SWJ El Centro Review Essay – Super Network of Corruption in Venezuela: Kleptocracy, Nepotism and Human Rights Violation

SWJ El Centro Review Essay – Super Network of Corruption in Venezuela: Kleptocracy, Nepotism and Human Rights Violation

Daniel Weisz

Eduardo Salcedo-Albarán and Luis Jorge Garay-Salamanca, Super Network of Corruption in Venezuela: Kleptocracy, Nepotism and Human Rights Violation. Tampa: Scientific Vortex LLC and Fundación Vortex, 2021. [ISBN: 979-8739921147. Paper, 135 pages]

Scholars and media have focused a lot of attention on Venezuela and have sought to explain its failures through ideology. Eduardo Salcedo-Albarán and Luis Jorge Garay-Salamanca approach the subject by concentrating on Venezuela's corruption. They argue that the levels and complexity of corruption in Venezuela have reached unprecedented levels and have formed a macro-corruption and Institutional co-optation network.  Eduardo Salcedo-Albarán is a philosopher and MsC in Political Science and Founder and Director of Vortex Foundation.[1] Luis Jorge Garay-Salamanca, Scientific Director of Vortex Foundation is an industrial engineer and Magister in Economics at the Universidad de los Andes (Bogotá, Colombia), and PhD in Economics at the Massachusetts Institute of Technology. The authors use the concepts, methods, and protocols of criminal network analysis to uncover and analyze the network of macro-corruption and institutional co-optation that affect the Venezuelan State.

The Structure of the Inquiry

Super Network of Corruption in Venezuela contains a foreword by Peruvian jurist José Carlos Ugaz Sánchez-Moreno, followed by six chapters, including I. introduction and a bibliography.[1] The chapters cover the context in which the current corruption processes in Venezuela take place and then trace and analyze the network of macro-corruption and institutional co-optation. Finally, the authors present implications of the networks of corruption and co-optation and provide suggestions for reparation. II. Some Background: From Chávez to Maduro focuses on Venezuela's oil reserves and the opacity in managing public resources as the main factors stimulating corruption. The authors explain that when Chávez took power, opacity surrounding the oil industry and public resources in general increased. They point out how the Venezuelan oil company PDVSA stopped publishing financial statements in 2003, and oil transfers became a discretionary executive decision. Chávez had little interest in consolidating institutions through his revolutionary project, which would reinforce a weak institutional framework. Discretion and opacity in the management of oil and public resources during this time led to an unproductive and extractive economic model that would plague Venezuela to this day.   

The authors explain the importance of preventing the executive branch from transferring money directly from the central bank to avoid increasing fiscal deficit and its corresponding effects on inflation and the revaluation of the currency in countries with high oil revenues. Venezuela, however, has engaged in the last two decades in irregular or technically unjustified decisions. These decisions have led to the distribution of public resources to legitimize the government and strengthen its clientelism networks nationally and internationally. Public positions during Chávez were granted to a few relatives and close friends of the president and high-ranking officials that have used their power to allocate State resources to secure the ruling parties' power and secure private benefits. The military is assigned key decision-making positions that they are unequipped to run, which has hurt various economic activities while securing support and loyalty to the ruling party and opening opportunities for corruption. Some in the military have even engaged directly in drug and human trafficking. The military branch has grown autonomous and has little to no accountability or democratic control over its actions. When Maduro came to power, international oil prices dropped, and Maduro had to transition from a solely clientelist model to one that included repression and coercion to maintain domestic social and political control. The increase of corruption and the renewed attacks on a weakened democratic system by Maduro have had detrimental effects on the economy, human rights, and overall standard of living of Venezuelans.  

III. The Super Network focuses on the size and complexity of the network of corruption and institutional co-optation in Venezuela that favors the illicit interests of powerful nodes/agents. The authors explain that clientelism understood as the appointment of public officials in exchange for favors and partisan purposes, is one of the primary mechanisms to consolidate the co-optation of institutions of the Venezuelan State. A combination of patrimonialism, clientelism, and nepotism are the main mechanisms sustaining the macro-corruption and institutional co-optation reproduced in the super network. The nodes/agents of the super network are classified into two main categories: natural persons and individuals representing 66% of the nodes/agents and organizations, corporations or entities regarded as legal persons representing 31%. The authors explain the high percentage of legal entities are due to illegal money laundering schemes that sustain macro-corruption processes in the network. With the use of criminal network analysis, the authors can establish that Maduro simultaneously concentrates the highest percentage of direct interactions and the greatest capacity to intervene in the flows or indirect routes of the overall super network. José David Cabello Rondón has a similar role as a key articulator of the super network, which places him and Maduro as potentially bearing the greatest responsibility of the macro-corruption, institutional co-optation, and human rights violations observed in the super network. The fact that ten nodes/agents intervene in more than half of the resource flows of the super network implies a high concentration of decision power. This concentration means that changes made to these ten nodes/agents could have a potential disruption of more than half of the resource flows of the structure.

The chapter then focuses on the analysis of subnetworks aimed at different activities. The first analysis is that of basic corruption such as bribery management, clientelism, and nepotism. The two main actors that serve as structural bridges are Maduro and Raúl Antonio de la Santísima Trinidad, who combined account for 16% of the geodesic routes of the sub-structure. Geodesic routes are essential in illicit and social networks as resources flow through these routes. Similar to the results of the super network, a small number of nodes/agents (8) intervene in more than half of the flows in the basic corruption subnetwork. The next subnetwork focuses on human rights violations. It identifies Maduro as the node/agent with the greatest capacity to intervene in the flows of resources aimed at committing human rights violations, followed by the Bolivarian National Intelligence service. The following subnetwork is that of the food sector, which is vital due to the high levels of food insecurity plaguing Venezuela. Carlos Alberto Osorio Zambrano, an ex-military and Chavista leader who has held several political positions, including vice president for food security, is registered as intervening in a third of the geodesic routes subnetwork. He is followed closely by Maduro, and both account for almost two-thirds of the geodesic routes and resource flows in this subnetwork. The last subnetwork focuses on the oil sector, one of the sectors with the most corruption due to the high levels of revenues received by the Venezuelan State. Maduro once again appears as intervening in more than a quarter of the total geodesic routes and flows of the subnetwork, followed by the Venezuelan oil company PDVSA coopted and manipulated by Maduro. This co-optation by Maduro on PDVSA means that Maduro intervenes in more than 40% of geodesic routes of the macro-corruption subnetwork at the Venezuelan oil sector.

IV. The Routes of Nepotism and Kleptocracy analyses the geodesic routes and the resource flows established between some of the most critical nodes/agents in the super network focusing on the number of geodesic routes that connect them. The authors explain the importance of analyzing geodesic routes with not only direct but also indirect interactions.  Indirect interactions help understand illicit schemes such as money laundering established to hide the true origin, destination, and direct and indirect beneficiaries of illegal money. Identifying the number of geodesic routes between each pair of nodes/agents makes it possible to infer the greater or lesser proportion of resources that flowed directly and indirectly between them. The authors contrast Naim Saab Morán with José David Cabello Rondón. They note how Morán interacts directly with 35 nodes/agents to establish 2,705 geodesic routes with Maduro. On the other hand, Rondón interacts with 12 nodes/agents to establish 278,750 geodesic routes with Maduro.

This comparison is helpful to identify how some nodes/agents act more stealthily in the network. The ratio between the number of geodesic routes and the number of indirect interactions is used to form a stealthy indicator by the authors. Rondón, for example, reduces his exposure by establishing few direct interactions that are highly useful to maximize the number of geodesic-indirect routes. Morán (who was targeted by US authorities and captured) was far less stealthy. He established a high number of direct interactions to achieve a relatively lower flow of resources with Maduro. Rondón formed a circle of relatives that manage financial, political, and social resources that act as intermediary node/agents for the resources that flow from Rondón to Maduro. The analysis of these nodes/agents that connect Rondón with Maduro allows inferring the operation of kleptocratic structures permanently reproduced in the Venezuelan State's key institutional positions. This kleptocratic regime is sustained, to some extent, by nepotism evidenced by Diosdano Cabello’s family role in the management of entities such as the National Integrated Service for the Administration of Customs Duties and Taxes. This kleptocratic regime ensures that resources flow among a small group that shares family and illicit interests. At the same time, most Venezuelan society does not have access to any of these resources.

V. The Magnitude: the Super Network of Corruption in Venezuela Compared to Lava Jato seeks to explain the unique magnitude of corruption in Venezuela by comparing it to the previous largest known transnational macro-corruption scheme known as the Lava Jato (Car Wash) case. The authors explain how the volume of the public budget from oil revenue has been illegally appropriated, the complexity of the criminal network that sustains this macro-corruption and institutional co-optation, and the effects on economic, social, institutional, and institutional human damages make the Venezuela case exceptional. The Lava Jato case originated in Brazil with companies that formed a cartel to manipulate and monopolize public contracts. It extended to 10 countries in Latin America and two in Africa. The cartel would give money to specific candidates to receive contracts that would be excessively costly and would not fully deliver the works contracted or did so with extended deadlines and better contractual conditions than initially agreed upon. It is calculated that the amount of squandered public budget in Venezuela is several hundred times worse than that of the total amount of bribes paid during Lava Jato throughout Latin America. The latest model elaborated about Lava Jato the structure made up 1,399 nodes/agents that established 3,758 interactions. The complexity of the criminal network in Venezuela is unique as it establishes over 5,000 nodes/agents and over 17,000 interactions.

VI. Human Rights Violations and Victims focuses on the unprecedented challenges and possible resolutions at the social, political, and institutional spheres to consolidate a real democracy based on the rule of law, truth, and reparation. Another piece that makes the Venezuela example unique is many human rights violations within the framework of institutional co-optation and reconfiguration that characterize the macro-corruption resulting from the super network. A combination of impunity and personal financial interests derived from the capture of state institutions leads to the systematic violation of human rights in Venezuela. The authors discuss the victims of corruption and believe that individuals and specific groups need to be focused on in Venezuela and that transitional justice is an adequate tool to try and apply justice to massive victims. Reparations should include patrimonial and extra patrimonial components and a justice of memory emerging from identifying those nodes/agents bearing the most significant responsibility in mass victimization processes. The use of criminal network analysis can be helpful yet obviously not a determining factor in identifying those bearing the greatest responsibility in macro-corruption and institutional co-optation networks. Another essential facet of reparation will be the rebuilding of trust interpersonally and institutionally to develop a functioning democratic society.

VII. Post scriptum: Comprehensive Reparation for Victims of Corruption in the Health Sector proposes using a comprehensive reparation matrix to estimate the individual and collective damages derived from the illicit acts committed by perpetrators. The authors use a matrix developed for hemophilia patients in Colombia to establish reparations for victims of corruption in the Venezuelan health system. 

Conclusion: Super Network of Corruption in Venezuela

This book relies on a sophisticated use of the social network analysis methodology. It is formed by reviewing official and media sources from different countries due to the unreliable data emerging from Venezuela. The authors use judicial records produced in Venezuela and, mainly, documents produced by prosecutors in other countries where legal proceedings are being carried out against Venezuelan citizens and reports and records from state bodies. The authors can identify the nodes/agents that exercised or continue to exert a relevant role for the super network in Venezuela. They find that a small group of agents/nodes is responsible for a high level of the flows of resources in the super network and the subnetworks. The authors are also able to identify the formation of a kleptocratic structure in Venezuela and the use of nepotism that operate in the super network of macro-corruption and institutional co-optation in Venezuela. Identifying all these models and nodes/agents is then tied to the prospective process of reparation that would need to occur in Venezuela to establish a functioning democratic society.

Super Network of Corruption in Venezuela does an excellent job presenting the complex and unique situation of macro-corruption and institutional co-optation in Venezuela. The use of the Lava Jato case helps contextualize the magnitude of the issue in Venezuela, and the data produced from the criminal network analysis sets up a framework for possible solutions and reparations in the future. The authors also uncover how a combination of impunity and personal financial interests derived from the capture of state institutions leads to the systematic violation of human rights in Venezuela. The book serves as a possible guide to identifying those most likely responsible for the clientelism, nepotism, corruption, and kleptocracy in Venezuela and how the system operates and is maintained. It helps the reader understand how a leader plagued with so many problems can retain power in Venezuela. Most importantly, it provides the building blocks and possible matrix for transitional justice and reparations to restore a functioning democratic society in Venezuela.

Endnotes

[1] Vortex—Fundación Vortex in Bogotá, Colombia and SciVortex Corporation in Tampa, Florida—develop concepts, methodologies, and technologies for strengthening public policy under integrative science principles. Their website is https://www.scivortex.org.

[2] Eduardo Salcedo-Albarán and Luis Jorge Garay-Salamanca, Super Network of Corruption in Venezuela was originally published in Spanish as Súper red de corrupción en Venezuela: Cleptocracia, nepotismo y violación de derechos humanos. Bogotá: Fundación Vortex, 2021.