U.S. sanctions Venezuelan network including Turkish company

The U.S. Treasury has sanctioned a Colombian national it said was at the centre of a “vast corruption network” that has enabled the regime of Venezuelan President Nicolas Maduro “to significantly profit from food imports and distribution in Venezuela”.

The Treasury also sanctioned companies in the network run by Colombian businessman Alex Nain Saab Moran, including Turkey's Mulberry Project Investment, that the treasury said had been involved in deceptive practices allowing the sanctioned Maduro regime to profit from Venezuelan gold sold in Turkey.

“Alex Saab engaged with Maduro insiders to run a wide scale corruption network they callously used to exploit Venezuela’s starving population,” said Treasury Secretary Steven Mnuchin in a statement published on the treasury website. 

Saab was already the focus of “sweeping criminal investigations by the U.S. Justice Department and agents from Homeland Security Investigations”, Bloomberg quoted four sources familiar with the investigations as saying.

“Treasury is targeting those behind Maduro’s sophisticated corruption schemes, as well as the global network of shell companies that profit from the former regime’s military-controlled food distribution program,” he said.

The Maduro government is accused of illegally profiting from the food distribution programme Local Committees for Supply and Production, commonly known as CLAP, by overcharging Venezuelans for cheap food produced in countries including Turkey.

The treasury says the government used this scheme to create political leverage over the people of Venezuela, where food shortages have become the norm.

“The regime uses the CLAP program as a political tool to reward support and punish political criticism.  By offering food through this program, the former regime is able to maintain its influence because many Venezuelan citizens do not have enough money to buy food and therefore depend on the rations CLAP provides to survive,” the Treasury’s statement said.

Saab became involved in the CLAP programme in 2016, when he and his business partner Alvaro Enrique Pulido Vargas set up a structure to buy and assemble food products in foreign countries and then make large profits transferring them to Venezuela, the statement said.

Part of the proceeds from this was spent on bribing Venezuelan officials including state governors and the food minister, to help Saab and Pulido win bids for CLAP contracts, according to the Treasury.

Saab also helped Maduro’s minister of industry Tareck El Aissami, to create a structure to sell Venezuelan gold in foreign countries including Turkey, the statement said.

Venezuela moved its gold refining activities from Switzerland to Turkey, where it thought it could more easily avoid U.S. sanctions, reports in January said.

“Turkish entities would purchase gold from the Government of Venezuela, depositing money in accounts in Turkey, which in turn would transfer funds to an account held by the BCV (Central Bank of Venezuela) in Turkey,” it read. “Saab’s company in Turkey, Mulberry, purchased goods in Turkey on behalf of Venezuelan clients, marking up prices before being sold back to Venezuela.”

Mulberry was among an extensive list of international companies sanctioned by the U.S. Treasury’s Office of Foreign Assets Control over the trade with Venezuela.

Turkey’s Justice and Development Party (AKP) government has become one of Maduro’s staunchest international supporters, and was among the first to declare its support for the Venezuelan strongman when opposition leader Juan Guaido declared himself interim president in January.

Trade volume has ballooned in recent years, with the nearly $900 million worth of trade in the first five months of 2018 surpassing the total volume over the five previous years, reports at the time said.

“Ankara is seeking to take advantage of a collapsed, cash-strapped Venezuela to do lucrative business at a time when U.S. and European companies are constrained because of sanctions,” former Turkish diplomat İmdat Öner, who was stationed in Venezuela, wrote for Ahval in January.

The Turkish focus on building trade with Venezuela could push Washington to level sanctions at Ankara, Öner wrote in a March op-ed.