ALLEGATIONS OF MINISTER DIOSDADO CABELLO'S

C O N F I D E N T I A L SECTION 01 OF 02 CARACAS 000918

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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,
XXXXXXXXXXXX alleged Minister of Public Works and Housing
Diosdado Cabello was expanding his network of corruption into
the financial sector. According to XXXXXXXXXXXX, 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). XXXXXXXXXXXX
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). XXXXXXXXXXXX
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, XXXXXXXXXXXX argued the "fascist and
military" trend associated with Cabello was gaining
ascendancy within Chavismo. (Note: By invoking the term
fascist, XXXXXXXXXXXX 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, XXXXXXXXXXXX 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, XXXXXXXXXXXX
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." XXXXXXXXXXXX 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) XXXXXXXXXXXX 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. XXXXXXXXXXXX
speculated Chavez himself might be concerned about Cabello's
growing influence but unable to diminish it. XXXXXXXXXXXX
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.
XXXXXXXXXXXX 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: XXXXXXXXXXXX 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