2.3.15

How to get a bank for free, Juan Carlos Escotet style

While investors and businesses were running for cover, multinationals were unable to repatriate profits, inflation and devaluation killed the Bolivar "Fuerte" (BsF) value, and the Venezuelan economy went to the dogs chavistas, a Boliburgeois banker, Juan Carlos Escotet, managed quite an extraordinary deal. No point denying it, so kudos are in order.

Say you have a bank (BANESCO) in a country with three different foreign exchange rates (Venezuela):
  • the first ($1 = 6.3 BsF) available only to businesses dealing with "critical" imports (i.e. food, medicine, etc.); 
  • the second ($1 = 12 BsF) available to businesses in not so "critical" sectors; 
  • and the third fluctuating, the highest one at $1 = 177 BsF, for everyone else.
Regardless of which one you are willing to get your USD from, you still need a chavista if you want to exchange, say the entire asset portfolio of a bank.

Clever operator Mr Escotet
If you happen to be Mr Escotet (pictured), you are not going to print in press releases your bank's paper value at the highest rate of exchange, but at the lowest, as impossible as it may be to actually justify said value. So in Mr Escotet's world, and that of the media which reprints without question his every utterance, BANESCO portfolio of assets -whatever the amount in BsF- gets magically converted into USD at the preferential -essential sector only- rate of $1 = 6.3 BsF, thus falsifying true net worth.

European bureaucrats and media outlets aren't concerned by such details of course, so Mr Escotet found out about a distressed bank for sale (Abanca) that had gotten more than €16 billion worth of aid from European and Spanish funds, and decided to put a €1 billion bid for it. Placing a bid is not the same as having to fork out the full amount, right? Having won the bid to acquire 88.33% of Abanca, Mr Escotet negotiated payment with Spanish authorites: 40% upfront and five years to clear remaining balance. With that in his pocket, Mr Escotet set out to raise the required €400 million to close the deal, which he did, eventually.

Abanca, formerly know as NCG Banco, had assets worth €71 billion in 2011 according to the European Commission. BANESCO, the Venezuelan bank of which Mr Escotet controls an estimated 58%, is worth less than $2 billion, but that was never going to stop Mr Escotet, was it?

So the deal, quite brilliant I must admit, went thus:
  1. put a bid on a distressed bank from a country whose authorities / media don't get the half of it;
  2. inflate true net worth by capitalising on ignorance of three-tier exchange rate;
  3. promise that no jobs will be lost should the deal be approved;
  4. upon deal approval, negotiate favourable payment terms and raise first installment;
  5. upon gaining control of distressed bank, set up a fire sale to recoup initial payment and then some.
It must be said, Mr Escotet managed quite the deal. Without putting a coin, he bought on some else's dime a bank several times larger than his BANESCO. He got a foothold in Europe, increased his net worth many times over, in real terms, and managed to dupe Spanish, European authorities, stakeholders and media long enough to get what he wanted.

Mr Escotet, whose net worth was recently put in some obscure Chinese report at $2.3 billion, has definitely entered the big leagues. His 58% of BANESCO doesn't quite get to $1 billion, but BANESCO's 88.33% share of Abanca's €71 billion does. Chapeau Mr Escotet.

25.2.15

On Malcolm Rifkind & Jack Straw

In the maelstrom of bad news from around the world, it would have been easy to have missed the latest UK political scandal, involving two senior and accomplished politicians: Tory Malcolm Rifkind and Labour's Jack Straw. The two share a number of feats, like having held the office of UK Foreign Secretary in the past. These are two grandees. Two fellas that have made it big in UK politics, and have held very important positions. In fact, Rifkind was, until a few hours ago, Chair of the UK Parliament's Intelligence and Security Committee. Read. That. Again. Please.

Screenshot from Channel 4 Dispatches
A team of Channel 4 journalists set up a website (now defunct) about a PR company, called PMR Communications (see image). The site was registered in September 2013, and it referred to a fake, as in non existent, Hong Kong company.

Channel 4 journalists sent emails to 12 Members of the UK Parliament, claiming PMR Communications was interested in hiring for its advisory board. Malcolm Rifkind and Jack Straw, among email recipients, took PMR's bait and replied. Both met with staff of the said fake company, and both were filmed admitting that they were up for it: Rifkind stating that he would require between £5,000 and £8,000 for a day's work, while Straw (Labour) said he would charge £5,000.

To be clear, neither actually took the money. But, both boasted about networks of contacts around the world that they could tap into at a moment's notice, and provided specific examples of the sort of access and results they could get (policy changes at national or international level). Said for-sale network is based on past or present jobs (let us not forget that both are current Members of Parliament), and both said that, for a fee, they could be hired by PMR Communications.

