Venezuela’s Trade Scheme With Turkey Is Enriching a Mysterious Maduro Crony
(Bloomberg Businessweek) -- In the late afternoon of July 15, 2016, a cluster of staffers inside the Turkish Embassy in Caracas struggled to make sense of the images from home flashing across their televisions and computer screens. Military trucks were blocking a bridge over the Bosporus, tanks were rolling into the Istanbul airport, and smoke was rising from the streets of Ankara. As best they could tell, a group within the Turkish military was trying to overthrow the government of President Recep Tayyip Erdogan.
Imdat Oner, the chargé d’affaires of Turkey’s diplomatic mission in Venezuela, was straining to hear a live news report when a telephone rang, pulling him away from his colleagues. On the line was Samuel Moncada, Venezuela’s deputy foreign minister. Oner knew him, but not well. He didn’t feel he knew any of the Venezuelans well, because the relationship between Turkey and Nicolás Maduro’s government seemed to him superficial, at best.
For a decade, Turkey had been trying to jump-start trade with Latin America, but Venezuela remained a dead zone. Hugo Chávez, Maduro’s predecessor, had regularly slammed Turkey for its opposition to Syria’s Bashar al-Assad, a Venezuelan ally. Shortly after Chávez’s death in March 2013, Turkey, as a way to kindle economic ties, tried to sell Maduro on a Turkish Airlines route connecting Istanbul and Caracas. He ignored the approach, says Oner. Even after Venezuela’s economy fell headlong into an extended and ongoing economic collapse, Turkey’s offers to trade food and pharmaceutical products for Venezuelan oil derivatives went nowhere.
Given the history, Oner was caught off guard by the message now being delivered on behalf of Maduro—a promise of unflinching solidarity with Erdogan in the face of “external meddling.” Maduro seemed convinced that the U.S. had orchestrated the Turkish uprising, just as he accused the Americans of being behind an unsuccessful 2002 coup attempt against Chávez.
Erdogan came to agree with him. In the months after the uprising, Turkey stripped hundreds of diplomats of their titles, labeling them supporters of a U.S.-backed overthrow attempt. Oner left the government as this was happening, and now is pursuing a doctorate degree in Florida. And Erdogan hasn’t forgotten Maduro’s pledge of support. He’s since complained that almost every leader in Europe remained silent for days after the failed plot. But not Maduro. “With the coup attempt,” Erdogan said at a news conference earlier this year, “we met Maduro. It has been a good beginning.”
Within weeks of the July call, Maduro announced his first trip to Turkey. Before the end of 2016, that Turkish Airlines route between Istanbul and Caracas was inaugurated, and delegations from the two countries started crisscrossing the Atlantic to forge deals. They began to construct a secretive business network, one that could operate out of reach of financial sanctions imposed by the U.S. It would be a network that trades in two powerful currencies for Venezuela: gold and food.
Maduro was saddled with a near-worthless currency, the bolívar, that had been bludgeoned by years of hyperinflation. Profits from his country’s massive oil reserves, which had funded the Venezuelan government for decades, were evaporating because of falling prices, a neglected and crumbling infrastructure, rampant corruption, and international isolation. Venezuelans were starving, and Maduro’s approval rating had plummeted. So he grasped a financial lifeline in gold, one of the only resources of value he had left.
In August 2016, Maduro announced that a state mining company called Minerven would be the sole official gold buyer in the vast tracts of jungle, savanna, and rolling hills where mining had long been clandestine and unregulated—essentially legalizing a business lorded over by murderous gangs. He sent in troops to force miners to comply and began hoovering up ore from open-pit mines. (Through a spokesman, Victor Cano, the mining minister, declined to comment for this story.) Maduro also started cashing in on the billions of dollars’ worth of gold bars that Chávez, who was loath to invest in U.S. dollars, had stockpiled. The sell-off carried hints of desperation. According to sources in Venezuela’s central bank, the government secretly sold the bank’s massive collection of rare gold coins, dating to the 18th century. The coins, box upon box of them, were thrown together in a single 30-ton sale in late 2017, and Venezuela accepted a price based on their weight alone, not their collectible value.
