Post by anenro on Oct 9, 2020 21:45:32 GMT 4
To dodge sanctions Venezuela turns to Asia asphalt giant
Back in January, a yearlong campaign of U.S. sanctions was taking its toll at Venezuela’s state-run oil company. Many of PDVSA’s overseas bank accounts had been frozen or closed, hampering its ability to pay vendors on whom it relies to keep the nation’s crude flowing.
So, as the bills piled up, the company leaned on a longtime client from Thailand, Tipco Asphalt, to blunt the impact of the sanctions: in exchange for deep discounts on oil, Tipco would pay PDVSA’s obligations and deduct the amounts from what it owed the Venezuelan oil giant, according to records obtained by The Associated Press.
PDVSA quickly took advantage of the arrangement. Over the course of a single day — Jan. 10 — the oil company sent Tipco executives 43 emails related to payment instructions, prompting a mild rebuke from Jean-Pierre Pastor, Tipco’s representative in Venezuela, who complained about the extra workload.
“Tipco is a PDVSA client, not the Venezuelan central bank,” Pastor wrote in bold and underlined text in an email to PDVSA.
“Tipco tried as much as possible to assist you in this difficult period,” he added. “Let’s hope you will not forget it.”.
The e-mail is just one of the dozens of documents obtained by the AP as part of a months-long investigation into how Venezuela is trying to skirt harsh U.S. sanctions that have exacerbated an economic collapse rarely seen outside war zones. At a time when Nicolás Maduro’s government is seen as a pariah in the west, the financial arrangement with Tipco has quietly allowed PDVSA to move hundreds of millions of dollars around the world that it might not be able to otherwise, records show.
The publicly-traded Thai company says its payments to third parties are a perfectly legal, standard feature of its oil purchases from Venezuela, which are not barred by U.S. sanctions applicable only to American companies. Nonetheless, the AP has learned that the outlays are being scrutinized by U.S. law enforcement and the Trump administration, which views them as a financial lifeline to Maduro.
The documents — invoices, contracts, shipping records, and wire receipts — were provided to the AP by a former PDVSA consultant located outside of Venezuela on the condition of anonymity for fear of retaliation.
Attorneys and forensic accountants who reviewed the documents said Tipco could be sanctioned for defying U.S. policy seeking to starve Maduro of oil income — a risk Tipco itself acknowledged last month. Processing payments for a sanctioned company could also spur a criminal fraud or money laundering investigation against Tipco in the U.S. if American financial institutions or companies were involved, as appears to be the case in a few instances, said David P. Weber, who spent years investigating corruption while employed at the U.S. Treasury Department and Securities and Exchange Commission.
“It may have seemed a good idea to make a profit serving as a financial intermediary,” said Weber, who now is a forensic accounting professor at Salisbury University in Maryland. “But in engaging in such risky activity, Tipco fell in with one of the most despicable governments in the world.”
Tipco on Sept. 11 — four days after the AP sent it detailed questions — announced that it would stop purchasing crude from Venezuela under pressure from the Trump administration.
The company in a filing with Thailand’s stock exchange said it was first contacted by the U.S. Embassy in Thailand in December 2019 and a month later provided American diplomats a written explanation of its purchases from Venezuela. Then in August, it was contacted again by the State Department, which warned it could be subject to U.S. sanctions if it didn’t wind down its purchases by the end of November.
A U.S. official said that the State Department in its latest contact raised concerns about Tipco’s financial support for PDVSA via payments to third parties. The official declined to be named because the conversations, part of an effort to work pro-actively with companies to eliminate the need for sanctions, were private.
The AP could find no record that Tipco ever informed investors about its contact with U.S. authorities until it announced its abrupt ending of oil purchases from Venezuela last month. Thai stock exchange rules require companies to disclose information that could have a “significant impact” on its stock price or affect investment decisions.
“In order to avoid the sanction, the Company is taking steps to comply with such request,” Tipco said in its filing, adding that its refinery in Malaysia, which produces half of the company’s asphalt, will have to shut down temporarily until sanctions on Venezuela are lifted or alternative crude supplies are found. The company’s stock plummeted 40% following the disclosure.
Tipco CEO Chaiwat Srivalwat, in an email to AP, wouldn’t address the alleged financial support provided to PDVSA via third parties, except to say that any payments “strictly corresponded” to its oil purchases from Venezuela. He also wouldn’t disclose details of the company’s relationship to Pastor, who is the brother of longtime Tipco board member Jacques Pastor, the head of the Asia Pacific office for Tipco’s top shareholder, French road builder Colas.
“There’s a lot of rogue players willing to buy Venezuela’s oil,” said Weber, who previously reviewed the so-called Panama Papers detailing the offshore financial activities of the world’s rich and powerful. “But in the absence of a bank willing to process PDVSA’s payments, an unlicensed money service business is the next best thing, for which Tipco was paid handsomely.”
