Hugo Chávez drafted banker in fraud case to fix Cuba's economy, insiders say

Posted on Saturday, 01.02.10
VENEZUELAN FRAUD CASE

Hugo Chávez drafted banker in fraud case to fix Cuba's economy, insiders say

Venezuelan President Hugo Chávez asked a Venezuelan banker, now accused
of fraud, to help revive the Cuban economy, say former employees of the
banker.
BY GERARDO REYES
El Nuevo Herald

A multimillionaire Venezuelan businessman, currently jailed in Caracas
on bank fraud charges, had been sent to Cuba by President Hugo Chávez to
help the country recover from its economic slump and also to spur
economic growth on the island after Fidel Castro dies, according to
former employees.

In an initial show of his new responsibility, looking for a personal
benefit from future business in Cuba, Ricardo Fernández Barruecos gave
the Cuban government a gift of 28 BMW automobiles, his former security
consultant Luis Castro said in a sworn statement.

Castro told El Nuevo Herald that Fernández, envisioning brilliant
prospects for his business in Cuba, also earned the support of Raúl
Castro to open up the island's economy after the death of his brother Fidel.

Another former employee of Fernández's organization told El Nuevo Herald
that Fernández made several visits to Cuba by private jet and met with
then-Foreign Minister Felipe Pérez Roque.

But the close relationship between Fernández and Chávez soon ended.

Venezuelan regulatory agencies in November seized Fernández's banks,
companies and properties, accusing him of massive fraud related to his
recent acquisition of four banks.

The scuttled Cuba mission is just one of many aspects of Fernández's
life that have recently emerged in the wake of the fraud charges.

BUSINESS EMPIRE

Fernández, 44, was one of the richest and perhaps least-known men in
Latin America. Archives at newspapers and television stations in
Venezuela don't contain a single photo of him.

His agro-industrial conglomerate Proarepa was the leading supplier to
Venezuela's government food programs. Yet he was obsessed with privacy.
The only public sign of his presence were his initials on the bow of his
fishing boats in the Pacific.

Chávez rewarded Fernández because he used his company's trucks to
transport food during the opposition-led strike of 2002 in Venezuela,
according to his attorney and an internal audit of Proarepa.

The international accounting firm KPMG calculated his fortune in 2005 at
$1.6 billion.

Fernández, who has an economics degree from Venezuela's Universidad
Católica Andrés Bello, owned one of the largest fishing fleets in Latin
America, with 12 vessels as well as fuel tanker ships. He had also
partnered with Gruma, a subsidiary of the Mexican food conglomerate
Grupo Industrial Maseca.

According to a 2008 report commissioned for Proarepa and prepared by
international consulting firm FTI Consulting, Fernández employed some
5,000 people that year and his conglomerate had about $400 million in
assets.

Chávez maintained constant and direct communication with Fernández, a
senior Venezuelan business executive told El Nuevo Herald on condition
of anonymity because he fears government reprisals.

In 2006, Chávez cited Fernández as a model ``socialist businessman.''

But for some leaders of the opposition in Venezuela, Chávez's admiration
went beyond his gratitude for Fernández's support of his socialist program.

They claim that Adan Chávez, the president's brother, received a cut of
the businessman's success.

``[Fernández] is a frontman for Adan Chávez,'' said dissident Ismael
García, of the pro-democracy group PODEMOS, on Nov. 24 during a session
of the Venezuela National Assembly.

``Over seven years, Fernández went from being the landlord of a
gymnasium and the parking garage for the Hilton hotel in Caracas'' to
the owner of a flotilla of tuna fishing and cargo ships, as well as of
the largest livestock ranch in Venezuela, among other assets, added Garcia.

Adan Chávez has repeatedly denied allegations of close business dealings
with Fernández.

The FTI Consulting audit maintains that there are no links between Adan
Chávez and Proarepa and that Fernández has been a successful businessman
since he was 25.

``Fernández is a prestigious and successful Spanish-Venezuelan
businessman in the agroindustrial, tuna and shipping sector,'' concluded
FTI in its report, which was commissioned by Fernández through the Miami
law firm of Tew Cardenas.

FALLINGS-OUT

Luis Castro, who had been hired by Fernández's Panamanian flagship
Fextun, left the firm in April over strong disagreements between the
owners' brothers and some members of the board of directors.

According to Castro, the directors suspected that he offered to sell
information about Fernández's conglomerate to a CIA official in Panama.

``It's all untrue,'' Castro said. ``I would have to be an idiot to put
at risk a job that paid $10,000 a month, another $10,000 for my wife,
plus an armored car and free housing.''

Following an attack on his wife in Panama in October 2008, Castro filed
a complaint with the Panamanian public prosecutor's office and asked
that Fernández, as well as his brothers and some board members, be
investigated. His wife was shot eight times and lost her left eye.

In his statement to the Panamanian prosecutor's office, Castro revealed
details of the inner workings of the conglomerate, including Fernández's
connections in Cuba.

Fernández's swift rise was always overshadowed by his fear that U.S.
federal officials were following his tracks.

A confidential report prepared by a U.S. investigative firm -- which
shared it with El Nuevo Herald on condition that the company not be
named -- stated that Fernández had been questioned upon his arrival at
U.S. airports in 2003.

An indication that the federal government was investigating him came in
December 2004, when his associate Sarkis Arslanian was deported to
Venezuela from Atlanta shortly after landing on a flight from Caracas.
Arslanian's visa had been canceled.

Fernández also experienced an embarrassing incident. In May 2007, U.S.
Drug Enforcement Agency agents seized his corporate jet at Fort
Lauderdale Executive Airport.

Fernández was not on board. In a seizure affidavit filed in federal
court in Miami, the DEA alleged that the plane had been illegally
registered with an ``N'' license, which signifies U.S. ownership,
although none of the company owners (American Food Grain) were
Americans, as required by law.

Such a tactic is frequently used by money-launderers and
drug-traffickers so their aircraft are subject to fewer inspections at
international airports, the affidavit stated.

After a year of negotiations between the prosecutor's office and Tew
Cardenas, the Miami law firm representing Fernández, an agreement was
reached that included a $1 million fine and a pledge to sell the plane.

The agreement contains no references linking the plane to
drug-trafficking. It only describes the administrative violation related
to the use of the U.S. license.

CUBAN CONNECTION

Castro, Fernández's former security consultant, said that he learned of
the connections with Cuba in 2007 from a Fextun employee.

The worker asked Fernández about the details of the automobile shipment
to Cuba and, visibly uncomfortable, Fernández explained that they were
presents for Cuban officials designed to curry favor with the island
government, according to Castro.

``When Fidel dies and Raúl has total power, Fernández was hoping to take
advantage by buying some bankrupt companies in Cuba into which he would
inject money to relaunch them,'' Castro said.

Alberto González, spokesman for the Cuban diplomatic mission in
Washington, declined to comment.

``The only thing we know is what has been published in El Nuevo
Herald,'' González said. ``The Cuban government has not issued a
statement on this matter.''

Hugo Chávez drafted banker in fraud case to fix Cuba's economy, insiders
say - Venezuela - MiamiHerald.com (3 January 2010)
http://www.miamiherald.com/news/americas/venezuela/v-fullstory/story/1407170.html