The fall of the Bolivarian tsar

[ChangoLoa]

Ricardo Fernández Barrueco was given a promissory note for USD 1.8 billion

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A lot has been said lately about Ricardo Fernández Barrueco, now behind bars. But many have forgotten that this person started as a broker when he was as young as 20 years old and became a tycoon and one of the saviors of the Bolivarian revolution during the nationwide strike in 2002.

His story tells a heyday protected by the top spheres of power, but all of a sudden he fell to absolute solitude in prison.

Fernández Barrueco did not become a businessman from one day to another, let alone with Chávez's help. However, he played a key role in the 2002 strike to sustain the president, who, in turn, catapulted him and made him one of the most influential businessmen under the Fifth Republic.

Some time before the 2002 strike, when RFB, the consortium led by Fernández Barrueco, had consolidated its investments in the agro-business sector, the government contacted him and asked him to take care of the crops that the Polar group failed to buy. The government wanted a competitor for Polar, viewed as a foe of the revolution.

From that moment onwards, he made great deals with the government; was granted loans for USD 180 million, and expanded his fleet of trucks. He shortly became the main supplier of the State-run food programs, particularly of corn flour, with up to 20 percent of the market led by the Polar group. He bought new companies. Operations for FY2001 recorded earnings for USD 500 million.

The 2002 strike
In December 2002, a two-month oil strike started. While the whole country came virtually to a standstill, Fernández Barrueco's companies, already linked with the government, resolved not to observe the strike, as well as some multinationals, including Cargill, Monaca, Nestlé, Purina, Proagro and Parmalat, among others.

RFB was instrumental to keep the food delivery during the conflict to eventually "break" a strike that had jeopardized Chávez's administration. In the food sector, Fernández Barrueco played a role similar to that of Wilmer Ruperti in the oil sector. Note that Ruperti put in motion a fleet of tankers that carried oil to foreign markets.

Once the stage of the strike was overcome, the government learned a lesson and made provision for future similar actions. Fernández Barrueco, turned into a "trusted businessman," was called to make a contingency plan under a "production agreement" that should be continuously effective in the event of any threats from the opposition, including stocks for one year.

As reported by Fernández Barrueco himself, the RFB accepted to sign an agreement but on certain conditions. The most important one was an advance payment for USD 1.8 billion, which was authorized by the Miraflores presidential palace. The payment came through a promissory note issued by state-owned Banco Industrial de Venezuela. In addition to the money, accounting for the budget of a bunch of state governments, the Bolivarian businessman requested military protection for all his operations.

Thereafter, the RFB group made a quantum leap and Fernández Barrueco became a tycoon in the agro-business sector. He could expand his business and buy some companies that went into bankruptcy during the strike.

A USD 1.5-billion empire
Fernández Barrueco's consortium is composed of 270 businesses estimated at USD 1.5 billion. When a businessman reaches such high levels, operations involve a significant cash flow through domestic and foreign banks.

As a businessman linked with the president and politics, his operations have been closely monitored over the past few years, with reports dating back to 2005. He has been particularly tracked for the large amount of registered businesses in and out of Venezuela, some of them viewed as "front companies."

Among the investigations conducted, at least two financial entities submitted progress reports to the Financial Intelligence Unit of the Financial Action Task Force (FATF).

Interestingly, despite Fernández's links with the government, none of his companies lists as partner any top government officer or any relative of President Chávez. However, some businesses were found with little capital stock and transferred few days after being registered without a clear justification.

Most of these companies (152) were recorded in Venezuela; 75 are based in Panama; seven in the United States; two in Guatemala; 10 in Spain; three in Ecuador; 10 in Curacao; one in Brazil; four in Virgin Islands, and two in Belize.

Only 21 out of all these companies are fully operating in the field of goods and services in agro-business, distribution and fishery.

Another set of companies (22) has been sold or transferred to third parties. In addition, nine companies are in partnership with third parties, but form part of the consortium.

The remainder (214) includes financial agencies organized to get bank funding, outsourcing, and companies for purchase of personal or real property.

Link
http://english.eluniversal.com/2009/12/04/en_ing_esp_the-fall-of-the-boli_04A3145371.shtml