Transparency International's Wall of Silence on Venezuela's PDVSA

[Joanne98]

What would you call an organisation that when caught making false allegations, refuses to answer legitimate questions or hold an investigation?

Answer: Transparency International!

The facts are straightforward. Last April, TI published a report about the global oil industry which ranked oil companies according to whether they were of high, medium or low transparency. Venezuela ’s state-owned oil company, PDVSA, was given the lowest possible ranking on the basis that it did not produce properly audited accounts and was withholding basic financial information about revenues, taxes and royalties.

The Chavez government says that it spends the proceeds of its oil industry on providing a free health and education system, and on raising the living standards of the working class and poor. The opposition counters that Chavez is mismanaging PDVSA and cooking the books in order to cover up inefficiency and corruption.

Unsurprisingly, TI’s report was seized upon by the opposition as evidence in support of their claims. PDVSA was a “company of low transparency”, and although TI did not directly suggest that PDVSA was corrupt, they do say that companies that withhold basic information from the public “leave the door open to corruption”.

But TI’s report was wrong. Not just any old wrong. But completely, utterly, glaringly wrong. All the information that TI claimed PDVSA was refusing to disclose was freely available in their Report and Accounts and published on their website and in the press.

TI’s financial involvement with the oil industry stretches back over many years. “TI gratefully acknowledges the generous contributions of... Shell and ExxonMobil,” they say on their website. Generous contributor ExxonMobil is no friend of Venezuela's socialist government. Earlier this year they took PDVSA to the British High Court in a bid to seize their assets, and lost.

So how did this “non-partisan” NGO (which also received a million pounds from the British Government last year) get it so wrong?

The one organisation that could provide a definitive answer is maintaining a wall of silence.

On May 14, I phoned Transparency International’s headquarters in Berlin and spoke with their senior press officer, a lady called Gypsy Kaiser. Ms Kaiser insisted that their report was accurate and that PDVSA had only disclosed basic financial information after they went to print. I checked the dates. Ms Kaiser was wrong. The missing information had been published months earlier in PDVSA’s 2006 accounts, and was also available in their recently released 2007 accounts. I called back and left two messages on Ms Kaiser’s answer-phone. My calls were not returned.

A few days later, I wrote a piece for the Guardian's 'Comment is free' section, debunking TI’s report. In the course of my investigations, I came across something very funny, and something very disturbing. The funny thing was a newspaper photograph of of the head of PDVSA holding up a copy of their Report and Accounts, containing all the information TI said didn’t exist.

The disturbing thing was that a document released under the Freedom of Information Act showed that during the 2002 coup, a lady called Mercedes de Freitas had emailed the US Government’s National Endowment for Democracy (NED) to defend the newly installed military dictatorship. At the time, Ms de Freitas was director of a NED funded opposition organisation called Fundacion Momento de la Gente. She is now head of Transparency International’s Venezuela bureau, and according to TI it was her who was entrusted with the task of compiling the data on PDVSA.

I called Gypsy Kaiser again, and asked if she had read my article. She had. I wanted to know whether TI would be withdrawing their report and holding an investigation into the partisan affiliations of their Venezuela bureau. Ms Kaiser declined to say, and instead invited me to put my questions in writing. I did.

After two more days of silence, I called Ms Kaiser’s boss, André Doren, Director of Communications. Perhaps he would be more communicative? He told me that he had people working on the answers and promised to call me back the following day. He didn’t. I emailed him to ask why. He didn’t reply. I left a message on his answer-phone. He didn’t respond. Presumably he was too busy exposing opaque organisations.

Another week passed, and still no answers from TI. I tried their regional office for the Americas . An official told me that they “stand by their report”. Even though it’s wrong? “That’s your opinion,” she replied.

“But the information that you say doesn’t exist, does exist.”

“Talk to our press office,” she advised.

