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C O N F I D E N T I A L SECTION 01 OF 02 CARACAS 000918 SIPDIS ENERGY FOR CDAY AND ALOCKWOOD HQ SOUTHCOM ALSO FOR POLAD TREASURY FOR RJARPE NSC FOR RKING USDOC FOR 4332 MAC/ITA/WH/JLAO E.O. 12958: DECL: 07/11/2019 TAGS: ECON, EFIN, PGOV, VE SUBJECT: ALLEGATIONS OF MINISTER DIOSDADO CABELLO'S CORRUPTION EXPANDING TO FINANCIAL SECTOR REF: A. CARACAS 887 B. 2008 CARACAS 1754 C. CARACAS 287 D. CARACAS 322 E. CARACAS 663 Classified By: Economic Counselor Darnall Steuart for reasons 1.4 (b) and (d). 1. (C) In a lunch with EconCouns and Econoff on July 10, respected political economist Orlando Ochoa (strictly protect throughout) alleged Minister of Public Works and Housing Diosdado Cabello was expanding his network of corruption into the financial sector. According to Ochoa, Cabello and several other former military officers who participated with Chavez in his 1992 coup attempt (specifically Vice Minister of Finance Alejandro Andrade, Governor of Aragua and former Minister of Finance Rafael Isea, and Science and Technology Minister Jesse Chacon) recently backed the purchase of several small banks and insurance companies. The front man for the group's foray into the financial sector, Ochoa continued, is Pedro Torres Ciliberto, owner of the small, Tachira-based investment bank Baninvest (to which he had named Chacon's brother as president). Ochoa speculated the group was moving into the local financial sector in part to gain easier access to arbitrage opportunities related to Venezuela's currency controls, particularly if the Central Bank began auctioning hard currency to financial institutions (as has been rumored to be under consideration). Ochoa characterized Cabello's group as one of the three major poles of corruption close to or within the GBRV. The second pole, operating in the oil sector, is associated with Oil Minister and PDVSA President Rafael Ramirez, and the third, operating in the food distribution sector, is associated with "Mercal King" Ricardo Fernandez. 2. (C) On the political front, Ochoa argued the "fascist and military" trend associated with Cabello was gaining ascendancy within Chavismo. (Note: By invoking the term fascist, Ochoa was referring to the movement's desire for authoritarian government control over society and the economy in a way that brooks no dissent. End note.) He characterized Cabello's strident speech in the National Assembly July 9 outlining increased state control over the media (ref A) as an indication of this ascendancy. Another indication, Ochoa continued, were reports from his financial sector contacts that former Vice President Jose Vicente Rangel was a partner in Cabello's group's investments (or at least allowing his money to be managed by Torres Ciliberto). In tandem with the rise of the fascist/military trend, Ochoa argued, the two key representatives of the "traditional Marxist left" in Chavez's cabinet, Planning Minister Jorge Giordani and Finance Minister Ali Rodriguez, were losing influence, with Rodriguez's health in decline and Giordani "looking to get out." Ochoa felt the traditional left was becoming increasingly disenchanted, at least in private, with Chavez's Bolivarian revolution, largely due to blatant corruption and the realization that desire for power, rather than achievement of socialist goals, was its driving force. 3. (C) Ochoa described Cabello as a potential "Montesinos-like" figure for the Chavez regime, i.e. someone who, like intelligence chief Vladimir Montesinos under President Fujimori in Peru, was amassing great power and control over the regime's apparatus as well as a private fortune, often through intimidation behind the scenes. Ochoa speculated Chavez himself might be concerned about Cabello's growing influence but unable to diminish it. Ochoa said he was coordinating with several others, including Tal Cual editor Teodoro Petkoff, to expose Cabello's questionable business dealings publicly, though he acknowledged the need to proceed carefully given how "dangerous" Cabello was. Ochoa hoped this exposure would cause further disillusion within the traditional left, part of a process through which this trend might ultimately withdraw its support from Chavez. 4. (C) Comment: Ochoa is a well-respected political economist with strong contacts in the financial sector and a growing network of contacts within the traditional left. We know from other contacts that people close to the government CARACAS 00000918 002 OF 002 have been buying, or trying to buy several small banks, and we would not be surprised if Diosdado Cabello and his associates were involved. Cabello's increasing influence in government is clear: Chavez appointed him Minister of Infrastructure in December 2008 (after Cabello lost his reelection bid for governor of Miranda; ref B); Chavez added the housing portfolio to Cabello's ministry on March 3, renaming it the Ministry of Public Works and Housing (ref C); the National Assembly passed a law on March 12, 2009 which effectively gave control over ports, airports, and roads (previously managed by the states) to the Ministry of Public Works and Housing (ref D); and CONATEL, the GBRV's media regulatory body, was transferred to the Ministry of Public Works and Housing on May 15 (ref E). What bears closer watching is Cabello's behind-the-scenes power, or at least the specific ways he exercises it. End comment. CAULFIELD