage has
taken place. We don’t venture an opinion on the legal merits of the action nor I comment on Reisch's assertions.
However, I believe that the arguments included in the action coincide with the
investigations of Cesar Batiz for Caracas daily newspaper “Ultimas Noticias” and of blogger Alek Boyd in http://alekboyd.blogspot.com/2013/07/infodio.html
and should have been the object of investigation, long ago, by the Venezuelan authorities.
But, what authorities, if they are all in the same boat of corruption?
Defendants are U.S. residents who have
amassed enormous fortunes through a
llicit scheme
to secure energy-industry contracts in Venezuela for their U.S.-based
companies,
Derwick
Associates USA LLC and Derwick Associates Corporation ("Derwick
Associates").
Known in the
press as the "Chavez Kids," "Boliboys," and "the mafiosi
of the Fifth Republic,"
Defendants
Leopoldo Alejandro Betancourt Lopez ("Betancourt"), Pedro Jose
Trebbau Lopez
("Trebbau"),
and Francisco D' Agostino Casado ("D' Agostino) have profited wildly from
the
corrupt and
anti-democratic Chavez regime.
Derwick Associates' "business model"
is simple. From the United States,
Defendants offer
multi-million dollar kickbacks to public officials in Venezuela in exchange for
the award of
energy-sector construction contracts. Once the contracts are secured for Derwick
Associates (and
the money ultimately transferred into bank accounts in New York), Defendants
skim millions
off the top, which they deposit in U.S. banks. Defendants then subcontract out
the
actual work to
be performed on site to other U.S.-based companies, including one based in
Missouri.
Defendants run their illegal scheme from their homes and offices in New York
through their
U.S.-based companies. The scheme has been a huge financial boon to Defendants
Betancourt,
Trebbau, and D'Agostino, all of whom enjoy lifestyles of extreme wealth in the
United States….At
all relevant times, Defendants Betancourt, Trebbau, and D'Agostino worked
ogether as each
other's agents and partners, and were the owners and/or officers, directors, or
operators of
Derwick Associates USA LLC and Derwick Associates Corporation
2.
Why the suit?
In a series of
telephone calls placed from New York in late 2012, Defendants and
their agents
told officials of Banco Venezolano and others in the small Venezuelan émigré
community in the
U.S., that Ambassador Reich was working for Derwick Associates. That, of
course, was
blatantly false…..Nevertheless, the fraud worked. Once Banco Venezolano heard
that its potential consultant was working for the people who were suing it (and
who had profited from the
corrupted Chavez
regime), Banco Venezolano pulled out of final negotiations with ORA.
3.
Who is Derwick?
Derwick
Associates holds itself out as being in the business of providing
engineering,
procurement and construction services involving power plants to the government
of
Venezuela. Yet,
Derwick Associates itself lacks the technology and engineering wherewithal to
engage in such
large scale, heavy duty industrial projects. By its own admission, Derwick
Associates
relies heavily on several U.S.-based companies, including General Electric,
Pratt &
Whitney, and
ProEnergy Services, LLC to provide the materials and services needed to
construct
he power
plants. Derwick Associates has a website, which is displayed in English.
4. The background
Bribing public
officials is illegal in Venezuela. Nevertheless, the country has
become a
breeding ground for public corruption, especially when it comes to the awarding
of
public
contracts. As noted by the U.S. Department of State and others:
• The U.S.
Department of State recognizes Venezuela as being corrupt and
of risk to
companies seeking to do business there. As stated in its 2013
Investment
Climate Statement on
the country, the State Department warns
U.S. businesses
that "Venezuela's regulatory system lacks transparency
and suffers from
corruption," and notes that "Venezuela has not adopted
he OECD Convention on Combating
Bribery of Foreign Public Officials
n International Business
Transactions.
Venezuela is ranked
number 165 out
of 176 countries in the world.
5. The Crimes.
Defendants use
Derwick Associates to secure inflated public contracts in
Venezuela,
paying public officials large payments in exchange for awarding them contracts,
and
unjustly enriching
themselves in the process. In the
Defamation Suit discussed above [against Banco Industrial de Venezuela] ,
Defendants Betancourt and Trebbau
admit that
"[b]between 2009 and 2010, Derwick [Associates] submitted more than 25
bids on
EPC projects and
received EPC contracts on twelve of those projects." The truth, of course,
is far more complicated (and much less flattering to Defendants). As discussed
in more detail below, from 2009 to 2010, Derwick Associates obtained at least a
dozen energy-sector contracts valued at approximately $1 billion from agencies of
the Venezuelan government, secured via illegal bribes, kickbacks and other
unlawful activities, all in violation of United States law.
In mid-20l0,
PDVSA awarded contracts to Derwick Associates for the construction of four
power plants in Venezuela. The plants in question were to be located in the
cities of Las Morochas, Barinas, EI Furrial, and El Morichal. These contracts were not the subject of a
public bidding process…Upon securing
the inflated
contracts, Derwick Associates would subcontract out the work to various
U.S.-based
companies,
including Missouri-based ProEnergy Services, LLC, who would do substantially
all
of the actual
construction. Derwick Associates, having done almost nothing beyond merely
procuring the
contracts, would keep a substantial percentage of the contract proceeds for
itself….in November,
2012, while in the United States, D'Agostino told a friend
that "of course"
Derwick Associates paid kickbacks to secure its energy contracts; he noted that
in Venezuela, "you always
have to pay" what D'Agostino called "consulting fees," in order
to
secure the contracts. Of note,
the U.S. Department of Justice has declared that payments to
foreign officials to influence
their decisions violate the Foreign Corrupt Practices Act even if
they are accounted for as
"consulting fees." Although the exact details of the PDVSA kickback
scheme (including the amount of
the kickback and the dates it was offered and paid) remain shrouded in secrecy
given its
illegality, it
is believed that through an individual named Francisco Convit-Guruceaga
("ConvitGuruceaga") (who is Defendant Betancourt's first cousin, and is
also a part owner of Derwick
Associates), Defendants
Betancourt, Trebbau, and D' Agostino contacted Nervis Villalobos
("Villalobos"), a
former Vice Minister of Energy, about obtaining the contracts to build the
plants. Upon information and
belief, Convit-Guruceaga, pursuant to Defendants'
instructions, told Villalobos to
extend an offer of a substantial payment on their behalf to Rafael
Ramirez ("Ramirez"),
President of PDVSA.. Upon
information and belief, Villalobos did so, and Ramirez accepted the offer.