Despite having a strong sense of déjà vu, I phoned the press office and spoke once again with Gypsy Kaiser. She was positively seething. “Calling our staff is inappropriate behaviour,” she barked at me, like an angry school teacher. “But you won’t answer my questions,” I protested. “We will,” she responded.

“But when? I’ve already waited three weeks. ”

“I’m not giving you a date. Let’s just say it will be sooner rather than later.”

A week on and I’m still waiting. Obviously her definition of “sooner” is my definition of “later”.

In the meantime, TI are busy mailing their inaccurate report on Venezuela to businesses, NGOs and governments all over the world. No investigation has been held into what went wrong. And their Venezuela bureau continues to be run by a person who backed the 2002 coup against democracy.

Transparency International doesn’t like answering questions. But I have one more for them. Isn’t it about time they changed their name?
http://www.venezuelanalysis.com/analysis/3553

[justinaforjustice]

1. Thanks, Joanne98, For The Facts.

There is so much misinformation about Venezuela disseminated by anti-Chavez sources it is very hard to keep up with.
Thanks for all your work in tracking down the facts about "Transparency International", which should obviously change its name to Obfuscation Inc.

[Peace Patriot]

2. Three very, VERY important articles on Venezuela's economy

The first is a MUST-READ in which OilWars analyzes the crap published in the NYT on Venezuela's oil industry:

NYT's Tina Rosenberg Goes to School on Venezuela's Oil, and Flunks
November 6th 2007, by Oil Wars
http://www.venezuelanalysis.com/analysis?page=17&%24Version=0&%24Path=/&%24Domain=.venezuelanalysis.com

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The second is simply a brilliant article on Venezuela's economic history, and what Chavez's Bolivarian Revolution economics is all about. Here's part of it:

The Struggle to Industrialize Venezuela
October 5th 2007, by Chris Carlson – Venezuelanalysis.com
http://www.venezuelanalysis.com/analysis/2689

(snip)

...most leaders and intellectuals in first world countries seem to have forgotten that the United States and other first-world nations developed industry by rejecting calls for free trade and actively protecting their nascent industries. The poorer nations of the world today would be wise to remember that the United States, once a colony of the British Empire, soon surpassed the British in industrial and economic might with policies that directly contrasted the free trade policies advocated by the intellectuals and politicians of the empire

President Hugo Chavez of Venezuela seems to understand this lesson of world history and has become the most outspoken opponent of the free trade doctrine now promoted by the United States. As US leaders did less than a century ago, Hugo Chavez understands that free trade is unfair for the weaker, less advanced nations, and that the true path to national development and advancement is the strengthening of his own nation's industry and production through direct state support, guidance and intervention. Before free trade could ever be fair trade, Venezuela and the rest of Latin America would have to become stronger. And toward that end, Hugo Chavez is making significant efforts.

The Failures of Venezuela's Past

Since the beginning of democracy in Venezuela in 1958, it has been generally understood that the main development goals of the country include industrialization and economic sovereignty. Industrialization as a means to national sovereignty was generally seen as a part of a larger process of nation-building that was initiated with the overthrow of the Perez Jimenez dictatorship in 1958.<5>

In 1962, the new government passed the Automobile Policy Law to begin building a Venezuelan national car industry, as well as a policy to create a national tractor industry. Both of these measures had the intention of reducing Venezuela's technological dependence and creating the capacity for heavy industry. It was generally understood that if Venezuela were to ever be an independent, developed country, it would need to industrialize. National car and tractor industries, characterized by complex technology and advanced organization of production, were seen as two strategic industries that could create the beginnings of a modern industrial society in Venezuela.<6>

But Venezuela's efforts to industrialize failed. Despite the fact that it was official government policy well into the 1980's, not one tractor would ever be produced; no national auto industry would be created. Venezuela remained almost completely dependent on imported technology from the developed world, paid for with oil exports. The traditional colonial structure of the economy had changed very little; Venezuela still exported raw materials, mostly oil, in exchange for imported manufactured goods from the developed world.