By then, Maduro was weathering extensive U.S. sanctions—mostly targeting individuals in his government accused of corruption, human-rights violations, and other crimes—and he seemed to anticipate that the U.S. Treasury might next sanction his dealings in gold to further choke the economy. Venezuela had been shipping freshly mined gold abroad, primarily to Switzerland, for processing. Last July, Maduro began sending it to Turkey. He’d already shipped at least $900 million in gold there by the time the U.S. last fall banned American individuals, banks, and corporations from doing business with anyone connected to Venezuelan gold sales. Tons more have gone since. The Turkish government declined to comment on allegations of wrongdoing related to the gold trade.
Venezuela now finds its business partnership with Turkey in the crosshairs of several law enforcement organizations around the world. Investigators from at least three countries, including the U.S., believe Venezuela’s gold and food trade with Turkey has evolved into a multilayered scheme built on a foundation of criminality. The pursuit of the gold trade has become a key part of a larger U.S.-led effort to further isolate Venezuela’s economy and force Maduro to release his hold on power.
“In many ways, gold is the key to the survival of Maduro’s government,” says Americo De Grazia, an opposition lawmaker who represents Venezuela’s main gold-producing region in the southern state of Bolívar, the Arco Minero del Orinoco, or Mining Arc. “But I’m not talking so much about the programs and functioning of the state. I am talking more about maintaining the perverse fortunes of key figures inside the government.”
At the center of it all is a Colombian named Alex Nain Saab Moran, whom U.S. investigators believe to be one of the most powerful financial enablers of Maduro’s regime. An examination of Saab’s international business empire and the allegations against it provides a lens into the uncharted territory that Venezuela has now entered: a place of strangled isolation, where millions suffer while the regime is encircled by opponents, all of them trying to break its last remaining links to economic survival.
For more than a decade, law enforcement agencies in the U.S. and Latin America have been compiling evidence that South American drug traffickers were working with Venezuela’s government to move cocaine and launder money. They tapped phones, tracked international shipments, and built suspect profiles. Several years ago, Saab’s name began popping up with notable frequency, according to people involved in those investigations. In recent months, thanks to the gold and food trade between Venezuela and Turkey, Saab has reemerged as a target of major criminal investigations in the U.S. and Colombia. Opposition lawmakers and former prosecutors from Venezuela are also looking into Saab. The working premise is that he and others have retrofitted their criminal enterprises to adapt to challenges and opportunities. Saab is at the center of sweeping criminal investigations by the U.S. Justice Department and agents from Homeland Security Investigations, four people familiar with the probes say. One focus is whether the food and gold trade with Turkey is being used to launder the proceeds of corruption and to evade U.S. sanctions, these people say.
Saab, 47, is a Colombian of Lebanese descent whose immigrant father, Luis, started Textiles Saab, a successful maker of towels and sheets in the port city of Barranquilla. As a child, Saab attended the German School, a private academy for the city’s elite. After graduation, he dabbled in a variety of small-scale commercial enterprises—“I started working when I was 18,” he said in a rare interview in 2017 with the Bogotá newspaper El Tiempo. Saab started selling pens imprinted with corporate logos and by the time he was 19 had opened a T-shirt factory that ended up exporting to Mexico, the U.S., and Venezuela.
Those who’ve known Saab for decades say he never hid his ambition to be wealthy. When he cruised the streets of the gritty port town in those days, he did so from behind the wheel of his Hummer, according to news reports. His father still leads a sort of booster organization for law enforcement in Barranquilla, called Policía Cívica, or Civic Police. In a brief telephone exchange with Bloomberg Businessweek, he shakes off any suggestion that his son lords over an international criminal network on behalf of Venezuela’s top leaders. “No, I don’t have any knowledge about that case,” he says. The countries investigating his son, he suggests, are doing so to apply more pressure on Venezuela, a sovereign country still struggling to free itself from foreign meddling. “The problem in Venezuela,” he adds, “is for the Venezuelans.”
