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Latin America & Caribbean

Couple close to Hugo Chávez ended up with companies in tax havens and Swiss bank accounts

The names of the former chief of security at the Presidential Palace, Adrián Velásquez, and his wife Claudia Díaz, the nation’s ex-Treasurer, appear in the confidential files of Panamanian law firm Mossack Fonseca.
4 Abr 2016 – 06:56 PM EDT
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Adrián Velásquez y su esposa Claudia Díaz con algunos de los documentos de sus empresas en paraísos fiscales

The emails of Panamanian law firm Mossack Fonseca speak for themselves. At least 40 of them reveal the footsteps of Adrián Velásquez Figueroa, the chief of security for Venezuela’s former president Hugo. Velásquez is married to Claudia Díaz, the nation’s former Treasurer, who also served as Chávez’s nurse.

In 2013, Velásquez, solicited the services of Mossack Fonseca to create front companies apparently designed to hide the couple’s assets in offshore tax havens, according to leaked documents.

The correspondence between the Panama law firm and Velásquez Figueroa came to light thanks to a massive documents leak to the German newspaper Süddeutsche Zeitung, which recruited the help of the International Consortium of Investigative Journalists (ICIJ). More than 300 reporters from all parts of the world spent months pouring over the documents.

During her tenure as Treasurer, Díaz Guillén, had custody of the assets and investments of the Bolivarian Republic of Venezuela. She also managed the profits from Venezuela’s oil industry, one the world’s largest, as well as the foreign exchange balances in the public banking system which were under strict currency exchange controls since 2003.

Those restrictions allowed certain people close to the Chávez government to benefit from a system that gave them access to dollars at a preferential rate, which they then exchanged on the black market, outside the country.

Díaz headed the National Office of the Treasury and the secretariat of the state investment fund FONDEN between 2011 and 2013. She also attended to Chávez as his personal nurse in the early days of the president’s battle with cancer at a time when the illness was still being kept a secret. The cancer would eventually end his life in March 2013.

When Díaz left public office, the couple moved to the Dominican Republic, and they elevated their finances to a more sophisticated level. Her husband – who had also been in charge of the security detail for Chávez only son, also named Hugo – solicited the services of the Mossack Fonseca in Panama.

On 18 April 2013, barely a month after the death of Chávez, Velásquez Mossack asked Fonseca to create a company, Bleckner Associates Limited, S.A. in the Republic of Seychelles, the small island nation off the east coast of Africa.

Better known as a destination for beach lovers in the Indian Ocean, the Seychelles is a well-known offshore tax haven for persons seeking to hide their assets and avoid taxes in their home countries.

Another corporation that appears in the correspondence of the Panamanian law firm is V3 Capital Partners LLC, a Swiss firm that acts as an agent to manage the assets of ‘high net worth individuals’ with fortunes of anywhere between $500,000 and $20 million, according to its website.

The company’s stamp appears on all the documents that Velásquez delivered to Mossack Fonseca. The military officer and his brother Josmel José appear as directors.

Even though Velásquez’s record as a businessman dates back to at least 2009, it became more active during the two years prior to the beginning of his relationship with Mossack Fonseca, according to records at his companies in Panama and Caracas.

Politically Exposed

In August of 2013, a person working for Mossack Fonseca reported by email that upon reviewing Velásquez’s background he had found something interesting. “Among the investigations I discovered that he is responsible for the safety of the son of former president Chávez. And even though it is not official the word is that he is also involved in illegal business deals involving food and minerals,” he wrote.

In the message he identified Velásquez as a “director of the firm Arctic Venture Partners International, S.A.” Then the employee recommended delving deeper.

In May 2015, two years after accepting Velásquez as a client, Mossack Fonseca implemented some changes in order to comply with new regulations, known as Law 23, passed by Panama and intended to prevent money laundering and the funding of terrorism. The law firm’s internal correspondence provides evidence that it took measures to “correct” anomalies, comply with the new norms and thus avoid being penalized.

A company email dated May 29 2015 stated:
“As you are aware, Mossack Fonseca & Co. Limited has a Class I Trust license and, as such, is subject to supervision by laws against money laundering, regulations and/or directives dictated by the competent authorities. The laws against money laundering and the Code on the financing of terrorism (…) compels every entity or professional on the BVI (British Virgin Islands) to conduct the respective enquiries concerning its clients and persons soliciting the transaction…”

During the review of its database, Mossack Fonseca ran across the name Adrián Velásquez, whom they identified as a Publicly Exposed Person (PEP), a term used to identify clients linked to public office holders. In the case of Velásquez, he came under the spotlight because he was married to a former national Treasurer, according to the emails.

“As a result of the process of supervision of compliance (which we mentioned) above, we have found that Mr. Adrián José Velásquez FIGUEROA qualifies as a publicly exposed person, therefore, we appreciate your cooperation with some additional information/documents about the firms and their representatives, as described below,” the email stated.

The warning resulted in the law firm delving deeper into Velásquez’s background, a practice known in banking terminology as an EDD (Enhanced Due Diligence). Mossack Fonseca asked Velásquez to provide additional information, personal documents and certificates showing his bank details.

