Hugo Chavez’s dream of being the leader of all of South and Central America is over, there is no place for Dictatorships in Central or South America anymore. In trying to pretend that he is Simon Bolivar reborn Hugo Chavez has acquired the mistrust of all of the people who live in Central and South America.
We are sorry Hugo Chavez, it is time for you to hit the road or hang by the neck until you are Dead, Dead, Dead. Don’t worry though Hugo Chavez you friend Fidel Castro will take you in as long as you bring all the money you have stolen from the Venezuelan People.
Chavez foe launches presidential bid in Venezuela
CARACAS, Venezuela (AP) — A Venezuelan opposition leader launched his presidential campaign Saturday, challenging President Hugo Chavez to accept him in the race after a human rights court overturned a ban on his candidacy.
Leopoldo Lopez said in a speech to thousands of supporters that Chavez shouldn't try to prevent him from running.
"Since 2008, he's been looking for a mechanism to remove me from the political game," Lopez said. "Mr. President, I ask myself: ... Are you afraid of me?"
Venezuela's top anti-corruption official had barred Lopez from running for office, but the Costa Rica-based Inter-American Court of Human Rights earlier this month ordered election officials to allow him to run.
Chavez has criticized the court's decision. Government and electoral officials say they will await a decision on the matter by Venezuela's Supreme Court.
"Rights aren't begged for nor given. Rights are conquered and fought for. We fought for our right and we conquered it," Lopez told the cheering crowd.
He urged Chavez to accept the ruling and not "hide behind" other public institutions. Lopez said former Latin American strongmen including Chile's Augusto Pinochet, Argentina's Jorge Videla and Peru's Alberto Fujimori all sought to flout decisions by the rights court.
"Decide if you will be on the side of history of democracy, or on the side of history together with Pinochet, Fujimori and Videla, who also tried to violate decisions," Lopez said.
The former Caracas district mayor was barred from running for office in 2005 by Venezuela's comptroller general, an ally of Chavez. Lopez was accused of receiving donations between 1998 and 2001 on behalf of an organization he led from the state oil company Petroleos de Venezuela SA, where his mother worked at the time.
The comptroller general also sanctioned Lopez in 2004 for alleged irregularities in the movement of funds from one portion of his local budget to another.
Lopez was on a list of politicians blacklisted due to corruption investigations, but he insists he is innocent and notes he never was sentenced in a court.
Lopez plans to compete against other opposition contenders in a February primary vote that will pick a unity candidate to challenge Chavez in the October 2012 election.
In recent polls, Lopez has trailed other opposition leaders such as state governors Henrique Capriles and Pablo Perez. Those surveys were carried out before the human rights court sided with Lopez in its ruling.
There was no immediate reaction from the government to Lopez's latest remarks.
Chavez said earlier this month that the rights court is part of an international system that "protects the corrupt and obeys the mandate of the (U.S.) imperial power and the bourgeoisie."
"What value can that court have?" Chavez said. "For me, it's worthless."
Lopez's supporters filled a Caracas avenue waving Venezuelan flags and beating out a festive rhythm on drums.
Some in the crowd said they have little faith in the Supreme Court. Many magistrates were appointed by pro-Chavez lawmakers who dominated the previous National Assembly before opposition candidates increased their presence in 2010 elections.
"If Chavez gives the order, the next day the court, all of them accept the sentence. He always has the last word," said Carmen Ruiz, a 34-year-old housewife at the rally.
Chavez vehemently denies holding sway over the courts or prosecutors, insisting they are autonomous and act according to the law.
International human rights groups argue that prosecutors and courts have targeted government opponents, and they urge Venezuela to abide by the ruling in Lopez's case.
"The Venezuelan government finds itself in a pickle: if they reject the sentence they will be in violation of the Venezuelan Constitution. If they accept it they will have to permit a political rival they have persecuted for several years," said Sarah Wasserman, chief operating officer of the New York-based Human Rights Foundation.
Other Chavez opponents have also faced accusations or criminal charges they say are politically motivated.
They include former presidential candidate Manuel Rosales, who lost to Chavez in the last election in 2006. Rosales fled into exile in 2009 after prosecutors accused him of pocketing public funds. He was granted asylum in Peru and has denied wrongdoing.