Barranquilla had long been a conduit for drug smuggling and illicit money flows, and for years investigators in Colombia and at the U.S. Drug Enforcement Administration have kept a wary eye on Saab. In the early 2000s he created a network of export companies and listed his family members as representatives or officers, Colombian court documents and business records show. The DEA, in a confidential memo cited by Colombian National Police in a report for prosecutors in Bogotá, described Saab as running a vast money laundering network and identified at least six companies in and around Barranquilla that allegedly move illicit funds abroad. Saab didn’t respond to multiple requests for comment for this story, or to written questions submitted to two of his lawyers. In the El Tiempo interview, he denied being involved in corrupt contracts with Venezuela: “I am an open book, and my accounts are clear and my conscience is clean,” he said. Spokespeople for Colombia’s Attorney General’s Office, the U.S. Department of Justice, Homeland Security Investigations, and the DEA all declined to comment.
Saab’s developing relationship with the Venezuelan government turned him into one of the region’s most powerful men. In November 2011, a company of Saab’s, Fondo Global de Construccion, landed a lucrative contract to supply prefabricated housing units for one of Chávez’s signature projects: expansive public housing developments. In a signing ceremony in the Miraflores presidential palace in Caracas, Saab sat at a table with Chávez, his then-vice president, Maduro, and then-Colombian President Juan Manuel Santos. As part of the deal, some prefab housing panels would be built in Ecuador, then shipped to Colombia via the Panama Canal, and finally trucked overland on a long trip to Caracas.
The route raised suspicions among Ecuadorian customs inspectors, who couldn’t figure out why it was necessary to move the panels through Colombia at all. The Ecuadorians reached out to Juan Ricardo Ortega, then the director general of Colombia’s customs agency. He started to dig and began to suspect that Fondo Global was moving something illicit with the housing panels. By the time Ortega’s agents were ready to move in to inspect the shipments, he says, they mysteriously stopped being routed through Colombia. In late 2013, an Ecuadorian court opened a criminal case after prosecutors said the contract was part of a scheme that allowed Saab’s business partners to launder more than $130 million in illicit funds via fake exports to Venezuela, court transcripts show. Saab himself wasn’t accused of wrongdoing.
Ecuadorian courts eventually dropped the case against Saab’s partners after several years of investigation. By the end of 2014, Ortega resigned, ending any probe in Colombia. He’d received too many death threats and moved his family to the U.S.
Saab seems to have a knack for winning the confidence of people in high places. He liked to vacation in the Caribbean nation of Antigua and Barbuda, flying in on his Gulfstream G280 jet, and in June 2014 he persuaded Gaston Browne, the prime minister, to make him a special economic envoy to Venezuela, complete with Antiguan citizenship and a passport. Then he asked Browne for approval to build a factory in Antigua to make housing panels. “The idea would be to export to Venezuela,” says Browne. About two and a half years ago, the prime minister sent people, including one of his ministers, to Venezuela for a tour of a factory Saab said he owned. They were impressed with what they saw, though the Antiguan factory was never built, Browne says. “I have to admit that Alex has become a friend. He is very genuine, a good successful businessman.”
After reports surfaced of Saab’s dealings with the Maduro government, Browne summoned him to a cabinet meeting to discuss the allegations. “He said it was all political, that they were going after him for doing business with Venezuela,” says Browne. “He said he was innocent of the allegations.”
Saab, for his part, has sent his lawyers after journalists who’ve published allegations of illegality. Last year, Saab sued Univision Communications Inc., the Spanish-language television network, twice in state court in Miami for defamation over stories about his businesses. Saab dropped one of the suits after Univision denied the allegations and sought to depose him. The other lawsuit is pending, awaiting Saab’s response to Univision’s motion to dismiss. In 2017, Saab sued the Venezuelan investigative news site Armando.info in Caracas for defamation over reports that he was a front for Maduro and involved in corrupt food contracts, leading four journalists to move to Colombia for fear of being banned from reporting and, possibly, jailed in Venezuela. That case is pending.
From cramped, drafty quarters in central Bogotá, Luisa Ortega Díaz, formerly attorney general of Venezuela, spends much of her time trying to track the movements of Saab and his associates. “They appear to have moved their base of operations to Turkey,” she says.
Almost two years ago, Ortega fled Venezuela by speedboat and then private plane for Colombia, where she embarked on a high-profile self-imposed exile. At least six prosecutors followed her to Colombia, where they build cases as if they were the de facto attorney general’s office of Venezuela. Ortega seems obsessed with exposing Saab’s connections to her former boss, Maduro, and trying to get the businessman put in jail.