6.
In bad company
At all relevant
times, Defendants' personal banker at J.P. Morgan was Eduardo
Travieso
("Travieso"), a Vice President in the Private Banking Division who
was located in New
York, New York.
On March 21,2013, according to a required U.S. regulatory filing with
FINRA, Travieso
separated from J.P. Morgan following allegations that Travieso had potentially
committed
violations of investment-related statutes, fraud, or failure to supervise in
connection
with
investment-related statutes, arising from certain undisclosed customer
interactions by
Travieso. In the
filing, J.P. Morgan has stated publicly that "Mr. Travieso acted in a
manner that
is inconsistent
with the Firm's policies and procedures," and had "fallen short of
the standards"
of financial
industry employees.
7.
The second corrupt government agency that contracted
with Derwick
CORPOELEC stands
for Corporacion Electrica de Venezuela. CORPOELEC is
the successor
entity to Electricidad de Caracas. It is the state-owned entity responsible
for
supplying power
to the Venezuelan capital of Caracas. It
was
created in 2007 via the merger of a
number of
Venezuelan state-owned power companies.
Like the PDVSA, CORPOELEC has been widely
recognized as a target for
exploitation by
corrupt public officials. For instance, The Economist observed that
"[tentative
efforts to tame
corruption [in Venezuela's energy sector] have [] been undermined ... On [Hugo
Chavez's] watch,
[Chavez's brother] had led the electricity ministry as well as Corpoelec, the
graft-riddled
state-run electricity giant" CORPOELEC's "graft-riddled" nature
asserted itself
in 2009 with its
solicitation of construction contracts….Upon information and belief, Defendants
Betancourt, Trebbau, and D' Agostino set out to offer millions of dollars in
kickbacks to CORPOELEC officials in exchange for awarding the contracts to
Derwick Associates. Upon securing the inflated contracts, Derwick Associates
would then subcontract out the work to another U.S. company, Missouri-based ProEnergy
Services, LLC, which would do substantially all of the actual work…. Derwick Associates,
having done almost nothing, would keep a substantial percentage of the contract
proceeds for
itself… Defendants would later brag to
their friends and acquaintances in the United
States that
Derwick Associates secured these contracts by giving kickbacks to the right
people.
8.
The third corrupt government agency that contracted
with Derwick
The Corporacion
Venezolana de Guayana, CVG is a state-owned company that controls energy
production in the Guayana region in southeast Venezuela. In late 2009, CVG awarded two contracts to
Derwick Associates for the construction of energy plants in Puerto Ordaz,
Venezuela named Sidor Planta A and Sidor PlantaB. The contracts were not the
subject of a public bidding process.. Upon information and belief, Defendants
Betancourt, Trebbau, and D'Agostino
set out to offer
millions of dollars in kickbacks to CVG officials in exchange for awarding the
contracts to
Derwick Associates. Upon securing the inflated contracts, Derwick Associates
would then
subcontract out the work to another U.S. company, Missouri-based ProEnergy
Services, who
would do substantially all of the actual work….it is
believed that
through an intermediary [named] Convit-Guruceaga, Defendants
Betancourt,
Trebbau, and D'Agostino contacted Rodolfo Sanz ("Sanz"), the
Venezuelan
Minister of
Basic Industries and Mining…. Upon information and belief, Defendants Betancourt,
Trebbau, and D'Agostino together authorized Convit-Guruceaga to offer Sanz a
substantial payment in order to obtain the contracts. Convit-Guruceaga did so.
Betancourt later personally negotiated with Sanz over the terms of the payment.
Upon information and belief, Sanz accepted…Upon information and belief, the
monies that Derwick Associates received from the contracts were wired to
accounts at J.P. Morgan and Davos Financial Group in New York, and were used,
in tum, to pay millions of dollars in kickbacks to Sanz
9.
Derwick in the eye of the U.S. authorities
The incredible
manner in which Derwick Associates secured more than a billion
dollars in complex energy
construction contracts in such a short time has drawn scrutiny from
the United
States government and numerous media sources.
10. The defamation
suit against Banco Venezolano de Credito collapsed.
[In this trial]
through discovery and trial, each of Betancourt, Trebbau and D'Agostino
(through Derwick
Associates) would have had the opportunity to pursue a legal process that,
ostensibly,
could have cleared their sullied reputations. Rather than pursue the discovery
process and
prove up their claims, each of Betancourt, Trebbau and D'Agostino opted to
settle
he case.
Indeed, Defendants agreed to dismiss their lawsuit in April 2013 - mere months after
it
was commenced -
and before any material discovery could take place. It has been reported that Betancourt,
Trebbau, and Derwick Associates agreed to settle their $300 million defamation
suit without having received payment of even a single dollar from Banco
Venezuela or anyone else.
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