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What do Derwick Associates and Ricardo Fernandez Barrueco have in common? Al Cardenas and FTI Consulting

London | According to reports from The Miami Herald, on Friday, October 17 2008, at 10 a.m., 15 shots were fired at a woman while driving in Carrasquilla, Panama City. Eight shots hit the woman, one bullet entering her temple and exiting through her eyelid, causing permanent left-eye blindness. The woman, miraculously, survived.

This wasn't just another example of Latin America's regular crimes, where robbery is the common goal, but a planned, targeted, assassination attempt. The woman was the wife of Luis Castro, a former security consultant of Ricardo Fernandez Barrueco, the disgraced Boligarch charged with multiple financial crimes by Hugo Chavez's regime in Venezuela.
The Herald claims that Castro requested a formal investigation into Fernandez Barrueco, his brothers Felipe and Gustavo, as well as other staff and managers of Fernandez Barrueco's companies, due to the assassination attempt on his wife. While Castro's accusations did not include evidence about Fernandez Barrueco's direct involvement, it did provide a window into the world of this parvenu billionaire, and of his close connections to the Venezuelan and Cuban regimes. As it turned, Fernandez Barrueco had been the only Boligarch in Venezuela to whom Chavez would personally answer calls. The trust that the caudillo had on him was such, that he was asked to devise an “economic recovery” plan to kickstart Cuba's economy, according to reports from The Herald. That request would allow him to be in the best of terms with the Castro brothers, and high officials of Cuba's dictatorship.
Despite reports commissioned to the ever so chavista-friendly FTI Consulting at the time, that sought to white wash Fernandez Barrueco's image and present him as some sort of legitimate serial entrepreneur, the truth is rather less Hollywood-esque: son of a Spanish immigrant, who had the concession to operate the parking lot of the former Hilton Hotel in Caracas, Fernandez Barrueco was an absolute nobody in Venezuela's business world. In fact, he was an employee of his father, and used to park cars for a living. In doing so, he got to meet all kinds of people, among whom Adan Chavez, Hugo's older brother and mentor. That, and that only, was the reason why he started getting government contracts, small at first, more substantial later. He started off in food-related businesses, then in distribution, through a loan he allegedly got from Sarkis Arslanian. By 2002's general strike, Fernandez Barrueco had a fleet of trucks and some agribusinesses. He put that to good use by siding with Chavez, and using his distribution network and food-producing companies to bypass the general lockout. That brought tremendous dividends. Fernandez Barrueco became Chavez's partner of choice in all imports and sales to MERCAL, Venezuela's multibillion populist program of subsidised food. So successful was his bet, that a 2005 audit, produced by KPGM's Venezuelan representative, concluded that the man was worth $1.6 billion, and had 41 companies in the services, fishing, distribution, agricultural, food, and forestry sectors. From parking cars before 1998, to 41 companies and a personal fortune of $1.6 billion in 2005. Not bad, even Russian oligarchs would be envious.
The 2002 bet was mutual though: Chavez started using Fernandez Barrueco, and his dubiously acquired businesses, as proxies to break Empresas Polar, Venezuela's largest private corporation. By channelling all of MERCAL's procurement to Fernandez Barrueco's companies Chavez thought it would only take some time to get the best of an empire that, for more than 50 years, has been producing and selling leading food and drinks brands in Venezuela.
But Fernandez Barrueco, as all thugs of his ilk, got greedy, and decided to diversify into banking. That was to be his undoing. He purchased four banks: Bolívar Banco, Banco Confederado, Banco Provivienda and Banco Canarias. Then, he used his contacts to get Venezuelan public institutions to move some of the State's money into accounts in these banks. It was reported that, at one point, Fernandez Barrueco's banks held 18% of all Venezuelan State money deposited in private banks. With those deposits, Fernandez Barrueco devised a way to fund his operations, which worked like this:
  • Reflect deposits in balance sheets, so that his banks would look financially very healthy;
  • Use deposits' funds to back up purchase of bonds by companies under his control, through his own brokerage firms (U21 & Interbursa);
  • Either use bonds as collateral for further loans to his companies without required guarantees from his banks; or sell bonds to third parties and syphon the money out of the country;
  • None of these operations were shown in balance sheets, so to make it look as if billions belonging to the State and other clients had never been spent.