Guillermo Zuloaga, the majority owner of opposition-aligned TV channel Globovision, fled the country last year after a court issued an arrest warrant on charges of usury and conspiracy. Zuloaga accused prosecutors of carrying out a vendetta on orders from Chavez.
Another opposition politician, Oswaldo Alvarez Paz, was jailed for nearly two months last year and was eventually convicted on a charge of spreading false information during a TV talk show. He denies the charge.
___
Associated Press writer Ian James contributed to this report.
CARACAS, Venezuela (AP) — A prominent opponent of President Hugo Chavez said Tuesday that Venezuela's highest court will violate constitutional rights if it upholds a ban on him running in next year's presidential election.
Leopoldo Lopez said the Supreme Court is obligated to comply with a ruling by the Inter-American Court of Human Rights that orders Venezuelan authorities to lift restrictions on Lopez that were imposed by the South American country's top anti-corruption official.
"It would be violating the constitution," Lopez said, referring to a pending ruling on the restriction to be handed down by justices of the Supreme Court.
Earlier Tuesday, Attorney General Luisa Ortega Diaz said the Costa Rica-based right court issued its decision in a "hurried way" in the case of Lopez.
Ortega said the rights court has yet to take a stance on various complaints of rights violations dating to the 1990s or earlier, but has acted particularly swiftly in Lopez's case.
"One sees how there is different treatment of different cases that have been presented here in Venezuela," Ortega said at a news conference.
She said Venezuela's Foreign Ministry should review the rights court's record to determine if it is complying with a regional human rights convention that governs its activities.
Chavez criticized the rights court after the ruling was released last week, calling the court part of an international system that "protects the corrupt and obeys the mandate of the (U.S.) imperial power and the bourgeoisie."
Lopez has insisted Venezuela has an obligation to comply with the court's ruling. He intends to run in an opposition primary in February that will pick a unity candidate to challenge Chavez. The presidential election will be in October 2012.
Lopez, a former Caracas district mayor, was barred from running for office in 2005 by Venezuela's comptroller general. Lopez was accused of receiving donations on behalf of an organization he led between 1998 and 2001 from the state oil company Petroleos de Venezuela SA, where his mother worked at the time.
The comptroller general also sanctioned Lopez in 2004 for alleged irregularities in the movement of funds from one portion of his local budget to another.
Lopez was among several politicians blacklisted due to corruption investigations, but he insists he is innocent and notes he never was sentenced in a court.
He challenged his disqualification before the human rights court, arguing his rights were violated.
The chief of Venezuela's elections council and other officials have said they are awaiting a response to the decision by the country's Supreme Court.
Human rights groups are supporting Lopez's argument that the ruling is legally binding for Venezuela.
Jose Miguel Vivanco, Americas director for New York-based Human Rights Watch, said in a statement that "the court's role is especially vital for a country like Venezuela where, under Chavez's rule, the judiciary has ceased to function as a check on government abuse."
The Human Rights Foundation also welcomed the decision by the rights court, calling it a "landmark case" that will have impact throughout Latin America. The New York-based organization noted Venezuela has previously recognized the rights court's jurisdiction.
Venezuela is a signatory to the American Convention on Human Rights, which the regional court cited in its ruling.
CARACAS (Reuters) - Venezuela has proposed paying Exxon Mobil Corp. $1 billion in compensation for the nationalization of its assets in 2007, much less than the U.S. oil giant wanted, the energy minister said on Wednesday.
In a telephone call to Reuters, Energy Minister Rafael Ramirez also denied the government of President Hugo Chavez was negotiating with Exxon separately from an ongoing arbitration process at New York's International Chamber of Commerce.
"Our proposal is $1 billion for its assets ... We are not in negotiations with Exxon Mobil, nor has it crossed our minds to approach them," Ramirez said.
"There are no negotiations outside the arbitration tribunal. We have said that the ruling of the Chamber of Commerce is coming out soon, but we do not know when."
Venezuela is battling about 20 arbitration cases triggered by nationalizations that were ordered by Chavez's socialist administration. The biggest by far are the cases brought by oil majors Exxon and ConocoPhillips.
Verdicts against the South American OPEC member will likely run to billions of dollars, which could put pressure on public finances ahead of a presidential election in October 2012, when Chavez will be seeking a new six-year term.