Venezuela’s Oil and Communications Ministries, which are responsible for handling all press inquiries about PDVSA, didn’t respond to repeated requests for comment.
Tipco is one of Asia’s largest distributors of asphalt for roads, highways, and airport runways, with revenue last year of over $1.2 billion, according to its annual report. France’s Colas, which is also publicly traded, has a 32% stake. Tipco’s massive refinery in Malaysia is specifically designed to refine Venezuela’s extra heavy crude, possibly the world’s best for asphalt.
Much like a third-party payment processor, Tipco wired several millions of dollars from its accounts at Siam Commercial Bank — Thailand’s oldest — to PDVSA’s clients around the world, documents show. Instead of accepting payment directly for the crude it sold, PDVSA kept a running tab with its longtime client and periodically would send detailed instructions to Tipco to pay vendors on its behalf. The arrangement was outlined in oil sales summaries seen by the AP in which PDVSA committed to providing invoices as well as bank certification letters of the third parties to Tipco so that the Thai company can make corresponding payments in “due time.”
Since the start of 2019 — when the U.S. sanctioned PDVSA to boost opposition leader Juan Guaidó’s challenge to Maduro — nearly 100 companies received hundreds of millions of dollars in this manner, according to the records. They include the global law firm Dentons, shipping owners registered in jurisdictions known for secrecy and small Venezuelan firms with bank accounts in Russia and Turkey, according to the documents. Even OPEC, the oil cartel Venezuela helped found in 1960, was paid 2 million euros ($2.3 million) in dues via Tipco.
Frequently, PDVSA’s vendors had no idea why they were being paid from a Thai company whom they never heard of and much less worked with. That was the case with a distributor for Kamaz, a partially state-owned Russian truck manufacturer, which between December 2019 and February 2020 received payments equaling $10.2 million for dozens of buses and chassis sold years earlier when Venezuela was its top regional market. Among the buyers was the state of Aragua, whose governor at the time, Tareck El Aissami, is now Venezuela’s Oil Minister.
“They asked us for alternatives, so we settled on an account in Euros instead of dollars,” said a representative for Kamaz Latinoamerica SA on the condition of anonymity because the company is still waiting to be paid the other half of what’s owed. “We were never told we’d be paid by Tipco.”
ANENRO'S COMMENT: It is well known in certain Venezuelan circles, that Maduro owns several corporations outside Venezuela and TIPCO is paying Maduro for services to PDVSA never provided. Maduro found a way to further lined his personal pockets.
Back in January, a yearlong campaign of U.S. sanctions was taking its toll at Venezuela’s state-run oil company. Many of PDVSA’s overseas bank accounts had been frozen or closed, hampering its ability to pay vendors on whom it relies to keep the nation’s crude flowing.
So, as the bills piled up, the company leaned on a longtime client from Thailand, Tipco Asphalt, to blunt the impact of the sanctions: in exchange for deep discounts on oil, Tipco would pay PDVSA’s obligations and deduct the amounts from what it owed the Venezuelan oil giant, according to records obtained by The Associated Press.
PDVSA quickly took advantage of the arrangement. Over the course of a single day — Jan. 10 — the oil company sent Tipco executives 43 emails related to payment instructions, prompting a mild rebuke from Jean-Pierre Pastor, Tipco’s representative in Venezuela, who complained about the extra workload.
“Tipco is a PDVSA client, not the Venezuelan central bank,” Pastor wrote in bold and underlined text in an email to PDVSA.
“Tipco tried as much as possible to assist you in this difficult period,” he added. “Let’s hope you will not forget it.”.
The e-mail is just one of the dozens of documents obtained by the AP as part of a months-long investigation into how Venezuela is trying to skirt harsh U.S. sanctions that have exacerbated an economic collapse rarely seen outside war zones. At a time when Nicolás Maduro’s government is seen as a pariah in the west, the financial arrangement with Tipco has quietly allowed PDVSA to move hundreds of millions of dollars around the world that it might not be able to otherwise, records show.
The publicly-traded Thai company says its payments to third parties are a perfectly legal, standard feature of its oil purchases from Venezuela, which are not barred by U.S. sanctions applicable only to American companies. Nonetheless, the AP has learned that the outlays are being scrutinized by U.S. law enforcement and the Trump administration, which views them as a financial lifeline to Maduro.
The documents — invoices, contracts, shipping records, and wire receipts — were provided to the AP by a former PDVSA consultant located outside of Venezuela on the condition of anonymity for fear of retaliation.
Attorneys and forensic accountants who reviewed the documents said Tipco could be sanctioned for defying U.S. policy seeking to starve Maduro of oil income — a risk Tipco itself acknowledged last month. Processing payments for a sanctioned company could also spur a criminal fraud or money laundering investigation against Tipco in the U.S. if American financial institutions or companies were involved, as appears to be the case in a few instances, said David P. Weber, who spent years investigating corruption while employed at the U.S. Treasury Department and Securities and Exchange Commission.
