Chinese Agricultural Projects in Venezuela Produce Corruption, Not Food

The Venezuela-China agreement failed to materialize, allowing a Chinese company to profit while locals struggled for basic needs and food
Voice of America | 12 June 2019

Transnational Threats

A man walks into a branch of the Banco Privada d'Andorra (BPA) in Andorra. The U.S. Treasury Financial Crimes Enforcement Network has publicly accused the Banca Privada d'Andorra (BPA of knowingly facilitating transactions for third-party money launderers acting on behalf of transnational criminal organizations in Russia and China, as well as Venezuela's state oil company. (Photo: Pascal Pavani, AFP)

In Delta Amacuro, a Venezuelan state on the Caribbean Sea, a large Chinese construction company made an agreement with the country’s former President Hugo Chávez. The state-run company would build new bridges and roads, a food laboratory, and the largest rice-processing plant in Latin America.

According to the 2010 agreement, China CAMC Engineering Co, Ltd. would develop rice fields two times the size of Manhattan in New York City. The project would create jobs for the area's 110,000 residents. “Rice Power! Agricultural power!" Chávez wrote on Twitter at the time.

Nine years later, locals are hungry. There are few jobs and the plant is only half built. It runs at less than 1 percent of the predicted output. People who know about the development say it has not produced a single grain of locally grown rice. Yet, CAMC and a few Venezuelan partners have made money. 

Court case in Andorra reveals corruption

Project contracts and court documents from an investigation in Europe show that Venezuela paid CAMC at least $100 million for the development. Reporters with Reuters news agency examined thousands of pages of court papers on the CAMC case. The papers were filed in Andorra, a small country in the mountains between France and Spain. Lawyers there claim Venezuelans involved in the project tried to launder kickbacks received from CAMC for helping secure the contract.

Andorra is known for its large financial industry, but because of widespread corruption, the Andorran government decided to clean up its banking practices. In 2015, it took over the private bank, Banca Privada D'Andorra. The bank handled money from Venezuelan officials, their families, and friends. The Reuters report exposes Venezuela’s deal with China to the public for the first time.

In September 2018, an Andorran high court judge alleged that CAMC paid more than $100 million in bribes to several Venezuelan officials to secure contracts for five agricultural projects for the Chinese company. The result, according to prosecutors, was a far-reaching culture of bribery. The money was paid through foreign bank accounts to well-connected Venezuelans.

Such payments illegally took money away from projects that were supposed to develop poor, forgotten parts of Venezuela. The Andorran court charged 12 Venezuelans with crimes including money laundering. Neither CAMC nor any of its leaders were charged in the indictment.

Abandoned projects

Since 2007, China invested more than $50 billion in Venezuela, mostly in the form of oil-for-loan agreements, government documents show. In a 2017 speech, Venezuelan President Nicolás Maduro said Chinese companies had agreed to 790 projects in areas ranging from oil to housing and telecommunications. Of those, he said, 495 were complete.

Some developments have been slowed because of corruption, people familiar with the projects said. Others got delayed because of poor management and a lack of supervision.

In Delta Amacuro, even government officials say a mixture of graft and poor management ruined the rice project. "The government abandoned it," said Victor Meza. He is with Venezuela's rural development agency, which worked with CAMC. "Everything was lost. Everything was stolen."

During a recent visit to Delta Amacuro, Reuters found the CAMC rice plant still unfinished. Only one storage area, half full, held grain. Some machinery was running, but it was processing rice imported from Brazil. The nearby paddies hold no rice plants. The laboratory is incomplete. And the roads and bridges have yet to be built.

We don't produce anything

Delta Amacuro's capital city, Tucupita, is a town of 86,000 people. In the past, Tucupita was a stop for vessels shipping goods from inland factories to buyers in the Caribbean and other places. In 1965, the government dammed the nearby river. The land was damaged by sea water. By the time Chávez became president in 1999, little farming remained.

"When I was a kid, there was rice everywhere," said Rogelio Rodriguez, a local agronomist. "Now we don't produce anything."

In 2009, Chávez and Xi Jinping, China's vice president at the time, expanded a joint fund that the two countries had created with the 2007 development agreement. Chávez promised to supply Beijing with oil "for the next 500 years." He then announced the plan to redevelop the area around Tucupita.

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