Earlier on Wednesday, local media quoted a senior Venezuelan official, Prosecutor General Carlos Escarra, telling reporters the government was negotiating with Exxon and that the company had cut its compensation demand to $6 billion.
That was much more than Venezuela has banked on paying -- but the comments caused speculation that a deal could be near.
The Exxon and Conoco cases stem from the 2007 state takeover of extra heavy crude projects in Venezuela's Orinoco Belt, one of the biggest oil deposits in the world.
The two companies originally claimed more than $40 billion in combined compensation, while Venezuela's state oil company PDVSA calculated the assets, after payments to creditors, were worth less than $2 billion.
The dispute with Exxon is particularly fractious. In early 2008 the company won a court order to freeze $12 billion of PDVSA assets. The freeze was swiftly overturned.
Earlier this year, Ramirez told Reuters that the Chavez government had calculated that it would pay no more than $2.5 billion in total to Exxon and Conoco.
Some analysts say PDVSA might have to sell overseas holdings to meet a big compensation bill. The company has cash flow problems despite high oil prices because most of its income goes toward funding Chavez's socialist spending.
But Ramirez says PDVSA is fully solvent, would not have to sell assets, and already has a compensation plan in place.
(Writing by Daniel Wallis; Editing by Bob Burgdorfer)
CARACAS, Venezuela (AP) — To its critics, the Venezuelan newspaper to Poder represents pure yellow journalism.
The irreverent weekly recently ran a front-page photomontage of Venezuelan politicians' heads atop bodies in skimpy swimwear and asked readers which were the sexiest. Another photo collage, shortly before President Hugo Chavez announced he had cancer, depicted him in a hospital robe as if about to undergo surgery.
But when a judge ordered the newspaper to stop publishing last weekend after an issue that particularly enraged Chavez's allies, it became a flashpoint in a renewed debate over free speech.
"With strange speed, simply because that was the order, the weekly was prohibited from circulation due to the pure will of the government," opposition newspaper editor Teodoro Petkoff wrote in an editorial in his daily, Tal Cual.
He said the court ruling set a disturbing precedent, comparing it to previous government decisions that forced 32 radio stations and the opposition television channel RCTV off the air.
The newspaper landed in trouble last Sunday as the latest issue was hitting the stands. A photomontage labeled "Chavez's women in power" depicted the Supreme Court president, the elections chief and four other prominent female officials as cabaret dancers in revealing skirts and high heels.
The text below described an imaginary scene in "the Cabaret of the Revolution," saying the women danced with high kicks to "attract the public to the Revolution" led by Chavez. An accompanying article promoted the view that various top officials who hold independent offices have become subordinated to Chavez.
The reaction was swift.
That same day, Supreme Court President Luisa Estella Morales denounced the article and the photo as offensive to women and an attack on public institutions. Other officials demanded legal action.
A judge ordered the newspaper to temporarily cease publishing, which was a first in Venezuela. The paper's director, Dinora Giron, was arrested at her home. She was released Tuesday after authorities said she was being investigated on criminal charges of insulting public officials, instigating hatred and publicly offending women.
The newspaper's editor and president, Leocenis Garcia, went into hiding. On Wednesday, he released an open letter to Chavez asking for the paper to be allowed to resume publishing and saying if that condition was met, "I'm willing to turn myself in within 48 hours."
The case against 6to Poder, or Sixth Power, has been criticized as a violation of free speech by the Miami-based Inter American Press Association, which has often clashed with Chavez's government and accused it of using tighter broadcast laws and criminal investigations to intimidate critical voices in the news media.
The country has many newspapers that are openly critical of Chavez, and the president's allies have defended the court's decision by arguing that 6to Poder flagrantly violates journalistic ethics all the time.
They cite, among other things, the paper's decision earlier this year to run a front-page photo of top anti-corruption official Clodosbaldo Russian in a hospital bed after he suffered a stroke. He was apparently unconscious and died shortly afterward, and officials criticized the paper for what they called a violation of privacy.
Pro-Chavez lawmaker Desiree Santos Amaral defended the court's order, saying the latest photomontage was an example of various irresponsible actions by the newspaper.
"It can't be considered humor," Santos said in an interview published Thursday in the government newspaper Correo del Orinoco. "They want to disparage the authorities making the people believe the country is a brothel run by President Chavez."
