Anti-Money Laundering News and Information

Venezuelan tied to epic corruption case funneled millions into secretive Luxembourg companies

As one of the world’s biggest oil producers, Venezuela’s government allegedly handed out billions of dollars in energy contracts to an inner circle of politically connected young businessmen, who in turn moved the bulk of their new fortunes to Europe, with some diverting their assets to South Florida.

One such entrepreneur was Alejandro Betancourt Lopez, a savvy Venezuelan who has managed to avoid prosecution in Miami while amassing his investments in Europe instead of here. Betancourt appears in a new data investigation of Luxembourg’s registry of corporate records that reveal he is the controlling person behind previously unknown companies in the tiny European tax haven.

Federal prosecutors in Miami have charged more than a dozen nouveau richeVenezuelans — dubbed boliburgueses, or Bolivarian bourgeoisie — who profited wildly off these alleged bribery-fueled contract schemes tracing back to the presidency of Hugo Chávez and his successor, Nicolás Maduro. These Venezuelan defendants have been charged here because federal investigators have collected evidence showing they used the U.S. banking system and real estate market to hide their allegedly tainted assets.

Under investigation for five years, Betancourt has studiously avoided the U.S banking system and real estate market and invested the vast majority of his wealth in shell companies set up in Spain, Switzerland and — now, it turns out — Luxembourg, which has grown into a preferred haven for rich people seeking secrecy and tax benefits.

Betancourt’s name pops up as the “beneficial owner” of at least four companies in Luxembourg, the Miami Herald and its reporting partners found. They are Latin America Ventures SARL, Gainsboro Developments, Ming International and O’Hara Financial S.A., with corporate records showing they have been used for hundreds of millions of dollars in business investments. Those range from oil exploration to sunglass manufacturing to transportation services — all outside of Betancourt’s native Venezuela, where he made much of his money off the state-run oil company, Petróleos de Venezuela S.A., or PDVSA. In early 2019, the U.S. government hit PDVSA with sanctions, saying it “has long been a vehicle for corruption,” while blocking its assets in the United States and any American from doing business with the company.

Betancourt’s relationship to his shell companies listed in Luxembourg’s corporate registry became more transparent in 2019 when that country started requiring disclosure of a beneficial owner’s name under an anti-money-laundering law that aims to combat offshore holdings set up to avoid taxes and launder illicit funds. However, Luxembourg’s registry cannot be searched by owner name; instead, it is only searchable by company name, making it impossible to discover whether someone is a beneficial owner of a company without knowing the name of it in the first place.

The castle/home of Alejandro Betancourt in Spain. The Miami Herald and its parent McClatchy partnered with 17 media outlets, including Le Monde in France, Süddeutsche Zeitung in Germany and the Organized Crime and Corruption Reporting Project, as well as the nonpartisan Anti-Corruption Data Collective to analyze Luxembourg’s corporate registry, which contains more than 140,000 active companies, as part of a project called OpenLux. Le Monde collected the registry information and created a searchable database that would allow news partners to look up a beneficial owner’s name and match it with his or her shell companies.

Venezuelan lawyer Alejandro Rebolledo, an expert on money laundering, said Luxembourg has become an ideal place to conceal millions that European and U.S. authorities suspect is tainted by corrupt Venezuelan energy contracts. Betancourt and others — including his cousin and former business partner, Francisco Convit Guruceaga, who faces indictment in Miami — use Luxembourg and other opaque jurisdictions to set up shell companies and move funds between them, he said

“This is a network of companies that creates layers to transfer money in order to diversify it and hide it,” Rebolledo said.

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Betancourt’s lawyers, Jon Sale and Frank Wohl, said he is using his companies for legitimate investments and has not hidden himself or them from the public.

“Mr. Betancourt’s assets and sources of money are perfectly legal,” his lawyers said in a statement released Wednesday. “They are not hidden. In fact, his interest in Luxembourg companies is publicly disclosed for the world to see. He is a legitimate and very successful businessman who has not broken any law.”

Convit’s defense attorney, Adam Kaufmann, did not respond to requests for comment.