Ortega has her share of enemies. For a decade as attorney general, she erected a façade of legal legitimacy for the governments of Chávez and Maduro. She still draws bitter scorn among the Venezuelan opposition for, among other things, the jailing of opposition leader Leopoldo López and other top Maduro rivals under her watch. She also enraged Venezuelans by going on state television to deny allegations that security forces had sodomized a protester with the barrel of an assault rifle during an anti-Maduro demonstration in 2014—an incident that’s been a touchstone of outrage ever since.
In mid-2017, Ortega turned against the government she’d spent years defending. She rebuked the Supreme Court for stripping Venezuela’s National Assembly of its power and began to openly criticize Maduro. He fired her, and her husband, a former Chavista lawmaker, was accused of corruption. Whatever her past, Ortega now says she fled her country at least in part because her quest to pursue cases was stymied by judges and politicians in Caracas who are protecting Maduro’s cronies.
On one overcast afternoon in late February in Bogotá, three prosecutors who worked for Ortega in Caracas sit at battered metal desks in cramped offices, which still have a faded sign for the previous tenant, a small export company, outside the door. “Welcome to the Venezuelan Attorney General’s Office in exile,” one of them says. “This is our command center.” The former prosecutors ask that their names not be published, out of fear for the safety of family in Venezuela. They toil in a space the size of a modest living room. A Venezuelan flag hangs in one corner, near a faded portrait of Simón Bolívar, the mythic leader of Venezuela’s war of independence from Spain whom Chávez appropriated as a symbol for his—and now Maduro’s—“socialist revolution.” Most of the leads they process come from people who still work for the government and law enforcement agencies. Ortega says she has taken this information to prosecutors and attorneys general in countries including Colombia, Mexico, Switzerland, and the U.S.
The gold-for-food system is a multicountry, many-company scheme intended to obscure the flow of money and goods, say investigators. That complexity is a Saab specialty, according to Carlos Paparoni, an opposition lawmaker in Venezuela who’s studied payment records, contracts, and corporate documents related to the trade. The gold is shipped to Turkey and converted into cash, which pays for food. Some food is shipped from Turkey, according to people involved in arranging shipments, but much of it is sourced in Mexico. Before it’s sent to Venezuela, its value is inflated, allowing those involved in the scheme to skim money from the transactions, Paparoni says.
Food has been in critically short supply in Venezuela for years. A 2017 academic study cited by the National Assembly estimates that 93 percent of families don’t earn enough to buy the basic food they need. In April 2016, Maduro inaugurated the latest version of the state food-distribution program, Local Committees for Supply and Production, best known by the acronym CLAP. The committees have a virtual monopoly on subsidized food. They claim to go house-to-house selling, for next to nothing, boxes of staples such as pasta, rice, flour, and powdered milk. Since late 2016 the dominant food contractor for the CLAP program, Paparoni says, has been Saab.
The companies Saab has set up to fulfill the food contracts are held by trusted associates and have been incorporated in Mexico, Venezuela, Hong Kong, and Turkey, say Paparoni and investigators in Colombia and the U.S. Some were preexisting entities that seem to have been repurposed. “He doesn’t put his name on almost anything,” says a former Venezuelan prosecutor who works for Ortega. But an examination of legal representatives, addresses, and phone numbers of these businesses all point back to the Colombian businessman, investigators say. One example is Group Grand Ltd., a company set up in 2013 in Hong Kong and moved to Mexico in 2017. From 2015 to 2017, Saab’s son Shadi Nain Saab was listed in registration documents as director. Since late 2016, Group Grand has netted some $700 million of food contracts, which Saab has fulfilled largely with food from a network of related suppliers, mainly in Mexico, investigators in Colombia say. Group Grand also secured $213 million of contracts for medical supplies, according to investigators in Colombia and Venezuela. In the El Tiempo interview, Saab denied that he or any of his relatives were part of Group Grand or any other companies tied to corrupt food contracts, as Ortega has claimed. “Absolutely false,” he told the paper.