In a debate in the National Assembly on Monday, she called 6to Poder's editor a criminal and accused him of repeatedly engaging in unethical behavior.
"He's not a journalist," Santos said, noting there are various civil court cases pending that accuse Garcia of libel and slander.
Garcia, who according to his employees is the newspaper's majority shareholder, writes an opinion column in which he has alleged irregularities in the state oil company.
He was previously jailed for more than two years on charges including illegal possession of a weapon and damaging property including a computer and a table during a rampage at a newspaper office. He was released in 2010, and soon after founded 6to Poder.
Gabriela Ramirez, the country's public ombudswoman, was among those pictured in the latest montage and said "it didn't make us laugh." She said on state television that she and other officials called for the investigation in part because "we have to protect our institutions."
Defense lawyer Pedro Aranguren said he will appeal the judge's order that shut down the newspaper.
Several journalists showed up for work as usual in their small Caracas newsroom this week, saying they hope the decision is overturned. They said the paper has about 20 full-time employees.
Copy editor Lourdes Acosta said she was surprised by the outcry and suspects the photomontage was used as excuse to crack down for other articles the paper has published.
Reporter Jesus Linares, who leads an investigative team, said that he didn't know who produced the altered photo but that Garcia took responsibility for publishing it.
"If at some point they felt offended by the photomontage, well, we apologize because that was never the intention," Linares said. "We never thought all of this would happen."
____
Associated Press writer Jorge Rueda contributed to this report.
The Venezuelan government has turned its fury against the Venezuelan weekly 6th. Power, ordering its closure and the arrest of its directors, after publishing a photo montage of six senior officers posing as cabaret dancers.
The weekly, which usually publish satirical montages Venezuelan personalities, received on Monday a court order prohibiting Control Ninth their publication and distribution, said the legal representative of the 6th. Power, Pedro Aranguren.
"This is a blow to freedom of expression," Aranguren. "It's a political decision without legal merit. Just being used to court to criminalize a person for writing a critical note and as an excuse to close a newspaper. "
The government of President Hugo Chavez ordered the weekend's political police, the Bolivarian Intelligence Service (Sebin), to arrest the owner of the publication, Leocenis Garcia, and director of information, Dinora Pigs.
Garcia remains a fugitive while Giron was arrested on Sunday on his way to the headquarters of the publication. The Attorney General of Venezuela on Monday accused both of "inciting hatred".
The weekly had published this weekend, a photo montage entitled "The powerful of the Revolution", which showed civil servants in the attire used by the Can-Can dancers.
The article accompanying the illustration noted that each of the representatives of the government fulfills a specific function "within the cabaret run by Mr. Chavez."
The photo appeared the vice president of the National Assembly, Blanca Eekhout, the president of the Supreme Court, Luisa Estella Morales, the Ombudsman, Gabriela Ramirez, the deputy comptroller Adelina Gonzalez, the Attorney General Luisa Ortega Diaz and president of the National Electoral Council, Tibisay Lucena.
The satirical illustration did not give many thanks to the officials.
"They try to talk about the female figure as a cabaret and [submit] to the country as a brothel. Imagine what this means, the full assault, it is inexcusable anywhere in the world, "said Eekahout in an interview broadcast by state-owned Venezolana de Television. "This campaign seeks to delegitimize, discredit and justify violent actions."
Meanwhile, Ramirez called on prosecutors to open an investigation against the publication, saying it offended the Venezuelan women and the justice system in Venezuela.
"[Mount] is a double offense to try to show women as strippers public authorities and is intended to show that justice in Venezuela there is a fee, which human rights are sold to the highest bidder, that surveillance Heritage Public is mercenary, "he said.
Also, the member of the national leadership of the ruling United Socialist Party of Venezuela (PSUV), Rodrigo Cabezas, criticized the weekly saying that freedom of expression is not synonymous with freedom of destabilization.
Hugo Chavez the dictator of Venezuela now may be the riches man on the planet considering he thinks all the oil in Venezuela’s and the money belongs to him, including 200 tons of gold.
August 19 2011 (AP) News of the World by Panama Jack in exile in Costa Rica
And how come the opposition parties are not running Maria Corina Machado for the next President of Venezuela 2012 The New Face of Venezuela, She is the only person who can beat Hugo Chavez in the next election??
