A Swiss Bank Keeps Cropping Up in Venezuelan Corruption Cases

(Bloomberg) -- As Venezuela’s chronic food shortages began intensifying, Naman Wakil, a former street peddler who made millions of dollars supplying meat to the socialist government’s food programs, decided to share the wealth.

Wakil ordered his Swiss bankers to transfer $5.9 million to relatives of state Food Minister Carlos Osorio, who’d given him the meat contracts, according to records compiled by the Venezuelan National Assembly’s audit commission. The commission labeled this series of payments from  2012 and 2013 as “suspicious transactions” in an official report.

“Call it what you like—bribes, commissions—it’s corruption,” said lawmaker Ismael Garcia, who helped write the report and now lives in exile in Costa Rica. Neither Wakil nor Osorio has been charged criminally, but U.S. prosecutors are now looking into Wakil’s contracts as part of a broad probe of Venezuelan corruption, according to two people familiar with the investigation.

After this story was published, and a week after Bloomberg made detailed inquiries, Osorio sent a series of electronic messages on Tuesday saying he has not engaged in any corruption and that evidence cited in the audit commission’s report was manufactured. He pointed out that in 2017 he won a defamation suit in a Venezuelan court against two lawmakers and a former lawmaker who’d led the 2016 commission investigation. Five months after that judgment, the U.S. Treasury Department imposed sanctions on Osorio, citing the commission’s allegations of “corruption in Venezuela’s food program” that cost up to $573 million. Wakil didn’t respond to messages left at a family business, with a business associate and with a lawyer listed as the registered agent for several companies Wakil has established in Florida.

Graft is almost commonplace in Venezuela, where economists estimate corruption siphoned away at least $385 billion in public funds from 2003 through 2015. Yet there’s something noteworthy about the transfers that the commission’s report attributed to Wakil: Only one bank was involved.

Both sides of each transaction, payer and payee, used accounts at Geneva-based CBH Compagnie Bancaire Helvetique SA, according to records compiled by lawmakers. The family-owned bank has grown eightfold since 2006. Venezuelan clients—specifically, those who made millions doing business with their government—have been part of the bank’s business, said Zair Mundaray, who headed financial-crimes cases for the Venezuelan attorney general’s office until mid-2017.

“This is the go-to bank for Venezuelans to hide money. They all banked at CBH,” said Mundaray, who now lives in Colombia and has worked with other expatriate former prosecutors to try to build criminal cases against cronies of Venezuelan President Nicolas Maduro and his predecessor, Hugo Chavez. Their goal is to see such cases brought to trial if or when there’s a change of regime in Venezuela.

Mundaray believes the bank should be held accountable for doing business with people who’ve been accused of helping to loot Venezuela’s treasury. At least one CBH client has been convicted in the U.S. of corruption-related charges, while others have been charged or, like Wakil, are under investigation.

U.S. prosecutors are looking into at least five Venezuelans who banked at CBH and are suspected of corruption, two people familiar with the probes said. The bank itself isn’t a target of those investigations, the people said.

Officials at CBH, which occupies a largely unadorned, five-story building near Geneva’s main shopping drag, declined detailed requests for comment for this story. In Osorio’s responses, which were sent from a mobile phone number that he has used for business purposes, he said Wakil was already a government food vendor when he was appointed food minister, and he noted that audit commission lawmakers who accused him of corruption paid a judgment in his 2017 defamation case. That judgment was 900 million bolivars (at the time, about $447,461 at the official exchange rate and $129,571 at the black-market rate). One of the defendants, former lawmaker Carlos Tablante, said that the court was beholden to Venezuela’s government and that he paid after his lawyer advised him that all his possessions would be confiscated otherwise. Tablante said he stands by the authenticity of the documents in the audit commission’s report.

Neither CBH nor any of its employees have been accused of any wrongdoing. Its chairman, Joseph Benhamou, a Swiss and Israeli national whose family has owned the bank for the last decade, told Florida banking officials last year that the bank has never been sanctioned by regulators or law enforcement, and that it complies with all Swiss international laws. Benhamou made those statements as part of his family’s attempt to acquire a Miami-based bank, a plan that ended this year with no public explanation while federal regulators were considering the Benhamous’ application.