It took me about two minutes to WHOIS PMR's website, and find out that there is no record of PMR Communications in Hong Kong's register of companies. Rifkind was, at the time, Chair of Parliament's Intelligence and Security Committee, and Straw does not lack contacts, at the highest levels, to have checked the bogus firm. And yet both fell for it. The promise of £5,000 led them to abandon common sense. Straw even admitted, after the fact, that he had "checked" the company with some people in Hong Kong. No wonder the UK keeps dropping the ball in so many issues, when the most prepared and cunning civil servants can't conduct the simplest due diligence checks.

Corruption in the UK, as demonstrated by Rifkind and Straw, is as rampant as anywhere else. UK politicos, and bankers, may come from Eton, speak the King's English and keep a facade of intellectual superiority. At the end of the day though, a quick buck, regardless of provenance, is as appealing to them as it is to thuggish chavistas. It is a disgraceful state of affairs, but one that proves that money talks and bullshit -whether dressed in fine tailoring from Saville Row- walks, regardless of ideology, status, education and background. While Rifkind and Straw claim that nothing improper took place, the fact that both readily admitted to be willing to capitalise on their extensive network of contacts, acquired over many years of public service funded by taxpayers, leaves little doubt as to their moral stance towards corruption. Furthermore, Rifkind, a current MP for Kensington & Chelsea, even claimed that he was "self employed", and that "no one pays" him a salary (he must have forgotten the £67,000 he gets as an MP). That utter disregard and contempt for the people that elected him should be used as campaign motto by the next Kensington & Chelsea MP.

29.1.15

Saudi can't win oil price war against US shale producers

London 29.01.2015 – The “swing producer” no more. There was a time not long ago, when Saudi Arabia could call the shots in the global oil market. Its dominant position was due, mainly, to its spare production capacity, its low production costs, its commanding position as the world's largest producer, and the fact that the dynasty that rules the kingdom could modify that country's oil policy at the click of a finger.

Over time, other equally powerful players appeared. First it was Russia, which surpassed Saudi as the world's largest producer. Although not a monarchy, the man in charge could also tack and order his minions to change energy policies. Then the US appeared. The production boom caused by shale producers can be easily described as capitalism unleashed. Unlike the other two, a myriad of independent private companies, varying in size, got onto the oil business, catapulting production numbers, and getting the US overall output ahead of both Russia and Saudi.

So now there are three “swing producers”, with quite different economic realities. Saudi has decided to “let the market” set oil prices. Increase of previous years, to over $100 levels, was due to a combination of factors, perhaps the most overlooked one being that oil became a store of value commodity. Aside from a spike in demand associated with growth in emerging markets, futures trading were buoyed by billions of dollars looking for shelter, which fueled an ever increasing price trend that wasn't necessarily demand-driven. As the saying goes, there's nothing more cowardly than money, and so the billions that were pumped in have either taken flight, or changed positions, offer and demand are now the drop's culprits. 

The market is oversupplied. Nearly all producers are countering lost income by increasing output, which adds to the glut. Stockpiles are at an all time high in most places. There's talk of players hoarding oil in tankers, expecting to turn a quick buck when prices rebound. Adding to the glut, is the fact that consumption in China, and Europe is decreasing, while Japan's chronic stagnation further weakens demand. While this is happening, the US Dollar has strengthened, which is another factor that pushes prices down. The US Federal Reserve, with its quantitative easing (QE) and low interest rates, has contributed in no small part to the shale boom. 

Europe, in the meantime, is suffering its own economic woes. Mario Draghi's recent QE announcements saw the Euro taking a beating against other currencies. Switzerland's Central Bank decision to un-peg value of its currency against the Euro, followed by Denmark's decision to cut interest rates, piled on the drama. Then, Grexit fears, now that Greeks have voted into office someone who wants to “renegotiate” sovereign debt terms, is creating more volatility in the Eurozone, while undermining trust in its economies' capacity to spur growth.

Russia is having to deal with a different set of cards. Imposed international sanctions, after de facto annexation of Crimea, have caused the Ruble to lost over a third of its value. Oil income has dropped dramatically. Further sanctions are being discussed in Brussels. China is watching this developing scenario with great concern. The two nations border is thousands of miles long. Potential instability in Russia could spill over. Ever pragmatic, China is increasing oil imports from Russia.

This pushes Saudi to a situation of having to defend, simultaneously, its market share against two of the world's three largest producers in the world's two largest markets. Saudi's decision to discount its oil to Asian clients is surely not appreciated by Putin, though it appears that increasing energy deals between Russia and China are not circumscribed solely to economics, but to political factors. China has enough muscle to throw a lifeline to Russia, as the WSJ reported recently “Saudi Arabia imports fell 8 percent in 2014, and imports from Venezuela fell 11 percent.”