For now, Betancourt, 40, remains an unnamed co-conspirator in a $1.2 billion money-laundering indictment filed about three years ago in Miami — a major corruption case alleging his cousin and business partner, Convit, arranged a sham loan with Venezuela’s state-run oil company.

A federal criminal affidavit alleges the Convit-led ring used a shell company to loan $42 million worth of bolivars to PDVSA in late 2014, which then was repaid in euros at an exchange rate favorable to the lenders. That currency exchange transaction instantly multiplied the loan repayment to the equivalent of $600 million, which was distributed to Convit and others in the network, including senior PDVSA officials and Betancourt. The affidavit doesn’t identify Betancourt by name, only as a co-conspirator who received a huge sum of money along with Convit.

Most of the windfall proceeds ended up in Malta, Spain and Switzerland, but also in MiamiOf the total payout, about $200 million was deposited in Malta bank accounts in the name of straw owners for the benefit of Maduro’s three grown stepsons, according to court records and sources familiar with the investigation.

The case, named “Operation Money Flight,” is among a half-dozen foreign corruption, money-laundering and narcotics investigations in Miami, Houston and New York, where prosecutors have charged Maduro and his political allies with drug trafficking.

Convit, designated as a fugitive along with several other defendants in Homeland Security Investigations’ money flight case, has been implicated by a solid trail of emails as well as recordings by a confidential federal informant, with the evidence stretching from South America to South Florida, according to the criminal affidavit. Convit gave Betancount about $85 million in proceeds from the PDVSA loan deal, according to several law enforcement sources and court records.

(Although Betancourt is not identified by name in the federal case filed in Miami, several sources familiar with the investigation say that he is “Conspirator 2” among the dozen unnamed Venezuelan conspirators and officials listed in the criminal affidavit that details the alleged international racket. The affidavit says that “Conspirator 2” was among the ring of boliburgueses and government officials who received hundreds of million of dollars in late 2014 from the alleged PDVSA loan scheme.)

However, Betancourt has not been indicted like Convit and nine others in the money flight case. That’s because of a lack of evidence that he knew the money given to him by his cousin was from the sham loan with PDVSA and was later washed through a highly profitable government currency exchange, according to sources familiar with the federal investigation.

“There is no question Betancourt was connected to Operation Money Flight,” said one source with knowledge of the probe, but there’s “no direct connection” through emails or witnesses indicating he played a role in the alleged loan scheme or had any knowledge of the source of the subsequent payoffs.

Betancourt, who grew up with Convit in Caracas and attended Suffolk University in Boston, founded an energy company called Derwick Associates with him and another cousin a decade ago. The unproven company was awarded lucrative electric and oil contracts by the Venezuelan government through Betancourt’s relationship with the late President Chávez and some of his senior officials. It has been reported that Betancourt later had a falling out with Chávez’s successor, Nicolás Maduro, and has been supportive of the opposition leaders in Venezuela.

While Convit was indicted in 2018, Betancourt was living in a castle outside Madrid and diversifying his investments in Switzerland by transferring hundreds of millions of dollars into shell companies in Luxembourg, the tax haven wedged between France, Germany and Belgium, according to corporate records in the Luxembourg registry.

Betancourt and Convit were barely 30 when they founded Derwick, an electric company incorporated in Barbados in 2011. Without much experience, they obtained no-bid contracts from the Chávez government to build power plants in Venezuela. According to a 128-page report on the energy sector written by ONG Transparencia Venezuela, the local chapter of the corruption fighting organization Transparency International, Derwick Associates was awarded 11 construction contracts worth $5 billion. But the government contracts were over-billed by $2.9 billion, says the report, which was widely covered by the news media in Venezuelan and elsewhere.

During this same period, Betancourt and Convit established Derwick Oil & Gas Corp. in Barbados in 2011. Derwick entered into a highly profitable joint venture with the Russian state-owned Gazprombank, which was awarded the right to explore an oil field known as Petrozamora, one of the jewels of Venezuelan industry. The Derwick partners’ roles in the venture remained secret, but they were eventually revealed by an investigative blog, Infodio.