Hugo Chavez the dictator of Venezuela now may be the riches man on the planet considering he thinks all the oil in Venezuela’s and the money belongs to him, including 200 tons of gold.
August 19 2011 (AP) News of the World by Panama Jack in exile in Costa Rica
And how come the opposition parties are not running Maria Corina Machado for the next President of Venezuela 2012 The New Face of Venezuela, She is the only person who can beat Hugo Chavez in the next election??
CARACAS, Venezuela (AP) — President Hugo Chavez's political rivals are on notice that anything they say over the phone might be not only recorded by eavesdroppers but also played and flaunted on national television.
Though wiretapping without a court order is illegal in Venezuela, such recordings have been surfacing on state TV and radio and have become a standard tactic in attempts to ridicule and embarrass opposition politicians.
Oswaldo Alvarez Paz, a longtime Chavez adversary and a presidential hopeful, denounced what he called "dirty tactics" by the government after state media this month aired recordings of him and an activist gossiping over the phone and complaining about other anti-Chavez politicians.
"That made me feel indignation and made me laugh, because it's not the first time. They've already put me on that program like four times," Alvarez told The Associated Press in an interview last week.
He said he isn't sure who is tapping his phones but he's certain they are working for the government and suspects the state phone company is complicit.
"They're criminals," Alvarez said. "I sincerely believe that the hand of Hugo Chavez ... is in all of this. He's the one who conducts the orchestra."
Mario Silva, who hosts the late-night talk show "La Hojilla," or "The Razor," on state television, smiled mischievously when he played the recordings. "There are some very good things here," said Silva, who suggested the opposition's divisions were apparent in the cursing and irritated remarks by Alvarez and activist Beatriz Contreras.
In another episode, Silva denied the government was making the recordings and said he was picking them up after they were posted on YouTube by others. He said it's the work of a new, unsigned blog known as "Mesa de Alacranes," or "Table of Scorpions," a play on the name of the opposition coalition, the Democratic Unity Table.
"I want to clear up the following for people: The Mesa de Alacranes ... is a tweet created by opposition people who are very upset with certain decisions that are being made within the opposition," Silva said.
Silva sits on the board of directors of Chavez's socialist party and dedicates his program to mocking and at times crudely insulting the president's political opponents, among others.
It's unclear who's behind the blog and how they gained access to the recordings. The Venezuelan government did not respond to a request for comment.
That and other recordings have been released just as Chavez, who is undergoing cancer treatment, has been intensifying his verbal assaults on his adversaries and seeking to portray the opposition as riven with divisions ahead of the 2012 elections. Chavez has pointed specifically to the leaked recordings as proof of such infighting.
"Look at how the opposition ... is a sack of serpents," Chavez said in a televised speech the day after Alvarez's conversations were aired on state TV. "Did you all see La Hojilla last night?"
Chavez reiterated that the recordings came from the blog and said of the opposition, "they themselves, it seems, are sending" the videos.
"They're stabbing at each other," Chavez said. "Those people cannot come back to govern this country."
The blog has aired the conversations of several Chavez opponents and recently posted a video featuring animated scorpions and merengue music mixed with fragments of Alvarez's comments.
A Twitter account, "mesadealacranes," has begun promoting the leaks.
Eavesdropping on phone and electronic communications has become rampant in many Latin American countries. Those tapping phones have ranged from state intelligence agencies to drug traffickers and other criminals. When recordings are leaked to the news media, the intent is usually to cause political damage.
The release of recorded conversations to private media in Peru during former President Alan Garcia's term led to a major scandal over alleged kickbacks for oil concessions. Former navy intelligence officials employed by a security firm were arrested and accused of carrying out the wiretapping.
In Colombia, more than 20 former officials of the state security agency have been jailed for their alleged roles in eavesdropping on judges, journalists and political opponents of former President Alvaro Uribe. His former chief-of-staff has been jailed on criminal conspiracy and other charges, accused of ordering the eavesdropping. A congressional committee grilled Uribe about the case Thursday, and the ex-president denied ordering illegal wiretaps, as has his ex-chief of staff.
In Venezuela, there have been no arrests and the occasional stream of recordings aired over the past several years seem aimed mainly at discrediting opposition politicians. What's more, state media openly promote the recordings.