Rumors of a possible meeting between OPEC and non-OPEC producers, to agree on cuts, can only undermine Saudi in the long run. For it is almost unimaginable that US shale producers will sit on that table, or indeed reach a cartel-like consensus. If prices rebound, Russia probably keeps its increased market share in China, and shale producers -pumping at an all time high- will compete with Saudi also in international markets upon US government lifting long held light oil exports ban.

While the kingdom has a rather large financial cushion, recent investments-cuts announced by Saudi Aramco's officials would suggest that the pinch is already being felt. No point in adding production capacity with current oversupply showing no signs of abating. Consider recent comments by OPEC's al-Badri, of price having “bottomed”. However US stockpile levels, highest since 1982, may well be the reason for Goldman Sachs' contrasting view, suggesting that price could drop further to around $30. If there's an entente to be reached, it will likely be between Russia and Saudi. Who will benefit more if it happens? Not Saudi...

8.1.15

Je suis Charlie

Yesterday's attack surprised most around the civilised world. What surprises me, judging the massive outpour of support and empathy, is indeed that most seem to have been surprised by the ghastly attack on Charlie Hebdo. It's as if 9/11, or 7/7 and 11-M never happened. As if ISIS doesn't exist. As if Putin didn't just invade Ukraine and annexed Crimea under the very noses of the entire European continent. As if China hasn't been running roughshod over Tibet or the Uyghurs. As if the world's largest democracy hasn't suffered enough at the hands of radical members of the world's second largest Muslim population. As if Syria and it's 200,000+ killed were in a different galaxy, or Mugabe was a cartoon character, and Che just a companion of Mafalda. As if attacks on civilisation weren't a regular ocurrence.

Shocking it is that the general public in Europe, from whose lands individuals like Hitler, Mussolini, and organizations like the IRA or ETA have emerged, are surprised by the fundamentalists that killed 12 freedom fighters hours ago. How quickly they seem to have forgotten the miseries and despair of old. It is easy to feel safe in a place like Paris, or London, easy to live with a wholly misplaced sense of security, as if exempt from disgraceful obscurantism and ignorance, which is present in every society.

I am Charlie. For over a decade I have been exposing criminal activity from my virtual corner. More often than not I have been derided, mocked, as a fatalistic Kassandra, an unconvincing exaggerator. Almost without fail, people adopt the "it's-not-as-bad-as-you-paint-it" stance, when not absconding to the standard and almost universal self-defeating appeasement mode of "let's-not-confront", mainly to avoid becoming a target of the Frankfurt School thought police, being branded a racist, or worse.

Well, tragedies, such as yesterday's, happen, have happened, and will continue to happen no matter what. Appeasement... Chamberlain... The world is faced with a new normal. We thought Europe had overcome hatred of the type. But then again, it just takes a couple of deranged Islamofundamentalists to prove the contrary. Policy makers must understand that ostrich-like, self centered, "all politics are local" BS no longer works, for the beliefs some of the locals have do not conform to established and accepted dogma. The assasins were born and raised in France, is not that they weren't exposed to the beauties and freedoms of civilisation. Those very freedoms, and tolerance towards the other, have brought us to a point where we must accept to live with such fanatics in our midst. We can wish fundamentalism away all we like, alas it is here, at the very core of our societies, reminding us, unfortunately at regular intervals, that it is part of our polity.

I bet no one at Charlie Hebdo ever thought their ideas would cost so much. I can, comparingly in an insignificant way, attest that I had never thought that exposing criminals, and their chavista counterparts, could cause so much hatred, and endanger the wellbeing of my family. But that's the thing, one can't imagine how the other is going to react, because one would never behave like that. We do not share their beliefs. We couldn't care less about our own deities, let alone theirs. No one at Charlie Hebdo ever thought it'd become a statistic, alas it takes a particular type of statistic to get the Leviathan -rather comfy with its inertia and dismissive stance- moving, at which point tragedy has already struck.

I too rather die standing than live on my knees. I too refuse to let deranged thugs dictate how and where I live my life, for Je suis Charlie.

10.12.14

El largo brazo del terrorismo chavista


El robo de mis ordenadores y amenazas contra mi familia, tras un asalto a mi apartamento en Londres el pasado 17 de noviembre, me transportaron a una realidad de la cual creí haber escapado. Una criminalidad desatada campea con absoluta impunidad sobre los 916,445 km² que cubren el territorio venezolano. Ni siquiera líderes del chavismo que cuentan con protección extraordinaria están fuera de su alcance, como quedó demostrado con el reciente asesinato del joven congresista Robert Serra. Mas cuando uno emigra, y pone miles de kilómetros de por medio, no espera que el brazo ejecutor de aquella irrumpa con sus prácticas terroristas.