The Derwick-Gazprombank venture was authorized by the executive director of the state-run oil company, Rafael Ramirez, who publicly declared that he did not know that Derwick was involved in the deal. Ramirez is living in Italy. Ramirez’s then-deputy, Nervis Villalobos, who resides in Spain, has been charged in an unrelated PDVSA contract-bribery case in Houston.

Records filed in the Luxembourg corporate registry show that Convit became the director of a Dutch foundation, Stichting Administratiekantoor DOG, in 2014. The following year, the foundation became the owner of a newly created company, Latin America Ventures SARL in Luxembourg, which eventually received assets from the Petrozamora oil bonanza.

Latin America Ventures holds more than $300 million in assets and lists Betancourt as the sole beneficial owner, according to 2019 corporate records in the Luxembourg registry. Convit left his position as the head of the Dutch foundation after he was indicted in Miami. He was replaced by Orlando José Alvarado Moreno, a Derwick director in Caracas who appears as an administrator in most of Betancourt’s companies and has advised him on investments.

In addition to controlling Latin America Ventures, Betancourt is the ultimate beneficiary of three other companies in Luxembourg: Gainsboro Developments, registered in 2015; Ming International, in 2016 and O’Hara Financial S.A., registered in 2018. Each one appears to be a vehicle for moving the Venezuelan entrepreneur’s assets into his portfolio of business investments, according to corporate records in the Luxembourg registry.

Like the role of Latin America Ventures, Gainsboro Developments acts as an intermediary for Betancourt’s major investments, mainly in Spain, including a temporary employment company and transportation services. Another one of Betancourt’s Luxembourg companies, Ming International, invests in a fashionable sunglass company, Hawkers, which has partnered with soccer star Lionel Messi to design a line of eyewear, according to the Luxembourg corporate records.

Betancourt’s Luxembourg portfolio is completed with a fourth company: O’Hara Financial S.A. Corporate records filed in Delaware show that the company owns a Falcon 2000 private jet. In recent years it has been spotted in the United Kingdom, Spain, the Netherlands, and the Portuguese islands of the Azores, along with Poland and Russia.

But before Luxembourg became the alternative haven for hiding foreign assets, Switzerland and its highly secretive banking system were the favored destination for the immense portfolios of Venezuela’s boliburgueses, according to U.S and Swiss records.

Betancourt, Convit and other members close to Chávez’s government, including Venezuelan brothers Luis and Ignacio Oberto and Caracas TV mogul Raul Gorrín, have been under investigation by U.S. authorities in Miami since 2016. They are suspected of paying massive bribes to senior government officials in PDVSA and the national treasury in exchange for access to energy contracts and currency exchanges that produced massive profits. While the Oberto brothers, who own penthouse condos overlooking Miami Beach, have not been charged, Gorrín was indicted in 2018 in a money-laundering conspiracy accusing him of pocketing hundreds of millions of dollars in a kickback scheme with two former Venezuelan treasurers, Alejandro Andrade, who pleaded guilty and was sentenced to 10 years, and Claudia Diaz, who awaits extradition from Spain.

That year, the U.S. Department of Justice, along with the U.S. Attorney’s Office in Miami, sought Switzerland’s legal assistance with their money-laundering investigation under a treaty agreement, requesting account records at Compagnie Bancaire Helvetique and other Swiss financial institutions such as EFG Bank, which by law manage wealthy clients’ money in total secrecy.

In the Swiss court’s review of the Justice Department’s request for bank records, businesses associated with Betancourt (Calandra Business SA and IPC Investments Corp.) and Convit (Banstead Assets SA and Vencon Holdings Investments) — along with Gazprombank Latin America Ventures B.V. (co-founded by Convit) — tried to block the release of CBH bank records to U.S. authorities.

They failed.

Both CBH and EFG banks did not challenge the department’s request, according to sources familiar with the matter.

Meanwhile, a handful of Venezuelan money-laundering cases in Miami continue to gain momentum — despite an interruption of the federal grand jury due to the COVID-19 pandemic. But it remains unclear whether Betancourt will ever be charged in connection with Operation Money Flight.

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By Jay Weaver, Antonio Maria Delgado, Kevin G. Hall, February 11, 2021published on Miami Herald

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