Venezuela: The “bolibourgeoisie”: a new bourgeois sector
Reporting on the Venezuelan economy in 2015 from on the ground in Venezuela, Leonardo Arantes outlines the composition of the Bolibourgeoisie profiting off of Venezuela
The U.S.’s unjustifiable invasion of Venezuela and detention of Nicolás Maduro has unleashed an unprecedented crisis for Venezuela and the region more broadly. To better understand the political economy of the country and its history, we are publishing a special edition of our International Courier, including new and old pieces on the nature of Venezuelan politics, past and present.
Leonardo Arantes, Correo Internacional, December 2015:
A bourgeoisie born out of parasitising the state
The Venezuelan state has successfully given rise to, and leveraged the emergence of, powerful economic groups and bourgeois sectors. While it is not the aim of this article to provide a historical account of this process (which would require a much more extensive study), it is impossible to ignore the fact that almost all existing economic groups and bourgeois sectors (as well as some that have disappeared) have emerged from parasitising oil revenues, exploiting the national budget and receiving favours from governments in power. Examples include the Alfonzo Rivas group (acquired by the U.S. company Cargill and subsequently dissolved), Delfino and Mendoza. Under the Chávez regime, this has been no exception.
The term ‘Boliburguesía’ is formed by combining the words ‘Bolivarian’ and ‘bourgeoisie’. Coined by journalist Juan Carlos Zapata, it refers to a new bourgeois sector that emerged during the Chávez years and continues under Maduro, being closely linked to his regime. The term encompasses individuals from different social backgrounds who became multimillionaire entrepreneurs through legal or illegal businesses facilitated by the Chávez-Maduro governments, as well as existing high-, medium-, and small-time entrepreneurs who were part of the Chavista project from the beginning and increased their fortunes through these same businesses.
What are the origins of this new bourgeois sector? What are its characteristics? What sectors does it comprise? This article will attempt to answer these questions.
The material foundations of the emergence of the Bolivarian bourgeoisie and its accumulation mechanisms
One element to consider is the heterogeneous social composition of the Chavista movement since its inception. As with any movement that has an electoral strategy and a reformist programme, there is a coexistence of diverse sectors within the same movement, including popular movement activists, reformist left-wing party militants, recycled right-wing politicians, military personnel, bankers, businesspeople and union bureaucrats, to name a few.
During the first eight years of Chavismo, a tendency became evident within the Chavista leadership and associated groups to exploit the state for personal gain and enrichment. The military, bankers and businesspeople played a particularly prominent role in this. This process, which continues to this day, was based on the fiscal abundance that began in 1999 when Chávez discovered oil at nine dollars a barrel. This was followed by a bullish streak that brought the price up to sixty-two dollars a barrel, and to over one hundred dollars a barrel after 2006. However, today, with the dynamic reversed — oil prices falling and fiscal accounts in deficit — parasitism and predation are on the rise.
The mechanisms of enrichment have been diverse: serving as intermediaries in business deals between private companies and the state, receiving bribes and favours in return for awarding public contracts, ‘briefcase companies’ (front companies), diverting budget items, and corruption and fraud, mainly committed by the management of state-owned companies through the granting of foreign currency for the import of food, spare parts and other items (an issue that also occurs in private companies). These are just some of the means used to amass or increase fortunes.
The management of ministries, institutions, PDVSA (the state oil company), basic industries, and other state-owned companies, as well as public and private banks and insurance companies, has been fertile ground for the formation of powerful economic groups whose wealth is impossible to legally justify.
Its origins, sectors, and characteristics
Left-wing economist, journalist and historian Domingo Alberto Rangel identified three major economic groups. The first and strongest revolves around Diosdado Cabello and Rafael Sarría, who are both retired military officers. This group owns banks, industrial plants and shares in service companies. It is possibly the country’s second-largest financial empire after the Polar Group.
A second group is centred around another retired military officer, Jesse Chacón. His brother is said to be the owner or apparent leader of this group, which acquired a bank, one of the largest powdered milk factories in South America, and several estates in the first eight years of Chavismo.
Finally, he referred to a third oligarchic group whose leaders are Ronald Blanco La Cruz, a retired military officer and former governor of Táchira State (2006), and Edgar Hernández Behrens, a banker and former president of the Deposit Guarantee Fund (Fogade), the Foreign Exchange Administration Commission (CADIVI), and the Superintendency of Banks (SUDEBAN). At that time, these were the three economic groups among which the nascent Bolivarian bourgeoisie divided its assets.
