Venezuela’s vast gold deposits, which could go a long way in easing the pain of millions nearing starvation, are being pillaged outright by a consortium led by strongman Nicolás Maduro and his inner circle, who smuggle out hundreds of millions in the precious metal while sending only a minor fraction to the state’s coffers, people familiar with the situation said.
Operating at least six gold extraction plants, the consortium is capable of producing more than 16 tons of gold per year, but is also forcing the smaller independent operators to sell them their output under the threat of violence, of being arrested or losing their access to fuel in the remote mining area. The purchase of this gold, extracted illegally by the small miners, nets another 12 tons per year, sources from the mining region said.
Multiple accounts gathered for this article confirm that the consortium might be earning more than $1.5 billion per year, the final amount depending on the gold content of the processed sands and the market price of the metal, in an operation where people in Maduro’s inner circle emerge as the main beneficiaries.
“The one in front of this criminal enterprise is Maduro,” said exiled Venezuelan General Manuel Cristopher Figuera, who headed the regime’s Bolivarian National Intelligence Service until he broke away from Maduro.
“It is unprecedented, the pillage exercised by the criminal enterprise that Maduro administers while heading the state. This is something never seen before,” Cristopher Figuera told el Nuevo Herald in a recent interview in Miami.
El Nuevo Herald talked to military officers, regime members and local workers familiar with the large-scale gold mining operations, which alongside the drug trafficking operations, other types of mineral smuggling and overall government corruption, are helping to sustain the regime in the midst of crippling economic sanctions imposed by Washington.
At the center of the gold mining business is the Domingo Sifontes Industrial Complex. Its extraction plants in the southeastern state of Bolivar processes nearly 80 percent of the country’s production, according to data provided by the regime’s Ecological Sustainable Mining Development Ministry.
But not known until now is the fact that the companies that make up the consortium keep for their own benefit more than two-thirds of the total output, which is later smuggled out of the country instead of being sold to the nation’s Central Bank as stipulated by law, the sources said.
The beneficiaries are a small number of key members of Maduro’s inner circle, who control the whole operation, the sources added.
The lucky inner circle members include former Vice President Tareck El Aissami; Maduro’s stepson Walter Flores; National Guard head Antonio Benavides Torres, and Maduro’s Colombian partner Alex Saab, all of whom have been sanctioned by the U.S. government for alleged crimes that range from drug trafficking and money laundering to corruption and human rights violations.
Top members of the Venezuelan regime have stolen billions of dollars from the state coffers during the two decades of socialist rule, through multiple corruption schemes orchestrated to siphon out large portions of the oil income and huge international loans that were meant for social programs and the country’s development, said a military officer who spoke under condition of anonymity.
But gold production opened a new range of corruption opportunities.
“When they first arrived, they found that the oil industry was totally mechanized, controlled by rules and accountability instruments that they would have to evade. That created hurdles for stealing the wealth and it took time for them to have their people in place, and it was after a long process that they could start pillaging,” the officer who spoke under condition of anonymity said.
“But with gold the situation is different, because with gold there is no supervision. If the complex processes one thousand kilograms of gold, nobody is there to audit it. And they distribute the loot among themselves,” he added.
The Maduro regime did not respond to requests for comment emailed by el Nuevo Herald.
The Domingo Sifontes Industrial Complex, which serves as the backbone of the whole operation, is controlled by Eduardo José Rivas, a trusted partner of the presidential family.
During the inauguration day of the complex, located in the Nacupay sector of El Callao, in Bolivar state, the Minister of Ecological Sustainable Mining Development at the time, Victor Cano, celebrated the investments made by six private companies that invested in the construction of the new extraction plants, which he said would optimize gold production efforts in the region.
These plants “are more efficient because they recover up to 90 percent of the gold material and also allow the removal of millions of tons of gold containing sands accumulated in Bolivar state during decades of uncontrolled mining, and that way substituting the use of mercury, which has a large environmental impact,” the minister said during the May 10, 2018, event.
What he did not reveal during the event is that the six companies — Inversiones RPL, Invertrade, Corporación Petroglobal, Mipre, Inversiones Glenduard, and Inversiones Oriente — are controlled and directly benefit key regime members.
Documents obtained by el Nuevo Herald show that El Aissami, sanctioned by the U.S. government on suspicion of drug trafficking, is one of the main partners of Inversiones Glenduard. Benavides Torres, who is also under U.S. sanctions, has a stake at Invertrade, while two sons of first lady Cilia Flores, Walter and Yosser Flores, own a slice of Mipre.
In the documents, Rivas is shown as president or partner in four of the companies: Glenduard, Invertrade, Mipre and Petroglobal, while Saab shows up as the main financier in most of the companies.
Saab, a Colombian businessman identified by the U.S. government as one of Maduro’s closest partners, was sanctioned this year by Washington for running a corruption scheme that siphoned millions of dollars from the subsidized food distribution program known in Venezuela as CLAP.
Among the people sanctioned alongside Saab were the three sons of Cilia Flores — Walter, Yosser and Yoswal — who were paid a large amount of money by Saab to have access to juicy government contracts for the subsidized food program, the U.S. Treasury Department said.
