An Odd Bust of Bolivars in Brazil

(Bloomberg) -- When Brazilian authorities in Rio de Janeiro cut the lock on a steel box ostensibly belonging to Iraq’s central bank, they found a stash of cash not worth the paper it’s printed on.

“We imagined we would find Iraqi money,” police chief Fabricio Oliveira, who participated in the bust, said in an interview. “Instead, to our surprise, we found Venezuelan money, which is a currency no longer worth anything.”

Not worth anything, that is, until scrubbed of its ink and reprinted as U.S. greenbacks, he said. Failing that, the 100-bolivar notes -- all 11,765 of them -- are valued at a measly $1,794. And that’s falling fast with Venezuela printing money to finance a massive budget deficit, which is the root cause of the Andean nation’s hyperinflation.

The lockbox does not belong to Iraq’s central bank, which hasn’t used such boxes since 2003, Abdul Kareem Hasan, general director of the bank’s issuance and vaults department, said by phone.

Brazilian authorities received intel that a transport company declined the attempt by two Brazilian men to ship the lockbox to the U.S., as it lacked documentation of its provenance. The men were arrested at Rio’s port area when trying to dispatch the treasure chest through another company, with the expectation of receiving $180,000 in compensation, Oliveira said. More than a dozen armed police officers and officials from the federal revenue service had been laying in wait for them in unmarked vehicles.

“From the information we have, it seems Venezuelan bolivar notes are ideal to be bleached with chemical products and reprinted as older dollar notes,” Oliveira said. “That’s our main line of investigation, since the box was being dispatched to Arkansas.”

In a peculiar twist, it was Brazil’s mint, located in Rio, that sold the paper that Venezuela used to print many of the bolivars seized Thursday, according to the federal revenue service’s division for repression of contraband. More than a dozen Latin American and African nations have contracted Brazil’s mint to provide paper or print their notes. Brazilian authorities have made other busts of bolivars in recent years, including one in the same port neighborhood in 2017 of 40 million bolivars packed into suitcases.

“The characteristics of the Venezuelan bill make it the raw material for falsification of other bills,” said Andre Rebolledo, a Venezuelan specialist in the prevention of money laundering. “It has no value, no one wants it, so people buy it to achieve that objective.”

--With assistance from Khalid Al-Ansary.

To contact the reporter on this story: David Biller in Rio de Janeiro at dbiller1@bloomberg.net

To contact the editors responsible for this story: Juan Pablo Spinetto at jspinetto@bloomberg.net, Walter Brandimarte

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