THE TEFLON EFFECT: CHAVEZ EVADES SUITCASE SCANDAL

C O N F I D E N T I A L SECTION 01 OF 03 CARACAS 001686

SIPDIS

SIPDIS

HQSOUTHCOM ALSO FOR POLAD
DEPT PASS TO AID/OTI RPORTER

E.O. 12958: DECL: 08/23/2017
TAGS: PGOV PREL PHUM VE
SUBJECT: THE TEFLON EFFECT: CHAVEZ EVADES SUITCASE SCANDAL
FALLOUT

REF: A. BUENOS AIRES 01627

B. BUENOS AIRES 01567

C. BUENOS AIRES 01576

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Classified By: Acting Political Counselor
Daniel Lawton for Reason 1.4(D).


1. (C) Summary. President Chavez so far seems to have
escaped largely unscathed by the fallout from the seizure in
Buenos Aires of $800,000 cash carried by a U.S.-Venezuelan
businessman. Using a variety of public relations tactics,
the Bolivarian Republic of Venezuela (BRV) has managed to
deflect accusations of BRV plans to use the funds for
nefarious purposes or of widespread corruption.
Nevertheless, media theories of BRV involvement in the
scandal run rampant and have handed the beleaguered
opposition a new issue to try to exploit. Although the story
is still unfolding, the Embassy believes that the
circumstances and timing of the incident point to BRV
involvement and should be fully exploited if borne out. End
Summary.

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Hodgepodge Strategy: Deny, Accuse, Distract, Investigate
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2. (SBU) The BRV has used a variety of public relations
gestures and tactics to manage the fallout from the August 4
seizure in Buenos Aires of $800,000 hand-carried by
U.S.-Venezuelan businessman Guido Alejandro Antonini-Wilson
on a private jet (reftels). Chavez first denied having any
knowledge about the issue. He claimed ignorance on August 7
during a press conference in Buenos Aires, brushed off
questions about the "police matter," and denied that
Antonini-Wilson was a member of his delegation. Later during
his August 19 "Alo, Presidente" radio and television program,
he said he refused to further discuss the troublesome luggage
and considered it a "case closed." Finance Minister Rodrigo
Cabezas, while calling for an investigation into the
incident, also strongly denied on August 10 any government
association with either the chartered jet or the wayward
businessman.


3. (SBU) Casting blame elsewhere, the BRV responded to the
growing flurry of accusations that Chavez was directly
involved in the affair by alleging that the suitcase scandal
was a plot manufactured to sully the Venezuelan President's
image and detract from the accomplishments of his visit to
Argentina. Chavez during the August 19 "Alo, Presidente"
blamed the "empire" and its "lackeys" in Argentina and
Caracas for trying to sow discord between the BRV and the
Kirchners. Communications Minister William Lara on August 21
flatly denied accusations that Chavez had lunch on August 3
with Antonini-Wilson. Foreign Minister Nicolas Maduro said
August 13 he believed the Pentagon and CIA were behind the
incident. The local media reported that Venezuelan
Ambassador to Argentina Arevalo Mendez alleged on August 7
that the scandal was a campaign to "make troubles and
distract from President Chavez' trip to Buenos Aires." In
the same vein, Vice President Jorge Rodriguez accused the
media of "making a stupid smoke screen" of the event.


4. (C) There is widespread local speculation that Chavez,
after months of delay, chose August 15 to unveil his
constitutional reform proposal to distract media and public
attention away from the suitcase scandal. The release of the
reform package did wrest local headlines away from the
incident. Telesur President Andres Izarra denied this and
told POLOFF and PD officers on August 15 that Chavez, always
attuned to history and anniversaries, timed his address to
coincide with the third anniversary of his defeat of the 2004
recall referendum and the 202nd anniversary of an oath taken
by Simon Bolivar.


5. (C) Even while claiming innocence and tossing out
accusations, the BRV bowed to reported pressure from the
Kirchner government to launch investigations into the case
and dismissed a key PDVSA official tied to the matter. PDVSA
confirmed August 17 that it accepted the resignation of the
head of PDVSA's Argentine affiliate, Diego Uzcategui-Matheus,
whose son reportedly accompanied Antonini-Wilson on the
chartered jet (ref c). PDVSA also reported an administrative
investigation into reported transgressions of internal PDVSA
regulations. Izarra during his August 15 visit to the
Embassy did not dispute that Uzcategui was the BRV's "fall

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guy" for the scandal. Energy Minister and PDVSA President
Rafael Ramirez, Superintendent of Venezuela's tax authority
(Seniat) Vielma Mora, and other BRV officials have also
publicly noted their plans to conduct and support any
investigations into irregularities surrounding the undeclared
$800,000.