Nonetheless, Venezuelan clients of CBH have surfaced repeatedly in U.S. criminal cases, dating to 2010. In at least three cases, Venezuelans were convicted of or formally charged with using CBH accounts to pay or receive bribes or to launder illicit funds, court records show. One of them, former Venezuelan national treasurer Alejandro Andrade, pleaded guilty in federal court in Miami in 2017 to taking more than $1 billion in bribes, including tens of millions of funds drawn from a CBH account to buy private planes and cover expenses related to his horses, according to a factual proffer attached to his plea agreement.

Court documents, internal emails and records and interviews with people familiar with the bank show that for many Venezuelan clients, CBH was more than just a passive deposit-holder. Its employees worked with lawyers in Panama and Luxembourg to set up companies for clients, who used the bank’s own headquarters in Geneva as the address of record for at least 15 such entities, emails between CBH bankers and outside lawyers show.

Serving accountholders on both sides of money transfers—as the audit commission’s records say CBH did for the meat vendor, Wakil—wasn't an isolated practice, according to three people with knowledge of the bank’s activities. Bankers urged Venezuelan clients to have their associates open accounts with CBH as well, the people said.

Clients who use internal transfers are able to avoid external wires that are monitored by regulatory systems designed to spot suspicious transactions. “Clearly, had they been using the traditional means of using the wire transfer system, there would have been red flags,” said Dennis Lormel, a former financial-crimes and terror-finance specialist for the Federal Bureau of Investigation who was presented with a description of the transfers. Lormel now runs DML Associates, a consulting firm that advises banks on how to prevent money laundering and fraud.

Wakil, 58, was born in Aleppo, Syria, immigrated to Venezuela and lived in Caracas’s Petare district, one of the world’s largest slums. He rose from selling goods on the streets to immense wealth. According to the Venezuelan audit commission’s findings, he had a close relationship with Osorio, a major general in Venezuela’s military who oversaw billions of dollars of food contracts as the nation’s food minister.

Osorio has held a series of powerful posts under Maduro, and in June he was put in charge of a state-owned mining company. Venezuela’s former head of military intelligence has described Osorio as Maduro’s key spiritual adviser, a man who stokes the president’s fascination with Santeria and other religions that merge aspects of African, indigenous American and Christian faiths. Osorio called those claims totally false.

Wakil’s specialty was buying cheap meat and poultry—some of it close to its expiration date—in Brazil, then selling it to Venezuelan food programs at markups, according to the findings of the National Assembly’s probe. In just a few years, he secured hundreds of millions of dollars’ worth of state contracts, investigators found. That includes a June 2012 contract to supply Venezuela’s food ministry with 70,000 metric tons of beef, pasta and cooking oil that paid $5,340 per ton of beef, according to documents reviewed by Bloomberg News. The contract describes the need to set up holding companies for each operation to handle the exchange of bolivars and dollars amid strict currency controls.

By 2012, Wakil controlled several accounts at CBH, according to four people familiar with investigations of his dealings in Venezuela and the U.S. His personal fortune reached $400 million by September 2015, according to an email exchange that month between one of his lawyers and one of his bankers that became part of the “Panama Papers.” (That cache of millions of leaked documents from a Panamanian law firm was published by the International Consortium of Investigative Journalists in 2016.)

While food shortages wracked Venezuela, much of Wakil’s earnings made their way to the U.S., where they paid for flashy toys. He and his family own at least 11 properties across Miami, most via companies they control. That includes a luxury apartment near Biscayne Bay in Coconut Grove that Wakil bought for $3.2 million in 2011, property records show. Wakil drove BMWs and Range Rovers, according to multiple traffic tickets he racked up in South Florida. In late 2016 he bought a $5.6 million condominium in the Porsche Design Tower, a 60-story oceanfront building that was co-designed by the German automaker. Individual units are served by oversized glass elevators that whisk owners’ cars hundreds of feet up to “sky garages” outside their front doors.

Well before that purchase, Wakil had used CBH for a far less glamorous purpose, according to Mundaray, the former prosecutor.

Over seven months beginning in December 2012, Wakil ordered his CBH bankers to make eight transfers from his accounts, according to bank documents at the center of an investigation Venezuelan prosecutors opened into the lawmakers’ allegations of corruption in 2016. In all, Wakil transferred $5.9 million into a CBH account controlled by brothers-in-law of Osorio, the food program chief, according to the documents, which were first made public by Tablante, the former lawmaker.

Mundaray was overseeing the prosecutors’ investigation when, in 2017, Maduro fired his boss, former Attorney General Luisa Ortega, who’d begun publicly denouncing corruption. Mundaray and other prosecutors followed her, dropping the Wakil probe before it could be completed. The former prosecutors, led by Ortega, have continued pursuing corruption cases from their self-imposed exile in Bogota.