To these groups, we must add the businessmen and bankers who supported Chávez from the outset and who saw their fortunes increase with Chavismo. These include Alberto Cudemus, president of FEPORCINA; Alberto Vollmer, owner of Ron Santa Teresa and Venezuela’s current representative in Mercosur; Miguel Pérez Abad, president of FEDEINDUSTRIA; Víctor Vargas Irausquín, owner of Banco Occidental de Descuento (BOD) and once known as “Chávez’s favourite banker”, as well as being the father-in-law of Luis Alfonso de Borbón (Duke of Anjou and great-grandson of Franco); Víctor Gil, former president of the now defunct Fondo Común bank; and Wilmer Ruperti, a billionaire oil tanker magnate who helped Chávez during the 2002 oil strike and subsequently saw his fortune grow to $10 billion. Also among them is Luis Van Dam, a metallurgical entrepreneur who has been a Chavista since 2005. In 1988, he was involved in a scandal for allegedly defrauding the nation of $70 million in a contract for the repowering of AMX30 tanks; and Luis Carlos de León, a businessman and Chavista since 2005 who is now involved in the oil and electricity business.
The media has also singled out José David Cabello (Diosdado’s brother), who was Minister of Infrastructure from 2006 to 2008 and has been director of SENIAT (Tax and Customs Service) since then. He controls all foreign trade in goods entering and leaving the country, and manages all taxes, fees, disputes, lawsuits and proceedings. Rafael Ramírez Carreño (former president of PDVSA and former Minister of Energy and Petroleum until his dismissal by Maduro) has been involved in the government’s food programme, which imports food through PDVAL; the construction of housing through the Gran Misión Vivienda programme; and the financing of social missions. He has also been involved in the energy business. It is estimated that he managed at least $150 billion annually.
Many have benefited from parasitising oil revenues and the national budget (which consists mainly of tax revenues). Millions of regional figures have emerged thanks to their relationship with the Chavista regime. There are also those whose fortunes and businesses transcend national borders, becoming true ‘Boliburgueses magnates’.
Various media outlets (such as the opposition publications Reportero24 and Sexto Poder) identify the following individuals as some of the main exponents of the Boliburguesía: Diego Salazar Carreño, also known as ‘Rojo de Oro’, is the son of a 1960s guerrilla fighter and poet, and the cousin of Rafael Ramírez Carreño. Ramírez Carreño awarded Salazar Carreño a multimillion-dollar contract for PDVSA’s insurance and reinsurance policy, enabling him to go from being an insurance salesman to becoming one of the richest men in the country. Another is Alejandro José Andrade Cedeño, an army lieutenant who participated in the 1992 coup attempt. His fortune is estimated at $5 billion. Pedro Torres Ciliberto has a net worth of $700 million. He is said to be the front man for Chavista journalist José Vicente Rangel. Leonardo González Dellán is the former president of Banco Industrial de Venezuela, a joint venture between state and private banks, and his fortune is estimated at $1 billion. Eudo Carrullo Perozo, son of Eudomaro Carrullo (former PDVSA director who collaborated with Chávez during the oil strike), has an estimated net worth of $500 million. Baldo Sansón, former financial advisor to PDVSA, is estimated to have a fortune of $600 million. Armando Capriles Capriles, who is linked to family businesses and is a friend of the former Finance Minister, Nelson Merentes, as well as being the cousin of the opposition leader, Henrique Capriles Radonsky, is estimated to have a fortune of $2 billion.
The list goes on: Samark José López Bello, who comes from a humble background and whose parents were teachers, is currently the president of Profit Corporation, a company whose main clients are PDVSA, PDVSA GAS and the Ministry of Internal Relations. He has been involved in scandals relating to the importation of spoiled food through PDVAL. He has a net worth of $1 billion. Raúl Antonio Gorrín Belisario (“The man of the scams in Venezuela”). He is associated with illegal businesses and is said to act as a front man for media owners with the support of powerful men in the government. He is reported to have bought the Globovisión channel for $68 million. He owns Seguros La Vitalicia and his net worth is estimated at $2 billion.
Others include Walid Makled, who bought the AEROPOSTAL airline; Eligio Cedeño; Leopoldo Castillo Bozo, owner of the brokerage firm Banvalor; and Miguel Mawad. All of these individuals possess exorbitant wealth and are connected to current and former government officials, including Freddy Bernal, Aristóbulo Istúriz and Luis Felipe Acosta Carles.
They have committed such scandalous illegal acts that, in order to avoid being tainted by them, the government opened legal proceedings against them (also motivated by their lack of ‘loyalty’ to the government). For instance, Makled threatened to reveal the names and secrets of high-ranking officials involved in the ‘Cartel of the Suns’ (a drug trafficking ring), while Cedeño financed the escape of Carlos Ortega, the former president of the CTV and leader of the 2002–03 oil strike. Today, they are fugitives from Venezuelan justice. Their activities centred on state-owned companies such as Pequiven and Bandes (the National Development Bank).
Two more recent phenomena that are still little known are the emergence of the so-called ‘bolichicos’ and ‘bolichoros’. The former refers to a group of young people aged 20–30 who have become millionaires through lucrative contracts with state-owned companies. In some cases, rather than being contractors, they act as proxies for high-ranking officials in the regime. They are generally young people from wealthy families who studied at the best schools and universities in the country and move in high society. They have nothing to do with anything resembling anti-imperialism or socialism. The second group consists of military personnel engaged in drug trafficking, extortion and the management of organised crime networks — activities through which they amass large sums of money.