To understand Venezuela's past failures to develop industry is to understand the failures of liberal democracy. As is the case in most liberal democracies, the democracy of the Fourth Republic (1958-1998) was built on a political pact between rival parties. Two political parties, composed of various conflicting sectors of society, with the exclusion of leftist parties, agreed to share power amongst themselves and to alternate the presidency between them.

As a government built on a coalition of conflicting sectors and class interests, it was nearly impossible to build a coherent political program that could satisfy the demands of conflicting interests. Industrialization was recognized as an important development goal, but would require significant changes in the structure of the economy. Nascent industry would need to be promoted for the nation to become independent from imported goods, creating a clear conflict with the traditional import sector. The political system, built on an agreement to avoid conflict and defend the interests of conflicting sectors, including the most powerful groups, would find it very difficult, or nearly impossible, to make the needed changes.<7>

So, for example, when President Carlos Andres Perez made an extra effort to implement the auto industry policy in the 1970's, the government guidelines for the policy said it should cause the least possible "social and economic upset" to the existing auto companies. The existing "structure of the market" would be a determining factor in the policy.<8>

In other words, even though it was necessary to make profound structural changes to the economy, the Fourth Republic planned to do it without making any waves, without creating conflict. But given that it was against the interests of the international car companies, and the domestic car importers to build a national auto industry independent of imports, it would be impossible to do without rocking the boat.

The same happened to the tractor industry. International tractor companies were not genuinely interested in cooperating in the transfer of technology, tractor importers were opposed to the policy, and the government, internally divided, did not have the political will to carry the project forward. In the end, the initiative left the empty carcass of a brand new tractor factory in the middle of the Venezuelan jungle, never to produce a single unit.

It was obvious that the liberal democracy of the Fourth Republic would not be capable of making the necessary changes, or confronting the conflicting class interests of a divided society. As is the norm in liberal democracies, powerful groups in Venezuela and abroad used their influence to prevent undesired changes, undercutting the interests of the majority poor, and the status quo was preserved.

After the failure of industrialization efforts, industry in Venezuela went backwards. Resurgent groups in the government took the country towards liberalization, and international financial organizations such as the IMF and World Bank pushed the country towards Washington's "consensus" on free trade. The economy went through a process of deindustrialization and privatization as major sectors of the economy were sold off to international capital, including telecommunications, the steel industry, the national airline, and plans were made do the same with the national oil and petrochemical industries.<9>

By the end of the Fourth Republic, the goals of national development had been completely abandoned. Venezuela's economy would remain a colonial economy, the desires of the impoverished masses betrayed. The lesson was clear: the kinds of revolutionary changes needed to transform the country could only be made by a revolutionary government.

The Bolivarian Revolution: Building Industry in Venezuela

The rise of Hugo Chavez and the Bolivarian Revolution was the end of democracy by pacts and coalitions in Venezuela. There would be no power-sharing agreements, and no powerful economic groups would have undue influence over the government. If it was the limitations of liberal democracy that had prevented previous governments from carrying out initiatives to build industry in Venezuela, it was the lack of those very same limitations that would allow the Bolivarian Revolution to engage in a flurry of industrial initiatives within the first few years of the revolution. Revolution meant just that; class conflict would be confronted, not avoided.

In search of the technology needed to build new national industries, the Chavez government has not made the same errors of past governments. Instead of attempting to arrange for technology transfer from the dominant US and multinational corporations which are linked to powerful local groups and are uninterested in cooperating with Venezuela's industrialization, the Chavez government has built close relations to countries that are interested in cooperating, such as China, Russia, Iran, Argentina, Belarus, Brazil and others. And instead of worrying about the impact their policies would have on powerful economic groups in the country, the Chavez government has tended to focus more on the impact they could have on national development and the lives of the majority poor.