Todos podemos ser víctimas del hampa común, en cualquiera de las principales ciudades del mundo. Pero cuando el simple hurto se mezcla con fotografías de niños, tomadas en el transcurso de operaciones internacionales ilegales de vigilancia, y con mensajes amenazantes contra la integridad de los inocentes (foto dcha), es difícil percibir el asunto como cotidiano. Si a lo anterior le ha precedido, y le sigue, campañas de difamación en las que participan altos personeros de gobierno y sus agentes, y para las cuales se utilizan recursos del estado, se hace imposible pensar en otra cosa que no sea terrorismo de estado, o como lo describiera Maruja Tarre: “la intimidación en contra de @alekboyd en Londres, demuestra q régimen sigue ejemplo de Chapita y Pinochet.”

De Chapita y Pinochet, y de Fidel Castro. En un mensaje de apoyo recibido después del asalto, el escritor Carlos Alberto Montaner me decía: 
 Hace 25 años ya la Seguridad cubana me colocó un micrófono en mi piso de Madrid. En esa época tenían un grupo clandestino. Poco después me enviaron un libro-bomba. El cordón detonante estaba cortado. Supongo que era para asustarme, no para matarme. Estos miserables no tienen límite.
Para la historia quedaron las actuaciones internacionales de “Chapita” Trujillo, Augusto Pinochet y Castro contra enemigos percibidos. Se creía que tales prácticas habían quedado en el pasado. Vemos, sin embargo, que los chavistas y los boliburgueses que medran de las dádivas de ese régimen, resienten el periodismo de investigación y las denuncias contra la corrupción tanto como Trujillo,  Pinochet y Castro lo hacían con respecto a quienes se les oponían, al punto de ordenar actuaciones como las descritas en la ciudad del mundo con mayor concentración de circuitos cerrados de televisión. Por cuanto los tres sospechosos del asalto y robo a mi apartamento no fueron filmados solamente por las cámaras del edificio donde vivo. Igual obraron, sin temor aparente a ser identificados.

Dentro del territorio venezolano, el chavismo y sus agentes actúan como les place, sin consecuencias. No hay autoridad lo suficientemente independiente como para poner coto a sus actos. Abundan los ejemplos, el más notorio quizás el reciente encarcelamiento y torturas a Leopoldo López y la persecución de la que es objeto Maria Corina Machado. A pesar de formar parte de tratados internacionales vinculantes para la protección de los derechos humanos, el régimen de Nicolas Maduro hace caso omiso a dictámenes internacionales de las Naciones Unidas de obligatorio cumplimiento. Solicitudes oficiales de visitas, enviadas a Venezuela por parte de la Comisión Interamericana de Derechos Humanos (CIDH) con el propósito de constatar la situación, han sido negadas desde el 2002, lo cual coloca al país en un estado “excepcional” según el ente. Es decir, el chavismo no le rinde cuentas a nadie, y hace lo que le viene en gana, sea en Venezuela o a nivel internacional. No osbtante, dichos abusos ya han llamado la atención de gobiernos que si pueden emprender acciones contra quienes atentan sistemáticamente contra el bienestar de los venezolanos.

Abundan también ejemplos de los ataques contra los medios de comunicación en Venezuela, tradicionales o no. Cuando no se les puede doblegar amistosamente a través de adquisiciones multimillonarias de publicidad, se les arruina con investigaciones sin fundamento alguno por parte del ente tributario, o se les niega acceso a divisas lo cual imposibilita importación de insumos. Si lo anterior falla, son “adquiridos” por empresarios afines al chavismo. Puede agregarse ahora otro precedente a las tácticas empleadas por la llamada “hegemonía comunicacional”: ni siquiera la distancia libra a los críticos del chavismo de sus intentos de censura. Muy por el contrario, ahora somos perseguidos allende las fronteras. Ahora las amenazas van dirigidas a niños y personas inocentes. Nate Thayer, el legendario periodista americano que pasó a la historia por haber sido el primero en entrevistar al monstruo Pol Pot, me comentaba en un correo que amenazar a los niños es contrario a las "reglas" de la Mafia, mas la mafia con la que estamos lidiando los venezolanos no tiene nada de tradicional, ni de honorable. Hace lo que sea por mantenerse en el poder, por alargar un poco más el peculado, y por acallar a sus críticos.

Creo que fue Rómulo Gallegos quien expresó pesar por haber creído que la dictadura perduraría por siempre en el poder. Todo pasa, la organización criminal conocida como chavismo también lo hará. Y cuando ello suceda, las violaciones a los derechos humanos cometidas, que no prescriben, tendran que ser debida y legalmente subsanadas.