Venezuela jails 11 Banesco bankers amid deepening economic crisis

Crippled by a crashing currency and soaring inflation, Venezuela on Thursday said it had arrested 11 executives of Banesco, one of the country’s largest private banks, for “attacking” the financial system.

“We determined that these managers at Banesco either helped or covered up attacks on Venezuela’s currency to dilute it through smuggling paper money or engaging in [money] exchange fraud,” Venezuela’s top prosecutor, Tarek William Saab, said in a televised speech.

Banesco President Juan Carlos Escotet, who lives in Europe, said he would be flying to Venezuela “within hours” to cooperate with investigators and help win release of his staff.

In a video, Escotet said the government’s actions were “disproportionate” and that he was returning with “a peaceful spirit, knowing that we’ve done everything correctly.”

The move against Banesco, one of the country’s largest banks with more than eight million clients, has rattled the private sectors and fueled fears about a broader government crackdown. Last month, two Venezuelan executives with the U.S. oil company Chevron were arrested after they reportedly refused to sign a supply contract.

But the Banesco arrests are part of a broader investigation called Manos de Papel, or Paper Hands, aimed at financial crimes, that has led to the detention of more than 130 people in recent weeks.

Venezuela’s two-tiered exchange rate has made it rife with fraud, as those who have access to the official rate (69,000 bolivares per dollar) can resell those dollars for ten times that price on the black market. And as the country prints more bills, it has become caught in a cycle of devaluation and hyperinflation. The International Monetary Fund has estimated inflation will hit 14,000 percent this year — but some analysts say it's already blown past that mark.

President Nicolás Maduro, who is running for reelection on May 20, has blamed the country's woes on “economic warfare” rather than his own policies.

This story was originally published May 3, 2018 at 7:18 PM with the headline "Venezuela jails 11 Banesco bankers amid deepening economic crisis."