"We are going to be a power on this continent and in the world. In petroleum, in gas, in petrochemicals, in industry, there is no doubt about it," said Chavez recently as he announced the launch of a new petrochemicals industry in the country. The industry would include the construction of more than 50 factories across the country, with investment and technology from Brazil, Russia, and Iran, to produce plastic and chemical goods from Venezuela's abundant natural resources. Chavez said the industry would not only supply the domestic market but would also be for export to other countries in the region.<10>

From Argentina, the country plans to bring technology for more than 56 industrial projects to produce consumer goods, foods, auto parts, furniture, home appliances, and more. And not only are cooperative projects among the countries in the region rapidly increasing, but they have the intention of building national industries through what one Argentinean minister recently called a "new method of cooperation."<11>

"That is the idea, authentic cooperation in industrial technology transfer, more than commercial agreements," he said. "Cooperation among the southern countries is the true path to national development."

http://www.venezuelanalysis.com/analysis/2689



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This is an excellent article on the social responsibility of corporations, and how this requirement is working out in Venezuela--as to both workers and business people:


Aug. 16, 2006, 11:42PM
SOCIAL DEVELOPMENT
Corporate do-gooders
In Venezuela, companies get the message to give back
By JENS ERIK GOULD
http://www.chron.com/disp/story.mpl/business/4122691.html

CARRIZAL, VENEZUELA — Inveval hasn't produced an oil-field valve in more than three years.

But Antonio Galvis is thrilled with the valve company's socialist-style makeover that is helping him learn how to read and write while it gears up to go back into production. The 69-year-old machinist, who had toiled for 27 years in the factory, has nothing but scorn for past management.

"The only thing they wanted was to exploit us," said Galvis, who was shaping up old plant equipment. "The company's improved now because we don't have anyone to give us lashes on our backs."

The transformation at Inveval is part of a sweeping initiative by the Venezuelan government to promote local oil service companies, and to encourage them to become cooperatives that devote more resources to social development.

Another part of the program requires international service companies to designate some of their subcontracting to these cooperatives and boost social spending or lose their contracts with state-owned oil company Petróleos de Venezuela, known as PDVSA.

"We want the private company to really be committed to society," said Susana Manzano, PDVSA's director for the program. "It's obligatory. All of PDVSA's contracting companies must be enrolled in the program."

International service companies, many with ties to Houston, are cooperating, so far, with the program. But they are just getting details about how it will affect them and they have many unanswered questions about its less-than-clear legal framework.

"It would be one thing if I entered something very clear and well-defined legally," said Giuseppe Castagna, president of CTA, a Caracas-based company that builds and maintains electrical systems for oil installations. "Here everyone's big worry is that the only option is to comply, but we're putting ourselves on a path without knowing at all where it's taking us."

Service companies are not openly resisting the mandatory social services program, although some grumble off the record. Many are reluctant to complain to the press because they don't want to arouse the ire of a government that is evaluating their proposals for future contracts with PDVSA.

Small companies benefit
Meanwhile, small local companies that are converting into cooperatives under the program, Companies of Social Production, known by the Spanish acronym EPS, are benefiting from incentives from PDVSA like special access to state contracts.

President Hugo Chavez, who inaugurated a $100 million fund to create the EPS program last November, said it is an example of his effort to reinvent businesses as socialist entities. Chavez said he is leading Venezuela toward the "new socialism of the 21st century."

Government support has already generated a sharp escalation in the number of new cooperatives in industries not related to oil, from manufacturing to agriculture.

The EPS program aims to reverse a trend in which a small percentage of companies, many of them large multinational firms, account for the majority of PDVSA's contracting work.

In 2004, over 1,000 companies were registered with PDVSA as contractors, but just 148 companies earned 83 percent of the money paid, the government-owned oil company said.

"It is true that there is a sort of club or elite industries that capture the bulk of the contracts with PDVSA," said Roger Tissot, an analyst based in Canada who works for a Washington, D.C., firm, PFC Energy. "Opening opportunities to more companies through EPS will provide more access to revenues to Venezuelan businesses."

