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infodioLeaks: BARIVEN - Derwick Associates Letter of Intent

infodioLeaks continues to provide some truly amazing leaks about corruption in Venezuela. One of the first questions ever asked to Derwick Associates, when it became known that it had been gifted 12 contracts in non-bidding processes, was to produce copy of said contracts. After all, Derwick was believed to be a Venezuelan private company, run by Venezuelans, that had been contracted by Venezuelan State's institutions, and that had been paid with Venezuelan public funds. To be certain, it is not illegal for a private company, either Venezuelan or otherwise, to contract with the State. What is extremely rare, and illegal, is for the Venezuelan State to be handing contracts without bidding, to companies without a track record, and when questioned on what / how had public funds been spent refuse to answer. That is exactly what happened to Cesar Batiz, the journalist who broke the mega corruption scandal involving Derwick Associates and BARIVEN (a PDVSA subsidiary) back in 2011. PDVSA is a State-owned corporation. By law, it is open to financial scrutiny, if and when such scrutiny occurs. Therefore, it can not excuse not revealing expenditure on the basis of contractual confidentiality agreements. There is nothing in Venezuela's body of legislation that allows any public institutions to, basically, reject accountability through appropriate mechanisms and do whatever it wants with public funds. For instance, when a journalist files a request for information on contracts signed by any given public institution, said institutions have to honour such requests. It is not a question of whether the institution wants to comply; it must, so long as public funds are at stake.

Batiz requests were never granted. When he contacted parties involved in the deal, they all gave the same answer: due to confidentiality clauses we can not reveal any information pertaining contracts. Now, thanks to a source and infodioLeaks, we know why: 

As can be seen, third clause of Letter of Intent between BARIVEN and Derwick Associates S.A. forbids either party to reveal any information about the contract without the other party's written consent. What a beauty, isn't? BARIVEN, a subsidiary of PDVSA, gives a Panamanian fly-by-night represented by an Italian national the right to block publication of information pertaining to expenditure of State funds. Perhaps I'm wrong, but this could be a first. Derwick is given permission by BARIVEN to reveal contractual information solely to service providers: i.e. ProEnergy Services.

But what to make of fourth clause?

Controversies pertaining the contract shall be resolved between highest authorities related to each party. That is, Rafael Ramirez as CEO of PDVSA in the case of BARIVEN, and Leopoldo Alejandro Betancourt Lopez, described in the contract as an Italian national with sufficient powers to represent Panama-registered Derwick Associates. Breachs? Misuse of funds? Misappropriation? Failing to deliver on schedule? Misselling? Misrepresentation? Hundreds of millions of dollars at stake? All of that, and more, to be settled "amicably" between Ramirez and Betancourt, as agreed. There's a pattern here. In the contract for $172 million given to Cuba's ALBET, for provision of identification technology, there is a clause (14.1) that establishes similar conditions. Chavismo has surrendered Venezuela's jurisdiction, and the power of its courts, to settle disputes with the thugs with which it does business. If any one of them pulls a runner, there's absolutely nothing that ties legally breach of contracts. Isn't this a first too?

The object of the contract is the possible acquisition, by BARIVEN from Derwick Associates S.A., of equipment described as follows:

- Two Pratt & Whitney turbo-generators (50 MW);

- Four GE TM 2500 turbo-generators (22 MW );

- Four Rolls Royce Trent 60 turbo-generators (58 MW);

- One GE LM 2500 turbo-generator (22 MW);

- Two GE LM 6000 turbo-generators (48 MW);

- Two GE Frame 7E-A turbo-generators (84.4 MW);

- Three GE Frame 7F turbo-generators (170 MW).

The combined power generation of the equipment described above is 1,216.8 MW. The contracting party is BARIVEN, PDVSA and its subsidiaries. Now let's head either to Derwick Associates' ad page in Wikipedia, or to this puff piece put out by Europa Press, to contrast previous back of the envelope calculation, with claims made by Derwick related to "executed" projects: 1,216 MW. In addition to previously leaked invoices, I think this is pretty good corroboration of veracity of leaked contract, which can be seen in full below. The contract was signed in Caracas, on 30 November 2009, roughly one month after Derwick Associates registered as a company in Venezuela. It's Panama-registered namesake was registered in 2003, but had not won a single contract, anywhere.