A Mossack Fonseca employee noted that “ the date he (Velásquez) quit as a military officer does not appear, buthe does appear as “former member of the Venezuelan military.”

Client of a Swiss Bank

Included in the documentation sent to the Panamanian law firm by Velásquez is a letter that certifies his status as the client of the Swiss bank BSI SA, beginning in November 2012. BSI SA is one of the oldest banks in Switzerland, specializing in managing assets and private investment funds.

The military officer, nicknamed by his friends as “Guarapiche” – taken the name of the river in the state of Monagas, where he was born – opened his Swiss account one month after a convalescent Chávez had won reelections in Venezuela in October 2012, according to a bank letter.

Velásquez had been an army officer for 28 years when he began to work as head of security at the Miraflores presidential palace in Caracas in 2007.

Four years later he began to establish corporations in Caracas and Panama, according to the leaked documents. When he asked Mossack Fonseca to establish Bleckner Associates in 2013, the captain’s average monthly salary was around 10,000 bolivars, less than $170 dollars according to the exchange rate at the time of 60 bolivars for every dollar. (Today the rate has risen to more than 1,000 bolivars to the dollar.)

Corporations in Panama and Caracas

In the open database covering the corporate world, Adrián Velásquez is registered as director, president or treasurer of at least five different companies in Panama. All with the date of registration between 2011 and 2012, with initial capital investments of $10,000 dollars, according to public records. The first one to be made official was Invesco Capital Fund, INC and the most recent is called Tsunami, formed in August 2012.

Venezuelan money laundering expert, Alejandro Rebolledo, said that the acquisition of several firms and corporations in countries other than where the funds originated is a common modus operandi in money laundering and tax evasion. In turn, assets are purchased under the names of these firms, which makes it harder to track down the beneficiaries.

There is no known evidence that Velásquez’s companies have been utilized for money laundering or any other illicit activity.

Hands in the Treasury pot

During the electoral campaign of 2012, Díaz approved an increase in the capital of the state investment fund, FONDEN, and the use of those resources for the payment and repurchase of public debt, to meeting “extraordinary situations,” according to the government’s Official Gazette.

In Chávez’s reelection campaign the abuse of public assets to favor the incumbent was strongly denounced by the losing opposition campaign of Henrique Capriles.

The National Fund for Development (FONDEN) has also come under journalistic scrutiny over its obscure management practices after it was created by the Chávez government in 2005.

A study by Reuters in September of 2012 warned that FONDEN had received some $100 billion, but that there were discrepancies between “the resources it receives, what is registered on the books, and the progress being made by the projects it finances.”

Reuters also pointed out that in 2011 – while Díaz was in charge – FONDEN received almost $15 billion.

“The network of bribes, corruption and money laundering in Venezuela already has names and faces, the Public Ministry ought to act in response to that,” said Rebolledo.

“Why hasn’t it done so? Why aren’t we seeing any mutual legal assistance and international cooperation? … The evidence is there.”

Recently, Rebolledo introduced draft legislation to reform the law that combats these practices in Venezuela in order to repatriate money to the Office of the Treasury that was taken out of the country illegally, and is currently held banks and corporations around the world.

They’re my “personal assets”

Adrián Velásquez has been registered with Venezuela’s Social Security (IVSS) ever since July 9 2012 as an active employee of the firm MJ Box Tool with a monthly salary of 10,748.08 bolivars (about $42 according to the official rate of 250 bolivars to the dollar).

Velásquez had several options when asked by Mossack Fonseca to justify the origin of his fortune on an official disclosure form. He chose to explain it as “personal assets.”

Exclusive flights

During 2011 and 2013 the couple travelled on numerous private charter flights, together as well as separately. The immigration forms for each flight reveals that they were preparing their move to the Dominican Republic, where Velásquez obtained legal residency.

Velásquez’s passport further reveals numerous flights to the Caribbean island of Curaçao and to La Romana, a resort town in the Dominican Republic. There is also one commercial flight on American Airlines: a four day excursion to Miami in March 2011.

Díaz’s passport also shows exclusive trips after leaving public office in 2013. At least 15 were between Venezuela and Santo Domingo or Punta Cana in the Dominican Republic. The last report shows she left the country via Cúcuta, Colombia in September 2015.

Velásquez obtained his legal residence in the Dominican Republic, on June 2 2014. Gone were the days when they both lived in the unassuming Caracas municipality of Libertador. According to electoral records she lived in a low-income area of El Silencio, at the center of the capital, and also in the middle class neighborhood of Las Palmas.

In his messages, Velásquez informed Mossack Fonseca of his new address, located in the Cap Cana residential complex, in Punta Cana. The price of a home there hovers between $410,000 and $1,600,000.

That’s where reporters sent the couple questions last month asking what they now do for a living and why they used Mossack Fonseca to create a corporation in the Seychelles?

Velásquez chose not to answer.

With the collaboration of Alfredo Meza, from Caracas