Lessening dependence
Inveval planned to restart production last year, but workers are still fixing up the plant. They say it will be back to producing a variety of valves for PDVSA by next year, hoping to lessen the state company's dependence on international suppliers.

The state expropriated the company, formerly National Valve Constructor, last year from its previous owners, who shut it down as part of national strikes ending in early 2003.

As an expropriated plant, Inveval is in the special position of receiving loans from the state, which owns 51 percent of the stock, with the rest of the shares held by workers.

This allows it to focus on social development rather than concerns about meeting the bottom line that occupy traditional private companies. The company has even set up a school for Galvis and others to get the elementary education they never received.

Some international companies say they are making the transition to the program smoothly.

Services company Schlumberger, which has increased its social development budget in Venezuela even without the help of the EPS program, said as early as April that it had already enrolled. At the oil conference where Manzano made her presentation, the company's stand featured a Schlumberger logo entwined with a Venezuelan flag and the words "social development."

Favel, which has offices in Houston and a contract with PDVSA to study a reservoir in Lake Maracaibo, said it will now devote 8 percent of its project income in Venezuela to social development, up from the 3 percent social budget it had in past years.

"We don't mind paying extra if we see the benefit," Favel President Clive Ferebee said. "The program makes companies more socially aware, and that's been missing in developing countries."

The latest step
Putting social obligations on service companies is the latest step in the Chavez government's drive to redirect oil profits toward low-income Venezuelans. It announced in June that companies like Chevron and Shell must devote a portion of their royalties to social development under new joint ventures with the government.

Venezuela also recently demanded that operating companies convert their contracts to give PDVSA a majority stake.

Most service companies are just now figuring out the rules of the EPS program.

Company representatives crowded around Manzano after a presentation she gave at an oil conference here in April, interrupting her interview with journalists with their own questions about requirements for the EPS program.

Four months later, some of them say PDVSA has still not set clear guidelines about its structure. Companies say legal troubles could arise because they depend on local cooperatives who may not be up to doing the job.

One international service company said PDVSA assigned an agricultural cooperative to build a school to satisfy its social obligations under the EPS program, even though that cooperative has no experience in construction.

Some firms say they don't know if the government will hold them liable if a cooperative does a sloppy job or does not complete a project.

"I have to commit to social activities that could be outside of my technical capacity," Castagna said.

Giving wheelchairs
Venezuelan company Forjacentro has proposed donating 200 wheelchairs to a senior citizens home. The company expects PDVSA to weigh its social offer as strongly as its technical offer when considering its proposal.

"It's an additional cost, but we think it's right," said Hernan Matute, Forjacentro marketing manager. "Someone needs to bring about this social work, and not all companies will make the effort if invited or given incentives. I think this obligates us to guarantee a success."

Galvis and his fellow employees at Inveval agree that obliging companies to help with the social projects will make Venezuelan communities better off.

"They must share it with the population, with the whole society," said Antonio Betancourt, who has worked at the plant since 1982. "If we don't see it from that point of view, we're selfish."

http://www.chron.com/disp/story.mpl/business/4122691.html

[Judi Lynn]

3. These links are so useful. They highlight just how crucial the work is which is being done now in

Venezuela, as they attempt to overcome wild misdirection by the oligarchy which left the economy so unproductive for the vast majority, and funneled the profits to the tiny elite core.

Will be keeping these links personally to share in the future. People can benefit from seeing them.

The Chronicle link went inactive, but the same article is available now at:
http://www.pscelebrities.com/alice/2006/08/corporate-do-gooders.html

The public needs a chance to understand what has been buried, denied about Venezuela. It's only fair that the truth gets through occassionally! Thanks.

[Judi Lynn]

4. Joanne98, thank you for the information on what Transparency Int'l has done regarding PDVSA.

This is VERY important to people who hope to obtain any sense at all of the truth.

Apparently their name was chosen as a tongue-in-cheek insult to the general public! What a damned shame.

[Joanne98]

5. Your welcome Judi!

:hi: