Vladimir Ilyich Lenin coined the axiom “the last capitalist shall be hanged with the rope sold by the next to the last.”
News from Venezuela’s Orinoco Belt seems to confirm that thought. Last week the Supreme Court in Venezuela unconstitutionally approved a joint venture in the Orininoco Delta to exploit heavy crudes from the Junin 10 well.
The fortunate partner to the Venezuelan regime is Inversiones Petroleras Iberoamericanas, an investment vehicle founded by Alfonso Cortina, the former CEO of Repsol, the Spanish energy mammoth and his son Luis Cortina.
The oil block is adjacent to Petro Cedeno a joint venture between Total (France) and Statoil (Norway). The company is owned by a Dutch Stichting which happens to be the best hideout for investors that would not like to be branded by a determined investment.
And reasons for this secrecy abound. First, the joint venture is being cleared to exploit oil in Venezuela by an institution that lacks constitutional powers to authorize such a transaction. Second, the venture is arming the government of Venezuela with US $400 million which will come in handy to buy weapons to continue to execute the regime’s “final solution” against the people of Venezuela.
Mr. Cortina, of course, is not alone in this venture. Behind his move are savvy advisors from Venezuela who after sucking out tens of billions of dollars to “rebuild, retool and reinvent” the country’s energy matrix left the country with no energy matrix and instead live the life of European jetsetters in Spain. There they can relish in the portrayal of men of noble origins exhibiting freshly bought nobility titles and schmoozing with, among others, the Cortinas.
The transaction thus raises many questions. Are these “the much sought after “local partners” that most Spanish companies court? Or are these secret advisors a reenactment of a buffoonish move by Mr Cortina in Argentina during the reign of Nestor Kirchner? In both cases the arrangement does not seem to bode well for Venezuelan democracy or the future consolidation of the rule of law in the country that made the greatest contributions to democratic consolidation in Spain.
Flashing back to Argentina at the beginning of this century, Repsol was headed by Mr Cortina and the country by Nestor Kirchner.
Mr Kirchner who had always desired to obtain an MBA used to practice business development when not concerned with state affairs. And it so happened that he came up with quite a wizardly formula to diversify equity holdings while claiming a success fee. All successful foreign multinationals needed a local partner to prop up their development.
Local partners, of course, were to be selected from Mr Kirchner’s roster. Given their financial limitations, the companies were to provide local partners with “loans” to acquire about one quarter of their equity. Distributed dividends would repay loans. Needless to elaborate on the fact that local partners represented a joint venture with the project golden share sponsor.
And for Repsol a local partner drawn from a small financial outlet was brought to bear. Mr Cortina closed the deal and thought that he had done a good deal to put it in Trumpian language. Several years down the road however, Mr Kirchner was recalled by the universe and his wife had little regard for Repsol’s local partner. A change in local partner was ordered.
But a public company could not accomplish such orders as expeditiously as the president demanded, Mrs Kirchner who was not known for her patience expropriated Repsol and although she paid compensation, the company lost the most important natural gas depository in the Americas after those of the U.S. and Venezuela.
This story leads us to believe that for this Spanish businessman tradition seems to carry much more weight than common sense.
Published by LAHT.com on Monday July 17th, 2017