Fernandez Barrueco's financial creativity -otherwise known as theft, misappropriation, etc.- departed from other methods used by Venezuelan bankers aligned with the regime. In the latter's case, through well placed government contacts, “bankers” would use legitimate funds to purchase bonds in Bolivares (bonds' value would be denominated at the official exchange rate), flip them internationally in USD, sell USD in the local black market, and pocket the huge differential after giving a portion of ill gotten proceeds to chavista contacts (after all, someone somewhere must decide allocation of bonds). The latest thing, according to a local source, is to purchase bonds, sell and transfer locally (all in Bolivares thus avoiding regulators' attention), and get paid abroad in USD.
For his involvement in the method described Fernandez Barrueco was charged, arrested, and remains in jail since November 2009. The actual charges are: misappropriation of savers' funds, misappropriation of credits, and criminal association. At the time of his arrest, Fernandez Barrueco's empire had grown to a multinational conglomerate of more than 250 companies in Venezuela, Panama, Curazao, Spain, Ecuador, Guatemala, U.S.A, UK, even Hong Kong. His staff would, for instance, issue instructions so that millions of dollars would be transferred from U21 brokerage firm in Caracas to HSBC's Bristol Branch in the UK, to credit the account of The Winterbotham Trust (Alrena Moxey as front) to further credit Antora Finance's account. In other court documents, it can be read that Fernandez Barrueco's Galopy Corporation International N.V., sole shareholder of previously mentioned banks, had requested to transfer $60 million worth of bonds from Banco Occidental de Descuento (owned by Victor Vargas, another Bolivarian “banker”) to a custody account (no. 026513265700) in Deutsche Bank Trust Co..
Panama-registered Tanker F and Broker F were used as guarantors to multimillion loans given to another myriad of Fernandez Barrueco's Venezuela-based companies. Other businesses named in connection were: Galino, Grufer Holding, and Comercial Atunera. These companies received $200 million worth of illegal transfers and deposits, in September, October and November of 2009 only. While Fernandez Barrueco was sent to jail in Caracas, his brothers were in control of 29 companies in Panama alone.
FTI Consulting, a firm that provides “critical thinking at critical times” didn't find any of it of course. That's how trustworthy and thorough their work is.
It takes a great deal of sophistication to mount an operation like the one Fernandez Barrueco had, for it is impossible for millions of dollars to be transferred to and fro different jurisdictions -some with foreign exchange controls- without active collaboration of banks and authorities willing to turn a blind eye on it. In the case of Fernandez Barrueco, little can be expected from Venezuelan authorities and bankers, but how about HSBC, Deutsche Bank, Metrobank, authorities in the UK, Panama, the U.S., and Spain to name but a few?
And here is where further questions about Al Cardenas's integrity should be made. Tew Cardenas, his law firm, represented Fernandez Barrueco in relation to a jet that was seized by the DEA in Miami in 2007. It was believed that Fernandez Barrueco was also involved in drug trafficking, although this charge was never proven in court. He was, however, found to be guilty of registering a plane under false credentials, reason for which he agreed to pay more than $1 million. His partner, Arslanian, was denied entry to the U.S. In 2006. As noted above, in 2008 the wife of Fernandez Barrueco's security chief was shot at 15 times in Panama. Then in 2009 the Chavez regime arrested the poster boy of the Boligarchs. So how come, having seen all of this unfolding in public, Al Cardenas is now working for Derwick Associates, another group of Bolivarian “businessmen”? How can Al Cardenas, and FTI Consulting, defend whatever integrity and credibility they think to have, in view of their rather indefensible choice of clients?
Not long ago, I published about the baffling disconnect between someone who purports to be an enemy of the Cuban tyrants, someone who has protested the creeping authoritarianism in Venezuela, someone held in high esteem in conservative Republican circles, defending the very worse of criminals from Venezuela, like Fernandez Barrueco, and now defending people of very dubious and suspect credentials, as Derwick Associates. There seems to be quite an established network of support services for Boligarchs in Miami: both Fernandez Barrueco and Derwick Associates retained Tew Cardenas and FTI Consulting. In the latter's case, the company is believed to have also been involved with Moris Beracha, David Osio, Wilmer Ruperti... a true who's who of the lowest class of thugs to have come out of Venezuela in many years.
One can only hope that responsible authorities will sometime start asking questions to companies / individuals involved, follow procedures, and applying current legislations, so that these "businessmen" room of manoeuvre is restricted to the confines of shit holes like Venezuela.