Last October, in response to lobbying by Luisa Ortega, the Mexican attorney general’s organized crime division announced a $3 million fine for companies shipping food to Venezuela to settle accusations of price gouging. Markups exceeded 100 percent, according to the head of the division. Ortega says Saab got off easy. The Mexicans didn’t accuse him or anyone else of crimes, and the key details of the settlement, including the full names of the companies and their top executives, remain sealed under court order. “It’s just impossible to explain,” Ortega says. “Imagine all the immense harm to the Venezuelan state and the people. And they were fined $3 million. It doesn’t come close to what the state—and the people—of Venezuela lost.” Agents for Homeland Security Investigations in the U.S. continue to look into Saab’s trade through Mexico as a vehicle for laundering the proceeds of corruption and evading sanctions, three people familiar with those probes say.
Saab’s pivot toward Turkey seems to have happened shortly after Maduro and Erdogan began to cement economic ties. Documents first revealed by Armando.info show that Group Grand transferred a lucrative government food contract in April 2018 to a Turkish company called Mulberry Proje Yatirim AS. Mulberry is based in Istanbul and is represented by people who serve as representatives for other Saab-related companies, according to a senior government official familiar with an ongoing criminal investigation by Colombian National Police. At least one more company ultimately controlled by Saab and his business associates was also given contracts to supply food from Turkey to the CLAP program, a person familiar with investigations by the Justice Department says.
Having entrusted Saab with much of the Venezuelan food program, Maduro began to give Saab’s network more and more oversight of the critical gold trade with Turkey. Maduro named Adrian Perdomo Mata, who’d worked in at least two of Saab’s companies, as president of Minerven. Then Maduro took the gold business out of the hands of the state and put it solidly under Saab’s sphere of influence, says De Grazia, the opposition lawmaker for the Mining Arc. Maduro announced a joint venture called Mibiturven, between Minerven and a relatively unknown Turkish mining company called Marilyns Proje Yatirim AS. Investigators in Colombia and in Venezuela’s congress believe Marilyns is also controlled by Saab and his business associates because of shared representatives and addresses. “Hypothetically, Minerven is the sole state gold buyer that is in charge of everything,” says De Grazia. “But Minerven doesn’t exist, for all intents and purposes. The reality is that this Turkish company, Mibiturven, is doing all the gold trade.” Antonio Rufino, president of Mibiturven, didn’t respond to requests for comment.
Saab’s gold ties don’t stop there. Federal prosecutors in the U.S. and opposition lawmakers in Venezuela are looking into whether Saab has business links to a major buyer of Venezuela’s gold in Abu Dhabi, an investment firm called Noor Capital, via an executive who’s long done business with Venezuela. Records show Saab-linked companies in Turkey receiving payments from Noor and at least two other companies that bought Venezuelan gold, allowing Saab to get funds at a time when the Central Bank of Venezuela has been restricted from making any such payments because of U.S. sanctions. (Noor, in a statement, denies wrongdoing and says it’s stopped doing business with Venezuela.)
Last fall a judge in Bogotá overseeing a criminal money laundering investigation issued a secret arrest order against Saab, two of his brothers, his ex-wife, and two subordinates, all of whom hold positions in Saab’s web of companies in Colombia. Hours before police moved in to make the arrests, Saab and his kin fled Colombia by private jet, Colombian investigators say. They accused a police investigator of tipping them off just hours before.
Saab is thought to now live in Caracas, where he has a home, multiple companies, and, police believe, a Venezuelan passport. Police suspect his ex-wife ended up in Paris, where the estranged couple have a home on Boulevard Saint-Germain. One brother is in Canada, and another in Italy, according to surveillance reports supplied to Colombian investigators. Saab has been getting around—recently he traveled between Caracas and Paris via the French Antilles using passports from Venezuela and Antigua and Barbuda, investigators say. In early April he went to Austria using the Antiguan passport, investigators’ reports show. Prosecutors in Bogotá went to court in March to persuade a judge to declare Saab an international fugitive, seeking to trigger a global Red Notice arrest order by Interpol. But in early April, Saab’s lawyers successfully persuaded a different judge to move the case to Barranquilla, his hometown, where prosecutors fear he has sway over judges that could complicate their chances for victory. Prosecutors are appealing the ruling to Colombia’s Supreme Court.