"Making private conversations public through the state media appears to be another tactic to harass government opponents," said Jose Miguel Vivanco, Americas director of the U.S.-based group Human Rights Watch. "Without an independent judiciary that acts as an effective check on government power, authorities and state media representatives have limited incentives to abide by basic rules."
Opposition newspaper editor Teodoro Petkoff had one of his conversations aired on state television in 2009, and he condemned the latest wiretapping in an editorial calling it disgraceful "when the abuse of power leaves us indifferent and we accept it as a normal component of the political landscape." A photo montage accompanying the article depicted Chavez listening on headphones.
Alvarez seemed unfazed by the leaks of his calls, and demanded in one subsequent newspaper column that "Chavez should quit." The president called that an indication of a conspiracy against his government, a claim Alvarez denied as absurd.
In another recording aired this month, opposition politician Daniel Santolo and another man are heard complaining about other members of the opposition. Asked about the incident, Santolo said it was not only illegal but also the sort of behavior that has no place in a democracy.
"This is a government that violates the constitution and uses state media to commit crimes," Santolo said.
Alvarez said the fact that broadcasting private conversations has become a routine political strategy means that for many Chavez opponents, "you have to be prepared for anything."
Some Chavez rivals have also faced criminal charges that they condemn as politically motivated. Alvarez was jailed for nearly two months last year and was eventually convicted on a charge of spreading false information during a TV talk show.
He called that charge bogus and has stood by his critical remarks about Venezuela cooperating with Colombian rebels and becoming a haven for drug traffickers.
The former congressman and state governor said he no longer has confidence in a judicial system that he views as under Chavez's influence.
"Everywhere in the world, they act against this sort of practice and those who are responsible are sanctioned," Alvarez said. "Not here, because all the powers are under the control of a single person."
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Associated Press writer Frank Bajak in Lima, Peru, contributed to this report.
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Ian James on Twitter: http://twitter.com/ianjamesap
CARACAS (Reuters) - Venezuela received an enviable honor last month: OPEC said it is sitting on the biggest reserves of crude oil in the world -- even more than Saudi Arabia.
But the Venezuelan oil industry is also sitting atop a well of trouble.
The South American nation has struggled to take advantage of its bonanza of expanding reserves. And a scandal over embezzled pension funds at state oil company PDVSA has renewed concerns about corruption and mismanagement.
Retired workers from the oil behemoth have taken to the streets in protest. Their beef: nearly half a billion dollars of pension fund money was lost after it was invested in what turned out to be a Madoff-style Ponzi scheme run by a U.S. financial advisor who was closely linked to President Hugo Chavez's government.
The fraud case centers on Francisco Illarramendi, a Connecticut hedge fund manager with joint U.S.-Venezuelan citizenship who used to work as a U.S.-based advisor to PDVSA and the Finance Ministry.
Several top executives at PDVSA have been axed since the scandal, which one former director of the company said proved Venezuela under Chavez had become "a moral cesspool."
Pensioners are not the only ones still wondering how such a large chunk of the firm's $2.5 billion pension fund was invested with Illarramendi in the first place.
The question cuts to the heart of the challenges facing PDVSA, one of Latin America's big three oil companies alongside Pemex of Mexico and Brazil's Petrobras.
The Organization of the Petroleum Exporting Countries issued a report last month showing Venezuela surpassed Saudi Arabia as the largest holder of crude oil reserves in 2010.
PDVSA is ranked by Petroleum Intelligence Weekly as the world's fourth largest oil company thanks to its reserves, production, refining and sales capacity, and it has been transformed in recent years into the piggy-bank of Chavez's "21st Century Socialism."
The timing of the scandal is not good for Chavez: the charismatic, 57-year-old former coup leader underwent cancer surgery in Cuba in June and is fighting to recover his health to run for re-election next year. He needs every cent possible from PDVSA for the social projects that fuel his popularity.
MULTI-TASKING
The company does a lot more than pump Venezuela's vast oil reserves. Tapped constantly to replenish government coffers, PDVSA funds projects ranging from health and education to arts and Formula One motor racing. From painting homes to funding medical clinics staffed by Cuban doctors, the restoration of a Caracas shopping boulevard and even a victorious team at the Rio carnival, there's little that PDVSA doesn't do.
