VENEZUELAN MILITARY INTELLIGENCE CONDUCTS RAID ON

C O N F I D E N T I A L CARACAS 001525 SIPDIS HQ SOUTHCOM ALSO FOR POLAD TREASURY FOR RJARPE NSC FOR JSHRIER COMMERCE FOR 4431/MAC/WH/MCAMERON E.O. 12958: DECL: 04/23/2018 TAGS: ECON EFIN ASEC VE SUBJECT: VENEZUELAN MILITARY INTELLIGENCE CONDUCTS RAID ON STANFORD BANK Classified By: Economic Counselor Darnall Steuart for reasons 1.4 (b) and (d). ¶1. (U) According to media reports, Directorate of Military Intelligence (DIM) officials raided offices of Stanford Bank in Caracas on Friday October 31. (Note: Stanford Bank, an affiliate of the Houston-based Stanford Financial Group, is one of two U.S. banks operating in Venezuela. It is a small player in the Venezuelan market, accounting for one quarter of one percent of total banking sector assets. It has 14 offices, five in Caracas and nine in other major cities in the country. End note.) According to media reports, Reuters quoted a military prosecutor as saying the raid was "a normal procedure in an investigation of an old case of spying," and the state TV channel indicated that three people "who had formed part of the U.S. government" were being investigated. Stanford Bank issued a statement saying that the bank had always strictly complied with Venezuelan law in its 15 years operating in Venezuela. ¶2. (C) According to Stanford Bank's security head (strictly protect),the DIM officials took files and other information from Stanford offices on October 31 and summoned bank officials in for questioning on November 1. Per the security director, the three bank employees under investigation included a former DEA employee and a former U.S. Air Force service member, both of whom had worked in Stanford Bank's Venezuela branch but now worked outside of Venezuela, and a dual Venezuelan-American citizen. The security director himself was questioned for eight hours at DIM headquarters on November 1, with questions revolving around former USG employees involved with the bank, the bank's use of counter-surveillance equipment, and deposits of Venezuelan government officials. ¶3. (C) According to economist Hugo Faria (strictly protect), a member of the board of Stanford Bank in Venezuela, the raid was not carried out on the banks' offices, but rather on the offices of Stanford Financial Group "advisors" who help Venezuelan clients manage dollar-denominated assets in Stanford International Bank, which is located in Antigua. Faria said there were a number of theories, or rumors, circulating as to the reasons behind the raid, including the following: (1) DIM was searching for deposits of "spies"; (2) DIM was searching for any offshore deposits made by Zulia governor Manuel Rosales; and (3) the raid was related to the bad blood between Stanford Financial Group and the former president of Stanford Bank in Venezuela, Gonzalo Tirado. (Note: Stanford Bank has had a controversial presence in Venezuela. In addition to the bitter and ongoing legal dispute between Stanford Financial Group and Tirado, Stanford Bank in Venezuela has been the subject of money laundering allegations. End note.) ¶4. (C) Comment: It will be difficult to find out the true story behind this raid. The Embassy will continue to monitor any public actions taken by the Venezuelan government against Stanford Bank and Stanford Financial Group in Venezuela. End comment. CAULFIELD