“It may have seemed a good idea to make a profit serving as a financial intermediary,” said Weber, who now is a forensic accounting professor at Salisbury University in Maryland. “But in engaging in such risky activity, Tipco fell in with one of the most despicable governments in the world.”
Tipco on Sept. 11 — four days after the AP sent it detailed questions — announced that it would stop purchasing crude from Venezuela under pressure from the Trump administration.
The company in a filing with Thailand’s stock exchange said it was first contacted by the U.S. Embassy in Thailand in December 2019 and a month later provided American diplomats a written explanation of its purchases from Venezuela. Then in August, it was contacted again by the State Department, which warned it could be subject to U.S. sanctions if it didn’t wind down its purchases by the end of November.
A U.S. official said that the State Department in its latest contact raised concerns about Tipco’s financial support for PDVSA via payments to third parties. The official declined to be named because the conversations, part of an effort to work pro-actively with companies to eliminate the need for sanctions, were private.
The AP could find no record that Tipco ever informed investors about its contact with U.S. authorities until it announced its abrupt ending of oil purchases from Venezuela last month. Thai stock exchange rules require companies to disclose information that could have a “significant impact” on its stock price or affect investment decisions.
“In order to avoid the sanction, the Company is taking steps to comply with such request,” Tipco said in its filing, adding that its refinery in Malaysia, which produces half of the company’s asphalt, will have to shut down temporarily until sanctions on Venezuela are lifted or alternative crude supplies are found. The company’s stock plummeted 40% following the disclosure.
Tipco CEO Chaiwat Srivalwat, in an email to AP, wouldn’t address the alleged financial support provided to PDVSA via third parties, except to say that any payments “strictly corresponded” to its oil purchases from Venezuela. He also wouldn’t disclose details of the company’s relationship to Pastor, who is the brother of longtime Tipco board member Jacques Pastor, the head of the Asia Pacific office for Tipco’s top shareholder, French road builder Colas.
“There’s a lot of rogue players willing to buy Venezuela’s oil,” said Weber, who previously reviewed the so-called Panama Papers detailing the offshore financial activities of the world’s rich and powerful. “But in the absence of a bank willing to process PDVSA’s payments, an unlicensed money service business is the next best thing, for which Tipco was paid handsomely.”
Venezuela’s Oil and Communications Ministries, which are responsible for handling all press inquiries about PDVSA, didn’t respond to repeated requests for comment.
Tipco is one of Asia’s largest distributors of asphalt for roads, highways, and airport runways, with revenue last year of over $1.2 billion, according to its annual report. France’s Colas, which is also publicly traded, has a 32% stake. Tipco’s massive refinery in Malaysia is specifically designed to refine Venezuela’s extra heavy crude, possibly the world’s best for asphalt.
Much like a third-party payment processor, Tipco wired several millions of dollars from its accounts at Siam Commercial Bank — Thailand’s oldest — to PDVSA’s clients around the world, documents show. Instead of accepting payment directly for the crude it sold, PDVSA kept a running tab with its longtime client and periodically would send detailed instructions to Tipco to pay vendors on its behalf. The arrangement was outlined in oil sales summaries seen by the AP in which PDVSA committed to providing invoices as well as bank certification letters of the third parties to Tipco so that the Thai company can make corresponding payments in “due time.”
Since the start of 2019 — when the U.S. sanctioned PDVSA to boost opposition leader Juan Guaidó’s challenge to Maduro — nearly 100 companies received hundreds of millions of dollars in this manner, according to the records. They include the global law firm Dentons, shipping owners registered in jurisdictions known for secrecy and small Venezuelan firms with bank accounts in Russia and Turkey, according to the documents. Even OPEC, the oil cartel Venezuela helped found in 1960, was paid 2 million euros ($2.3 million) in dues via Tipco.
Frequently, PDVSA’s vendors had no idea why they were being paid from a Thai company whom they never heard of and much less worked with. That was the case with a distributor for Kamaz, a partially state-owned Russian truck manufacturer, which between December 2019 and February 2020 received payments equaling $10.2 million for dozens of buses and chassis sold years earlier when Venezuela was its top regional market. Among the buyers was the state of Aragua, whose governor at the time, Tareck El Aissami, is now Venezuela’s Oil Minister.
“They asked us for alternatives, so we settled on an account in Euros instead of dollars,” said a representative for Kamaz Latinoamerica SA on the condition of anonymity because the company is still waiting to be paid the other half of what’s owed. “We were never told we’d be paid by Tipco.”
ANENRO'S COMMENT: It is well known in certain Venezuelan circles, that Maduro owns several corporations outside Venezuela and TIPCO is paying Maduro for services to PDVSA never provided. Maduro found a way to further lined his personal pockets.