It’s unclear what happened to the official case after Mundaray and his colleagues left Venezuela. Current Attorney General Tarek Saab, who was appointed by Maduro in 2017, declined to comment on the case.

When Mundaray officially supervised corruption cases in Caracas, he said, CBH kept showing up in suspicious transactions. For years, it seemed to him, Venezuelans he suspected of corruption had been parking their money in the Swiss bank.

“You had patterns of activity that were suspicious: lots of accounts, clients with no discernible proof of the source of their money, companies without any obvious source of economic activity,” Mundaray says.

The bank now known as CBH began operating in 1975 as a securities brokerage called Stock and Commodities Services or Banque SCS Alliance. By the time Joseph Benhamou, who was an auditor at KPMG, joined its board, it had a banking license and offices in Geneva, St. Moritz, Luxembourg and Nassau. Within seven years, Benhamou had taken over as chief executive officer, his family had bought a controlling share of the bank and the name had been changed to Compagnie Bancaire Helvetique, or “Swiss Banking Company” in French.

In 2011, CBH began pursuing new business in Venezuela, with two recently hired relationship managers on the Andean desk, Spaniard Santiago Souto and Frenchman Charles-Henry de Beaumont.

It was Souto and another CBH banker, Roberto Rodriguez, who were asked to execute the payments from Wakil’s accounts to Osorio’s relatives, according to internal bank documents that became part of the audit commission’s report. Souto didn’t respond to requests for comment.

Rodriguez, a Spaniard who worked alongside Souto at CBH for several years, has since moved to CBH’s Hong Kong office. Approached by Bloomberg in June, Rodriguez at first denied that he knew Souto. Eventually, he backtracked. “I was just his assistant,” Rodriguez said. He declined to comment on the payments.

While former colleagues say Souto often bickered with Benhamou, two people recall that Beaumont often joined the CEO for lunches prepared by a private chef. The men were so close that Beaumont called Benhamou “Dad,” one of the people said.

Beaumont, in a written response to questions, said the bank required all clients to document their sources of income and wealth when he was a CBH director. Other officials at CBH, he said, decided whether to take on a client once they studied the application documents. “I have never had any decision power of any sort,” he said.

As for past clients, he declined to comment. “I cannot issue any comment either on any legal procedure wherever they would come from,” he said. “What I can tell you is that I have never committed any mispractices.”

One of CBH’s Venezuelan clients was Raul Gorrin, a Venezuelan lawyer who built empires in insurance and media, and who was indicted in Miami in August 2018 on charges of money laundering and conspiracy to violate the Foreign Corrupt Practices Act. He’s currently a fugitive from U.S. justice.

In 2012 and 2013, Gorrin tapped an account at CBH to buy aircraft worth $33.7 million and cover some horse-related expenses for Andrade, the former Venezuelan treasurer, according to plea agreement documents filed in Andrade’s case last year. Gorrin’s 2013 purchase of the television network Globovision, which opposition leaders say silenced one of the few media outlets that had been willing to criticize Maduro, was funded partly by a wire transfer from Gorrin’s accounts at CBH, according to a person familiar with the operation.

Another CBH client was Luis Oberto, the son of a prominent Venezuelan banker, whose name surfaced in a public corruption investigation involving the state-owned oil company, Petroleos de Venezuela SA (PDVSA), according to Tablante, the former Venezuelan lawmaker. Tablante, who previously served as head of Venezuela’s anti-drug trafficking office, worked on several corruption investigations with fellow lawmakers and chronicled his findings in a book, El Gran Saqueo, or “The Great Looting.”

In 2012, a company controlled by Luis Oberto and his brother Ignacio secured a contract to provide a credit line to PDVSA that would have enabled them to benefit from currency exchanges, according to Tablante and people familiar with investigations in Venezuela and the U.S. Loans under the contract were extended in bolivars, but PDVSA repaid them in dollars at the government’s official exchange rate. At the time, bolivars were about three times cheaper on Venezuela’s extensive black market for currency, allowing anyone who controlled the PDVSA credit lines to triple their money.

In one deal, Panama-based Violet Advisors SA—a now-defunct company that listed Luis Oberto as president and Ignacio Oberto as director—secured a 17.49 billion bolivar credit line with PDVSA, according to internal oil company documents cited by Tablante. Violet Advisors had an account at CBH, according to fund-transfer records reviewed by Bloomberg News.