Jeffrey Davidow, a former U.S. ambassador to Venezuela who now heads the Institute of the Americas at the University of California, San Diego, points to the occasion when PDVSA senior executives turned down invitations to a regional energy conference at the last minute back in May, saying they were too busy because of PDVSA's leading role in the government's "Gran Mission Vivienda" project. It aims to build two million homes over the next seven years.
"In poorly-managed societies, national oil companies tend to be the most efficient organizations, so the government gives them more work to do, instead of letting them focus on being better oil companies," Davidow told industry executives in the ballroom at a luxurious La Jolla hotel.
That's the kind of criticism that Chavez, who has nationalized most of his country's oil sector since he was elected in 1999, says is rooted in a bankrupt "imperial Yankee" mind-set.
He purged perceived opponents from PDVSA's ranks in response to a crippling strike in 2002-2003 that slashed output, firing thousands of staff and replacing them with loyalists. Since then, the company has endured one controversy after another.
There was the "maleta-gate" affair in 2007, so-called after the Spanish word for suitcase, when a Venezuelan-American businessman was stopped at Buenos Aires airport carrying luggage stuffed with $800,000 in cash that U.S. prosecutors said came from PDVSA and was intended for Cristina Fernandez's presidential campaign in Argentina. Both Fernandez and Chavez denied the charge.
There have also been persistent allegations by industry experts and international energy organizations that Venezuela inflates its production statistics -- which PDVSA denies -- and a string of accidents, including the sinking of a gas exploration rig in the Caribbean last year and a huge fire at a giant oil storage terminal on an island not far away.
In a big blow to its domestic popularity, tens of thousands of tons of meat and milk bought by PDVSA's importer subsidiary, PDVAL, were left festering in shipping containers at the nation's main port last year, exacerbating shortages of staples on shop shelves. Opposition media quickly nicknamed the subsidiary "pudreval" in a play on the Spanish verb "to rot" - "pudrir".
In an apparent damage-limitation exercise after the pension scandal, five members of the PDVSA board were relieved of their duties in May, including the official who ran the pension fund. They were replaced by Chavez loyalists including the country's finance minister and foreign minister.
Gustavo Coronel, a former PDVSA director in the 1970s and later Venezuela's representative to anti-graft watchdog Transparency International, said the fraud had been going on right under the noses of the PDVSA board.
"What this scandal shows is that Venezuela has become a moral cesspool, not only restricted to the public sector but to the private sector as well," he wrote on his blog.
"Money is dancing like a devil in Venezuela, without control, without accountability. Those who are well connected with the regime have thrown the moral compass by the side Venezuelan justice will not move a finger. Fortunately, U.S. justice will."
SHOW ME THE MONEY
U.S. investigators say Illarramendi, the majority owner of the Michael Kenwood Group LLC hedge fund, ran the Ponzi scheme from 2006 until February of this year, using deposits from new investors to repay old ones. He pleaded guilty in March to multiple counts of wire fraud, securities and investment advisor fraud, as well as conspiracy to obstruct justice and defraud the U.S. Securities and Exchange Commission. He could face up to 70 years in prison.
By those outside the circles of power in Venezuela, Illarramendi was seen as one of the "Boli-Bourgeoisie" -- someone who was already wealthy but grew much richer thanks to the "Bolivarian Revolution," named by Chavez after the dashing 19th century South American independence hero Simon Bolivar. In one widely-circulated image, Illarramendi is seen overweight and balding, wearing a dark blue overcoat and clutching a blue briefcase as he left federal court in Bridgeport, Connecticut after pleading guilty.
An ex-Credit Suisse employee and Opus Dei member in his early 40s who lived in the United States for at least the last 10 years but traveled frequently to Venezuela, Illarramendi is on bail with a bond secured on four U.S. properties he owns.
He was close to PDVSA board members and Ministry of Finance officials, but is not thought to have known Chavez personally. The son of a minister in a previous Venezuelan government, Illarramendi did enjoy some perks -- including using a terminal at the capital's Maiquetia International Airport normally reserved for the president and his ministers, according to one source close to his business associates.
His sentencing date has not been set yet, but a receiver's report by the attorney designated to track down the cash is due in September. In June, SEC regulators said they found almost $230 million of the looted money in an offshore fund.
