Caracas Chronicles

Deep in his comment section, the Satanic Bowel Movement turns up the smoking gun in the case for thinking Fonden’s books will never ever make sense  to an outside auditor: this line item for 60 million “dollars” to wind up the old INAM (National Minors’ Institute).

Why the scare quotes?

Because, even though Fonden was supposed to only ever spend in U.S. currency (precisely to avoid the shenanigans inherent in moving back across the bolívar-dollar divide), it’s more than obvious that if you’re liquidating INAM, what you need is bolivars (to pay off prestaciones, wind up obligations to local contractors, etc.), not dollars. More than likely, then, Fonden funds have been moving back-and-forth between the currencies. And that gives the game away right there.

Because, remember, there have long been multiple simultaneous exchange rates between the bolivar and the dollar, and it’s precisely state actors who have privileged access to the arbitrage opportunities that anomaly generates.

Who’s to say that, a few years ago, INAM didn’t turn its dollars into bolivars at Bs.8:$, then went to CADIVI and rebought dollars the next day at Bs.2.15? CADIVI wouldn’t be heartless enough to reject a dollar request coming from a good, red, socialist institute set up to help poor little orphans, would it?

And if one project did that once, what’s to stop multiple projects doing it multiple times? Not the Contraloría General de la República, that’s for sure!

And who’s to say, if they could do it at the project level, that they didn’t also do it at the macro, Fonden-wide level too? Once you go through the dollar arbitrage looking glass, there’s no turning back: it’s just too tempting.

Fonden might publish its Balance Sheets, but it sure as hell isn’t going to give us the gory detail of the ilícitos cambiarios you can bet lie behind that $60 million outlay to wind-up INAM. Which gives me the strong hunch that, fun though the hobby is, we’re never ever going to be able to make Fonden’s numbers square off with one another.