Rotten food, rotten revolution

An article of mine in Latin Business Chronicle


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Thursday, June 03, 2010
Venezuela: Rotten Food in a Rotten Revolution
http://www.latinbusinesschronicle.com/app/article.aspx?id=4264

PDVAL's former president is in custody after the rotten food scandal.

The spoiled food scandal is only the latest blow to Venezuela's state oil company PDVSA.
BY GUSTAVO CORONEL

One of the main claims of the Hugo Chavez government has been the help given to the poor. Although few would quarrel with this noble objective many Venezuelans criticize the manner in which is being done.

Enormous amounts of money have been spent in social programs involving direct aid and subsidies that provide the poor with “a fish a day” but not teaching them how to fish. The state oil company, Petroleos de Venezuela (PDVSA), directly finances many of these programs. In its 2008 Annual Report the company claims to have dedicated some $15 billion to social programs of the most diverse nature, including importing and distribuing food, financing street vendors, forming “socialist workers,” supplying free medicines and symptomatic medical attention in marginal areas and paying thousands of poor Venezuelans to integrate popular, armed militias to repel what Chavez defines as an imminent U.S. invasion. Much of this expenditure has been done with no transparency or accountability.

Medical attention run by Cuban paramedics in poor “barrios” has dwindled, as many of the Cubans, an estimated 1,200, have fled the country to neighboring Colombia and, eventually, the United States or other countries. Meanwhile “socialist” universities where a student can graduate in two years with little or no requirements are producing low quality professionals who will not contribute to social progress.

Perhaps the most tragic example of the waste of money involved in these populist programs has been the food imports and distribution program carried out by the state-owned oil company PDVSA. Not only is this an improper activity for an oil company, but the level of associated corruption and pilfering has been enormous. The oil production capacity of PDVSA is down some 800,000 barrels per day since Chavez arrived in power, as much oil money and effort are being dedicated to importing and selling chickens, milk and black beans in a grotesque travesty of what an oil company should be.

But there is worse, much worse. In recent weeks 2,000 containers with rotten food have been found in three different locations run by the oil company, containing some 40 million kilograms of largely spoiled food. This is enough food to feed millions of poor Venezuelans. Pressumably the food was imported as a means for corrupt bureaucrats to obtain commisions (kickbacks), never with the intention to distribute it. So far, there is only one person in custody, the former president of PDVAL, the food distribution company under PDVSA supervision, a former military officer of the Air Force, as most of Chavez’s “government” team.

These fraudulent activities involve numerous accomplices. The companies selling food to the Chavez regime are run and, even, owned by Chavez’s friends and they are in bed with the government’s representatives. Through overpricing they share enormous illegal profits at the expense of the Venezuelan nation.

Instead of cleaning up the rotten bureaucracy, Hugo Chavez is involved in a drive to eliminate the private sector and to expropriate private farms and companies, claimig that they are responsible for Venezuelan inflation, at some 32 percent per year the largest in the world. The real culprits, of course are his disastrous public policies, including exchange controls, harassment of the private sector, price regulation and abuse of power.

As this drama unfolds the Hugo Chavez regime appears poised for an implosion.

Gustavo Coronel, a 28-year oil industry veteran, was a member of the first board of directors of Petroleos de Venezuela (PDVSA) and is the author of several books.