That was just part of the approximately $500 million Illarramendi received, about 90 percent of which was from the PDVSA pension fund, according to the SEC.
PDVSA has assured its former workers they have nothing to worry about, and that the money will be replaced. But what concerns some retirees are allegations the company may have broken its own rules for managing its pension fund, which should have provided for more oversight by pensioners.
A representative of the retirees should attend meetings where the use of the fund is discussed, but no pensioners have been called to attend such a meeting since 2002.
PDVSA's investment in capitalist U.S. markets may seem to be incongruous given the president's anti-West rhetoric, but the scale of such transfers is not known, and the investment options for such funds at home in Venezuela are sharply limited, not least by restrictive currency controls.
Energy Minister Rafael Ramirez told Reuters that Illarramendi only had an advisory role with PDVSA, and that it ended six years ago. So quite how he came to be managing such a big chunk of the pension fund is a hotly debated topic. Ramirez said the pension fund had been administered properly, and that the losses were of great concern to the company.
In July, PDVSA boosted pension payments to ex-employees by 800 bolivars a month, or about $188. The government also allocated nearly half the income from a new 2031 bond issue of $4.2 billion to the company's pension fund -- probably to replenish deposits lost in the scandal.
Still, ex-PDVSA worker Luis Villasmil says his monthly stipend barely meets the essentials for him, his wife, a diabetic son and a niece. One morning in April, he rose early and met several dozen other PDVSA retirees to march in protest to the company's local headquarters in Zulia, the decades-old heartland of Venezuela's oil production.
"I never thought we would be in this situation," the 65-year-old told Reuters with a sigh. "I think PDVSA should show solidarity with the retirees and pay their pensions whatever happens because it is responsible. But that's not the heart of the issue, which is to recover the money if possible."
Ramirez, who once proclaimed that PDVSA was "rojo rojito" (red) from top to bottom, says the firm's 90,000 staff have nothing to worry about. "Of course we are going to support the workers," he told Reuters in March. "We will not let them suffer because of this fraud. We have decided to replace it (the lost money) and to make ourselves part of the lawsuit (against Illarramendi)."
ORINOCO FLOW
The latest scandal comes at a time when observers are focused on the future of PDVSA, given Chavez's uncertain health, next year's election and OPEC's announcement on reserves.
The producer group said in July that Venezuela leapfrogged Saudi Arabia last year to become the world's no.1 reserves holder with 296.5 billion barrels, up from 211.2 billion barrels the year before.
"It has been confirmed. We have 20 percent of the world's oil reserves ... we are a regional power, a world power," Chavez said during one typical recent TV appearance, scribbling lines all over a map to show where planned refineries and pipelines to the coast would be built.
The new reserves were mostly booked in the country's enormous Orinoco extra heavy belt, a remote region of dense forests, extraordinary plant life and rivers teeming with crocodiles and piranhas.
And there lies the rub. Not only is the Orinoco crude thick and tar-like, unlike Saudi oil which is predominantly light and sweet, it is also mostly found in rural areas that have little in the way of even basic infrastructure. It costs much more to produce and upgrade into lighter, more valuable crude.
So hopes now rest on a string of ambitious projects that Venezuela says will revitalize a declining oil sector, eventually adding maybe 2 million barrels per day (bpd) or more of new production to the country's current output of about 3 million bpd, while bringing in some $80 billion in investment.
The projects are mostly joint ventures with foreign partners including U.S. major Chevron, Spain's Repsol, Italy's Eni, Russian state giant Rosneft and China's CNPC, as well as a handful of smaller companies from countries such as Japan, Vietnam and Belarus. Even after the nationalizations of the past, investors clearly want a seat at the Orinoco oil table.
In June, Ramirez announced new funding for Orinoco projects this year of $5.5 billion through agreements with Chinese and Italian banks.
The question remains: will PDVSA have the operational capacity required as the lead company in each project, and will it be able to pay its share?
"Processing that extra heavy crude requires a lot of capital and equipment, and the climate is not good for that at the moment," said one regional energy consultant who has worked with PDVSA and asked not to be named.
There may be billions of barrels in the ground, but the pension scandal will only underline the risks going forward for foreign companies with billions of dollars at stake.
(Additional reporting by Emily Stephenson in Washington; Editing by Andrew Cawthorne, Claudia Parsons and Michael Williams)
