Maduro’s stepsons sanctioned amid allegations they profited from Venezuela’s hunger crisis

The three stepsons of Venezuelan leader Nicolás Maduro are being accused of profiting off the nation’s hunger — receiving bribes and kickbacks in exchange for access to hundreds of millions of dollars worth of contracts intended to feed the poor.

On Thursday, the U.S. Treasury Department sanctioned the three brothers, known as “Los Chamos,” or the boys, along with Colombian businessman Alex Nain Saab, his business partner, Alvaro Enrique Pulido Vargas, and others, claiming they are part of a vast network of corruption that grew rich on fraudulent contracts.

The allegations that the men were making millions on the back of the government’s CLAP food program — launched in 2016 amid a deep hunger crisis — are incendiary and likely to put additional pressure on Maduro, 57, who is struggling to stay in power.

“Alex Saab engaged with Maduro insiders to run a wide-scale corruption network they callously used to exploit Venezuela’s starving population,” Treasury Secretary Steven Mnuchin said in a statement. “The corruption network that operates the CLAP program has allowed Maduro and his family members to steal from the Venezuelan people. They use food as a form of social control, to reward political supporters and punish opponents, all the while pocketing hundreds of millions of dollars through a number of fraudulent schemes.”

Among those hit with sanctions are Maduro’s three stepsons, Walter Jacob Gavidia Flores, Yosser Daniel Gavidia Flores and Yoswal Alexander Gavidia Flores; Saab’s sons, Shadi Nain Saab Certain and Isham Ali Saab Certain; his business partner, Pulido; Pulido’s son, Emmanuel Enrique Rubio Gonzalez; and former Venezuelan trade minister Jose Gregorio Vielma Mora. Yosser Gavidia Flores’ wife, Mariana Andrea Staudinger Lemoine, was also sanctioned.

The Treasury said that Saab began exploiting his ties to the government as far back as 2009 — under the administration of the late President Hugo Chávez. At that time, Saab and his business partner won a contract to build 25,000 homes.

Treasury said the men were paid “three to four times the actual cost of building each low-income home, which were intended for Venezuela’s more vulnerable populations.”

In 2011, when Maduro was the country’s foreign minister, Saab gave his three stepsons a contract to clear land for a construction project. That was the beginning of a long-term relationship in which Saab paid Los Chamos kickbacks and bribes for the inside track on government contracts, Treasury said.

In a separate action Thursday, the U.S. Department of Justice indicted Saab and Pulido on allegations that they used that government contract to game the country’s currency exchange system.

By submitting “false and fraudulent import documents for goods and materials that were never imported into Venezuela and bribing Venezuelan government officials to approve those documents,” the pair allegedly fleeced the government of $350 million.

The court said some of those alleged bribes occurred in Miami and that Saab and Pulido had wired money through bank accounts in the Southern District of Florida to accounts overseas. Saab is also being investigated by Colombian authorities.

An indictment is merely an allegation and the defendants are presumed innocent until proven guilty in court.

Treasury suggested that Saab’s relationship became even more profitable when Maduro came to power in 2013 after Chávez died from an undisclosed form of cancer. One of Maduro’s signature initiatives, in 2016, was to create the CLAP program, designed to give subsidized food to the country’s poorest.

Critics say that program has become a tool to reward supporters, punish critics and lure out votes during elections.

Treasury says that Saab was involved in the CLAP project from the beginning, creating shell companies that won no-bid contracts to acquire food from abroad, assemble the packages of food in Mexico and export them to Venezuela, “all at the most profitable rate for themselves.”

“Since 2016, when Saab met with Los Chamos and Maduro to discuss importing food on behalf of the Government of Venezuela, Saab and [and his business partner] Pulido have made hundreds of millions of dollars from the profits of this corrupt scheme,” Treasury said.

In some cases, Treasury said, the shell companies would receive a prepayment from the government, which they would use to give kickbacks to government officials.

Speaking on background, a senior U.S. administration official said the scheme highlights the regime’s criminal hypocrisy.

Instead of using $100 million to buy food for Venezuelans, “what do they do? They buy half of it, or a third of it and steal the rest of the money,” he said. “And then they make speeches about how U.S. sanctions are hurting the people of Venezuela and depriving them of food.”

But Saab’s involvement in corrupt schemes allegedly went beyond food and construction. As Venezuela’s economy has continued to tank amid corruption, mismanagement and U.S. sanctions on the vital oil sector, Venezuela’s gold reserves have become a lifeline. And Saab became a key player.

Treasury said that starting in 2018 the country began liquidating its gold reserves to pay for contracts, including the agreements with Saab. The Colombian businessman, Treasury said, worked with others to design a scheme that allowed Venezuelan gold — much of it mined illegally — to be sold in Turkey in exchange for foreign currency.

In November 2018, Treasury sanctioned Venezuela’s gold sector, prohibiting U.S. companies, citizens and residents from dealing in the Venezuelan metal.

Saab has been on the radar of U.S. law enforcement for at least two years. In 2017, the Venezuelan news website Armando.info broke the news about his ties to Maduro and the CLAP program and several of its reporters were forced to flee Venezuela amid threats.

Along with the individuals named Thursday, the U.S. Treasury sanctioned 13 companies registered in the United Arab Emirates, Hong Kong, Turkey, Colombia and Delaware that it says are front and shell companies used by Saab and his associates to skim and move money earned from the government contracts.

Under the sanctions, all U.S. assets that belong to the individuals and the companies are blocked and all U.S. citizens, residents or even those passing through the United States are prohibited from doing business with them.

The Trump administration has sanctioned more than 100 Venezuelan former and current officials, including Maduro and his wife, Cilia Flores, as part of a broader campaign to drive them from office.

On Thursday, U.S. officials reiterated that the government will not pursue Maduro if he steps down soon.

“Each day that passes that escape valve is closing,” an official said. “I would recommend that he take this [offer], because these paths and opportunities are closing for him more every day.”

Washington and more than 50 other nations recognize the head of Venezuela’s congress, Juan Guaidó, as the country’s sole legitimate leader.

Maduro — who claims that elections last year give him the right to rule through 2025 — has often accused the U.S. of trying to illegally seize power through “economic warfare,” including broad sanctions on the country’s petroleum and gold sectors.

This story was originally published July 25, 2019 at 2:07 PM.