Tuesday, June 07, 2005

The Good Old Days III 

In the first installment we described what it was like when Venezuela was run by bankers who knew how to have a good time with other peoples money. In today’s installment we will see what happened when anyone, government officials included, crossed them.

The Price of Vigilance in Venezuela’s Banking Community

Wall Street Journal
March 4, 1994

By Thor Halvorssen

Carlos Andres Perez was Venezuela’s first re-elected president. His 1989 come-back had the makings of a new era in the development and restructuring of Venezuela. I had served in his first term and was excited about the potential of his second. A few weeks after taking office, President Perez designated me anti-drug czar. He instructed me: “Tell the Americans that mine will be a term known for its commitment in the drug war.” After one year, my reports on money-laundering and drug-trafficking were no longer welcomed by the president. However, I was not dismissed, so I continued my investigations.

In 1992, the Venezuelan Senate, inspired by the U.S. Senate investigations, created an Anti-Money Laundering Commission. In March of that year I was appointed special overseas investigator for that commission. Among the banks I was investigating was the now defunct Banco Latino. It seemed inconceivable to me that this bank could move the enormous amounts of money that it did without being involved in some kind of money-laundering scheme. I alerted the U.S. Federal Reserve and the New York District Attorney’s Office of my suspicions. I believed the bank was used in a Ponzi scheme that sooner or later would have to fall.

In September 1993, an informant gave me a brief with incontrovertible evidence of money-laundering in Venezuelan banks. The largest amount of evidence concerned Banco Latino. Shortly after I received that evidence, an attempt was made on my life, foiled only because I was not traveling in my usual vehicle. However, the brief was taken from that car. The next day, and on two other occasions, I told the acting interior minister, Carlos Delgado Chapellin, that I was under surveillance and thought it was due to the Banco Latino investigation. I asked for his support. “Thor, the doors to my office will always be open to you,” he responded.

I immediately left for New York to meet with Manhattan District Attorney Robert Morgenthau. More than 90% of Venezuelan international wire transfers go through Manhattan and are consequently in his jurisdiction.

When in New York, I received a call from Jesus Abreu, right-hand man of Banco Latino Chairman Gustavo Gomez Lopez. Mr. Abreu asked if I could come to Venezuela right away for a meeting with the bank’s chairman. I suspected that they wanted to come to an agreement for a plea bargain. A meeting was set for Oct. 8 at 11 a.m. A treasury agent in New York warned me that it might be a trap. I took no heed of this warning.

I flew back to Venezuela. But the day before the meeting, Mr. Gomez Lopez’s secretary canceled it. The next day, I was arrested by the Venezuelan Technical Judicial Police and charged with masterminding a series of bombings that had rocked Caracas during the summer.

Neither my home nor my offices were searched by the police. No member of my family was interrogated. No evidence was brought forth against me – not even fabricated evidence. The only thing used to keep me in custody was testimony extracted under torture from one of my alleged co-conspirators. It is clear today that there was never any intention to convict me. My life was to be taken when I was in custody.

Two days after my arrest, Orlando Castro Llanes, a man I had investigated, went to the police with “evidence” trying to link my supposed involvement in the bombings with some of his banking rivals. His son, Orlando Castro Castro, a board member of several banks and insurance companies came with him. At the time, I was sitting in a room in the homicide department. Suddenly I was handcuffed and the four officers assigned to guard me left the room. Orlando Castro Castro entered the room and struck me in the head and neck. He then pummeled my rib cage, fracturing three ribs. After the beating, he said: “This is just the beginning before the cemetery. I want you to get the feeling of it.” The young banker then left me bleeding on the floor.

The result of the beating was verified and photographed by an Amnesty International representative (a medical doctor) sent from England a month after the event. The evidence of the attack was unmistakable even after nearly 30 days.

While in the hands of the police chief, Orlando Jordan Petit, I was psychologically and physically tortured and sent to a maximum security jail, Reten de Catia. While in the prison, I was put in a section known as “the pit,” punishment cell. Another attempt was made on my life there. The assassins, prison inmates from another wing, were sent to Cell 407, where they took the life of two inmates imprisoned there. I was in Cell 417.

My knight in white armor arrived in the form of British writer David Yallop, an old friend. He and I had been working on a book about money-laundering in Venezuela. Mr Allop began a media campaign to counter the one being waged against me. His efforts were halted when uniformed members of the police forced him – at gunpoint – to leave the country. The justice minister, Fermin Marmol Leon, who had declared me guilty hours after my arrest, now stated that my life could not be guaranteed while I was in custody.

However, after 74 days of imprisonment, I was unconditionally released. Fortunately, the police had not bothered to fabricate evidence, and “lack of evidence” was the official reason given for my release. In fact, international pressure exerted by Mr. Yallop, the Manhattan district attorney, British Parliamentarians and human-rights groups saved my life.

This deplorable, unabashed violation of human and civil rights demonstrates the extent to which members of a corrupted banking system are willing to go to eradicate those who oppose them. The new president, Rafael Caldera, has shown strength and courage in his efforts to expose the scandal behind Banco Latino and other banking institutions. But this is a scandal that will not go away until those responsible are punished, their influence in Venezuela wiped out, and their ill acquitted wealth confiscated.

Poscript: Mr. Halvorssan unfortunately was later implicated himself in acts of corruption and left Venezuela. He was last known to be living in Philadelphia and has been active in the Venezuelan opposition. Fortunately, at least he give us a window into how things worked when the opposition was running the government and he certainly did get the last sentence of this article right.


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