The Venezuelan government of Nicolás Maduro has been accused of turning a blind eye to or engaging actively in corruption for both the personal enrichment of state officials and as part of sanction-dodging efforts. Among other individuals linked to corruption by the Maduro government, in June 2020 Colombian national Alex Saab was arrested in Cape Verde in connection with an Interpol Red Notice concerning money laundering. Now, 6 months after his arrest, it seems likely that he will be extradited to the US. How significant is Saab to the Maduro government and what impact might his extradition have?

Facing Charges

On 4th January a Cape Verde appeals court decided that Alex Saab can be extradited to the United States to face charges of money laundering through bank accounts established in Miami in 2017. Saab was arrested in Cape Verde on 12th June 2020 while the private jet he was travelling on had stopped in Cape Verde to refuel before its final destination, Iran. Saab’s legal team has called the charges against him politically motivated and has argued alongside the Venezuelan government itself that Interpol and Cape Verde failed to take into account Saab’s diplomatic immunity as an agent of the Venezuelan state. According to the Venezuelan government, Saab was en route to Iran as part of efforts to secure medical goods and reach an agreement on the supply of foodstuffs.

The delay in Saab’s extradition owes much to the fact that Cape Verde does not have an extradition treaty with the US. Despite the decision on the 4th that Saab can be extradited, it is quite likely that there will be further delays in the extradition process given the intention of Saab’s lawyers to make another appeal. In another effort to shield Saab and delay extradition, the Venezuelan government appointed Saab as Deputy Permanent Representative to the African Union on Christmas Eve. This move underscores Saab’s apparent importance to the Maduro regime, and further links to the Venezuelan government suggest extradition will have ramifications for the Maduro administration.

Dirty Business

Alex Saab’s dealings with the Venezuelan government date back at least as far as 2011, when he signed a deal with Hugo Chavez’s administration concerning various construction projects. Through his own Fondo Global de Construcción he engaged in money laundering and overbilling; exporting a value of only $3 million despite receiving $159 million from a Venezuelan firm to sell prefabricated homes. Though an investigation into this discrepancy has been conducted, at the time of writing no conclusion has been reached.

In 2013, Saab registered another company in Hong Kong, Group Grand Ltd. In 2016, Group Grand Ltd signed a contract with the regional government of Táchira state in Venezuela for the supply of food boxes as part of Venezuela’s Comité Local de Abastecimiento y Producción (CLAP) programme. The programme is ostensibly meant to provide subsidised food to poor Venezuelans. However, allegations again emerged that Saab’s company was engaging in overbilling and the diversion of funds. According to the Associated Press, on one occasion Group Grand charged the Venezuelan food ministry more than double the 2017 market price for a transaction of powdered milk.

The Turkish Connection

Beyond benefitting Saab’s own personal enrichment, these businesses serve the purpose of aiding the Venezuelan government obtaining valuable resources and dodging international sanctions. This becomes clearer when the details of Venezuelan gold exports to Turkey are analysed.

In August 2018, President Maduro issued Decree 3598, authorizing the creation of a mixed enterprise between Venezuela’s MINERVEN mining company and an obscure Turkish firm by the name of Marilyns Proje Yatirim, a company concerned with the extraction, production and transport of precious metals. This company had connections to another, Marilyns Capital Limited. Between June 2018 and March 2019 the director of Marilyns Capital was Lorenzo Antonelli, Alex Saab’s wife’s brother-in-law, suggesting a connection between Marilyns and Saab. Saab’s Group Grand Limited transferred a CLAP food supply contract in 2018 to another Turkish firm believed to be part of Saab’s network, Mulberry Proje Yatirim. Taken together, a picture emerges of Saab-linked businesses exporting Venezuelan gold to Turkey in exchange for food to service the CLAP programme, while overbilling to divert funds.

Forecast

In the short term, a plea deal on Saab’s part revealing new information about his associates and network of shell companies is not improbable; the revelations from such a deal would likely reveal much about the state of corruption in Venezuela and help the US and its allies construct a tighter and more focused sanctions regime to increase pressure on the Venezuelan government. The repercussions of such a deal may even extend beyond Venezuela to affect individuals in countries such as Turkey, given the apparent links between the businesses Saab is linked to and that country.

Though Saab’s extradition will likely place further pressure on the Maduro government’s revenue in the short term, it is unlikely to result in a definitive end to illicit Venezuelan revenue streams. This is because Saab is not the only individual with alleged links to money laundering and shady business for the Venezuelan regime; Alvaro Pulido Vargas, one of Saab’s associates involved with him as far back as the establishment of Fondo Global de Construcción, has been indicted by the US Department of Justice for conspiracy to commit money laundering. Unlike Saab, at the time of writing Vargas is not in police custody.

Ultimately, Alex Saab’s arrest and extradition is only the first step in a complicated international process towards dismantling a network of corruption which has operated at the expense of Venezuela’s population.

Source: Global Risk Insights