Saab’s travel options appear to be narrowing. When Browne, the prime minister of Antigua and Barbuda, is asked about Colombia’s arrest order for Saab, he hasn't heard about it, and he’s taken aback. Recovering himself, he says Saab’s status as special economic envoy would be revoked. “I didn’t know about any criminal allegations,” says Browne. “We know him as a businessman, but we have to be prudent.” He then turns to his foreign minister, who’s in the room with him, and emphasizes that Saab can’t keep his Antiguan passport. “So we are going to revoke it.”
Treasury officials from the U.S. have been suspicious of Venezuela and Turkey’s gold deals from the beginning, and their concerns initially were rooted in a preoccupation with Iran and the financing of Middle Eastern terror groups. For years, DEA agents had been tracking Tareck el Aissami, a close confidant of Chávez and Maduro. They believed el Aissami was working on behalf of Venezuela with Colombian and Mexican drug cartels and that these groups were part of a larger international money laundering scheme that helped fund Hezbollah.
In January 2017, Maduro made el Aissami his vice president. A month later, the U.S. Treasury Department slapped sanctions on el Aissami under the Foreign Narcotics Kingpin Designation Act. The penalties didn’t diminish his influence. Last summer, Maduro put el Aissami in charge of the Ministry of Industry and National Production, giving him oversight of much of Venezuela’s gold deals with Turkey.
El Aissami traveled to Turkey last summer to meet with Erdogan, and around the same time the U.S. Treasury Department began amplifying concerns that the Venezuelan gold shipped to Turkey might end up in Iran. “We are tracking large purchases of gold in Turkey these days, and we’re trying to understand why that’s happening,” Marshall Billingslea, the Treasury Department’s assistant secretary for terrorist financing, told reporters last July. But the U.S. hasn’t been able to prove that Iran has any connection to those gold deals. In recent months, the U.S. focus on Venezuela’s gold trade has had less to do with fears of Iranian involvement and more to do with a desire to stop Maduro from looting a country that the U.S. hopes he won’t be leading for long.
In January, el Aissami met again with Erdogan in Turkey, just as U.S. officials successfully lobbied their British counterparts to block Maduro’s attempt to withdraw $1.2 billion in Venezuelan gold stored in the Bank of England. At the same time, Venezuela had set aside about 20 tons of gold from its central bank for shipment abroad. The sale of the bars, worth about $850 million, was scrapped amid growing pressure on prospective buyers. After Marco Rubio, the Republican senator from Florida, outed Noor Capital via Twitter as being a buyer in a planned sale, that company abandoned a pending purchase. And on April 15, the Canadian government added more than 40 names to its list of sanctioned Venezuelans, including Cano, the mining minister, and Perdomo, Minerven’s president.
The U.S. has intensified the squeeze on Maduro’s remaining gold assets in recent months. In March a federal court in New York indicted el Aissami for violating the sanctions the U.S. placed on him in 2017, specifically for chartering U.S.-based private jets to Turkey. Less than two weeks later, the Treasury Department imposed new sanctions on Minerven.
Venezuela and Turkey don’t appear to be backing down. Food bound for the CLAP program has been flowing into the port city of La Guaira, near Caracas, at the rate of roughly eight 10,000-ton shiploads a month, most via three aging ships owned by the Venezuelan government, according to shipping documents. Most of the food continues to come from the same Mexican companies that supplied Saab’s past shipments. Food from Turkey is in the mix, too; it’s transshipped via the Dominican Republic.
Just as Saab’s empire continues to adapt and thrive, the alliance between Venezuela and Turkey shows no signs of cracking. Earlier this year, as dozens more countries stopped recognizing Maduro as a legitimate president, Erdogan placed a call to Venezuela. According to his spokesman, he pledged to show Maduro the same solidarity Maduro showed him when he was besieged in 2016.
“Stand tall,” Erdogan told Maduro over the phone. “We are with you.” —With Fabiola Zerpa, Ben Bartenstein, Patricia Laya, Ethan Bronner, and Ezra Fieser
To contact the editor responsible for this story: Daniel Ferrara at firstname.lastname@example.org
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