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Chavez is Rubber...
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6. (C) Thus far, Chavez seems to have mostly avoided paying
a significant political cost as a result of the suitcase
scandal. Brazilian Embassy First Secretary Audo Faleiro and
Head of the Regional Integration and Mercosur Section Leandro
Zenni Estevao expressed their surprise to Polcouns August 20
that Chavez had not been more directly linked to the scandal
nor suffered more from the resulting fallout. They also
insinuated that it was highly unlikely he was not involved in
the cash transfers given the timing of Antonini-Wilson's trip
to Buenos Aires just days before Chavez' arrival. Venezuelan
press coverage of the scandal has been largely overshadowed
by Chavez' proposals for sweeping constitutional changes and,
more recently, by Chavez' offer to mediate hostage exchange
negotiations between the Revolutionary Armed Forces of
Colombia (FARC) and the Colombian government.

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...And the Opposition Lacks Glue
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7. (C) The response from the Venezuelan opposition has been
characteristically ad hoc. Various opposition leaders have
called for investigations into the case and attempted to link
it to Chavez' profligate foreign spending. Secretary General
of COPEI Luis Planas, for example, demanded on August 21 that
the BRV fully investigate the matter and cited it as an
illustration of how Chavez spends Venezuela's resources
financing political activities in other countries rather than
solving domestic problems. Venezuelan business federation
Fedecamaras on August 14 asked for an explanation of the
$800,000. An opposition organized "March of the Briefcases"
to PDVSA's headquarters in Caracas, scheduled for August 15,
fizzled after the protesters learned that a pro-Chavez
counter rally had been planned to confront them at their
destination. Since then, their attention has largely been
diverted to trying to devise a strategy (or strategies) to
counter Chavez' constitutional reforms.

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Conspiracies Flourish
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8. (C) Local theories abound as to the destination of
Antonini-Wilson's $800,000, with many of them revolving
around Venezuelan government support for leftist political
leaders and groups (ref b). Allegations from both the
Venezuelan and Argentine opposition, as reported in regional
press, suggest that Antonini-Wilson was acting as Chavez'
handler to deliver the cash to Buenos Aires in support of
Cristina Kirchner's presidential bid, which Chavez has openly
endorsed. Others speculate that the money was being
delivered to Argentine "piquetero" protest groups, in
particular to social protest leader and former Kirchner
government official Luis D'Elia. Opposition sources are also
alleging that a "ninth passenger," who might have been a
high-level Venezuelan military officer charged with
overseeing the transport of the money, was on board the
flight. Still more hypotheses reported in Uruguayan press
say the $800,000 was sent to support Uruguayan President
Vazquez, while some link it to a suspended shipment from
Venezuela's Military Industries, Inc. (CAVIM) of 15,000
Iranian produced bullets to the Uruguayan military. Others
simply chalk it up to nefarious and corrupt activity by one
U.S.-Venezuelan businessman and a cadre of PDVSA officials.
Some believe the money was either being laundered or used to
influence contracts between Argentine and Venezuelan firms.
Others believe that, given Venezuelan currency controls in
place and the reported sequential nature of the bills, the
issuance had to come from the BRV.

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Comment
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9. (C) The Argentine-Venezuela suitcase affair has
highlighted Chavez' nonstick quality that has allowed him to
redirect and escape blame for his domestic failings and
international shenanigans time and time again. As part of
his deflection strategy, he also demonstrated his ability to
make maximum advantage of only token public gestures of
amends when facing domestic and international pressure.
While explanations for the bag of cash run the gamut, the
circumstances and timing of the scandal point to BRV
involvement. If Antonini-Wilson was indeed acting as a
go-between in Chavez' regional meddling activities, his
failure to deliver the goods may indicate that the BRV, long
accustomed to working without domestic accountability, is
getting sloppy abroad or there is simply too much money awash.

FRENCH