In April 2016, the Venezuelan attorney general’s office opened a criminal investigation into suspected corruption tied to big PDVSA contracts, according to documents and two former Venezuelan prosecutors familiar with the case. A written summary of that investigation shows that prosecutors working under Mundaray examined Luis Oberto’s tax and business records. Saab, the current attorney general, declined to comment on where the probe stands.

The Justice Department is now investigating how the Obertos won the loan contracts, and whether any gains from them were invested in the U.S., according to two people familiar with the probe.

Miami-based attorneys for the Obertos declined to respond to detailed questions about their business dealings. “Luis and Ignacio Oberto are both highly respected businessmen who have never been accused in any country of any crime,” lawyers Ed Shohat and David Oscar Markus said in a joint statement. “And for good reason—they are honorable, ethical, and transparent. They have committed no crime. Any suggestion to the contrary will be met with a full court press defense.”

By April 2013, as CBH was making significant fees from its Venezuelan business, Souto left the bank to become an independent asset manager. (Beaumont left the same year.) Documents show that Souto’s clients kept money at CBH after he left the bank, and he stayed involved in managing their affairs. For example, Wakil asked Souto to help arrange for four of the eight wire transfers to Osorio’s relatives after Souto had left CBH, according to records the Venezuelan audit commission compiled.

Meanwhile, CBH went on a buying spree. It bought Latin American and Iberian accounts from Portugal’s Banco Espirito Santo, which later collapsed after what regulators described as fraudulent activities and “ruinous management.” CBH also added assets in Hong Kong and Eastern Europe, and opened an office in London. Its assets reached 9.3 billion Swiss francs ($9.3 billion) in 2018.

Last year, CBH’s Benhamou set his sights on the U.S., cutting a deal to buy Brickell Bank, a one-branch bank in Miami’s financial district that was owned by now-bankrupt Banco Espirito Santo. He envisioned moving $120 million of deposits to the Miami bank and sending clients to open accounts there, filings with Florida regulators show. “I think it was quite a dream for me to have something in the United States,” Benhamou said at a 2018 state regulatory hearing. “Miami is the hub, the gateway for Latin American clientele.”

Background checks turned up nothing amiss, and Florida regulators approved the purchase. At that point, the Benhamous’ plans needed only federal regulatory approval.

Months went by without any news. Then, in early May, a different suitor revealed plans to buy Brickell Bank. Federal regulators approved the acquisition by Banesco USA, a bank owned by Venezuelan financier Juan Carlos Escotet, according to a statement issued by Brickell Bank in August. State and federal regulators, Banesco and CBH all declined to discuss what happened with the Benhamous’ plans.

In Venezuela, finding the country’s missing billions is a top priority for Juan Guaido, a lawmaker recognized as Venezuela’s legitimate leader by the U.S., the European Union and dozens of other countries. Members of a team Guaido appointed to track the funds say they hope they can recoup a significant portion, but they’re realistic about the challenges involved.

A decade of pressure from foreign regulators has forced Swiss authorities to ease their famous banking secrecy rules and to share more information generally. Even so, U.S. prosecutors have asked for several bank records related to suspicious Venezuelan accounts at CBH with scant results, according to people familiar with the requests. Swiss authorities take at least a year to rule on such requests from foreign law enforcement agencies. Consequently, U.S. prosecutors’ progress has been slow.

In March 2018, Mundaray, the former Venezuelan prosecutor, tried to force the issue. He traveled to Switzerland armed with cases that he said documented how Venezuelans used Swiss banks to hide the proceeds of some of the biggest financial crimes he’d investigated. He urged government officials to look into CBH and other banks, he said.

The Swiss Attorney General’s office told Bloomberg this month that it has been investigating allegations of money laundering in Swiss banks by Venezuelans but declined to comment further.

Back in Bogota, Mundaray, who recently was named a legal adviser at the Venezuelan embassy representing Guaido’s government in Colombia, says he remains hopeful that his request of Swiss officials will produce results. “They promised to take action,” he said. “And I really hope they will, right?”

—With assistance from Blake Schmidt, Fabiola Zerpa, Hugo Miller, Patrick Winters, Joao Lima, Ben Bartenstein and Alex Vasquez

To contact the editor responsible for this story: John Voskuhl at jvoskuhl@bloomberg.net, Flynn McRoberts

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