“Through a sophisticated network of shell companies, business partners, and family members, Saab laundered hundreds of millions of dollars in corruption proceeds around the world,” the department said when it announced the sanctions. “Also targeted today are Maduro’s three stepsons, Walter, Yosser, and Yoswal, to whom Saab funneled money in exchange for access to contracts with the Government of Venezuela, including its food subsidy program.”
MODERN DAY ALCHEMY
Partners in the gold scheme have found that simultaneously playing the roles of regulator and regulated in mining concessions is the perfect formula that allows them to create fortunes out of thin air.
Sources told el Nuevo Herald that the Sifonte Complex acquired three million tons of sands rich in gold from state-run Minerven, paying only $2.60 per ton.
According to the geological studies conducted in the area, those sands are capable of containing between 5 and 20 grams of gold per ton, and calculating a median content point between the two numbers of 12.5 grams per ton shows that each ton could contain around $600 worth of gold, based on the current price of $48 per gram.
That means that for an initial investment of $7.8 million paid to Minerven, the partners received sands containing $1.8 billion worth of gold.
The complex had by the middle of the year a capacity to process around 864,000 tons per year of the sands that had already been extracted by Minerven and were just sitting in large holding areas. But the partners are in expansion mode and are already constructing more plants with the aim of doubling output capacity, the sources said.
Minerven, which on paper is the largest provider of gold for the Central Bank of Venezuela, is today an empty shell. Its production has been reduced to zero, or, in the best case scenario, to a minimal fraction of what it was a decade ago, when it produced more than 12 tons of gold per year.
“Minerven does not produce one single gram of the precious metal,” reported a union leader in July 2018 when asking for the reactivation of its plants to save 4,000 jobs.
The work at the state-run company seems to have restarted, but employees say that they now seem to be working for the people of the complex, which leaves many doubts on whether the Central Bank is getting any gold coming out of the Bolivar mines.
“All of the gold that is being processed in Bolivar and in the mines has to go to the Central Bank. That is the government policy. But oddly we have never seen again, in the written press or on television, that there has been a shipment headed there, nor have we seen at the mines any security movement that could show a shipment was being sent,” a Minerven worker said, speaking on condition of anonymity.
“We don’t know what the real output of the industry is. We don’t know the output of the plants that were authorized by the state to process secondary material. We don’t know the output of the small miner that is supposed to be watched by the Ecological Sustainable Mining Development Ministry. We just don’t know anything,” the worker said.
The consortium not only benefits from the sands extracted by Minerven. It also absorbs the bulk of the metal produced by small miners known locally as “artisans.”
Migrating from the big cities in search of jobs, tens of thousands of Venezuelans have headed to Bolivar state to join small mining operations. The operations are technically illegal, but the regime tolerates them as long as they sell the production to the consortium.
According to the sources, the regulations introduced by the regime in 2015 that established the Mining Arc mining zone have created a gold rush similar to the one in California in the mid-1800s.
“It all became a huge business with the creation of the Mining Arc in February 2016. That doesn’t mean that there was no illegal mining previously. But it did not exceed 30,000 or 40,000 illegal miners in the area. Today the number of people participating in this activity should be close to half a million,” said Cliver Alcalá, a sanctioned Venezuelan major general who broke away from the Maduro regime in 2016 and now lives in exile in Colombia.
Miners in the area usually work long and arduous hours under the region’s intense heat to accumulate maybe a gram or two of gold per day, which the miner normally sells in bolivars to buy food in the poverty-stricken area.
The metal is mostly sold to the consortium operators, because they control the cash in the area. Larger miners are also forced to sell them their output because they also have control of the fuel supply in the region, the sources said.
Without that fuel, their pumps and mining equipment would come to a standstill, the sources said.
When that fails, there is also the threat of violence.
Venezuela today is one of the most violent countries in the world, and the worst in all of Latin America, with a rate of 81 homicides per 100,000 inhabitants. That compares to a rate of 30.5 in Brazil, 24.9 in Colombia and 24.8 in Mexico. In the United States, the rate does not reach six homicides per 100,000 inhabitants.
But the violence in the mining city of Callao, where the Domingo Sifontes Industrial Complex is based, is staggering. According to the Venezuelan Violence Observatory, the town suffered 620 deaths per 100,000 inhabitants last year.
In its 2018 report, the observatory said the violence is due to the presence in the mining area of criminal groups, known in Venezuela as ‘Pranes,’ and elements of the Colombian guerrilla group Army of National Liberation (ELN).
According to the sources in the region, the Pranes and the guerrillas collaborate with the regime and serve as enforcers, maintaining order in the mines and making sure that the consortium is respected and obeyed.
“The contribution of the ELN in the operation is that they are the ones who have control over the mines, appeasing the thug, the robber, the drug addict and pacifying the area. They impose order for people to work well,” said another of the sources who spoke on condition of anonymity.
“The Pranes do the same. They maintain order so that no one commits any type of offense or crime, and can work quietly. They do not allow anyone, absolutely nobody, to go there to interfere with the work of the miners,” he said.
The penalty for infractions is often death, he added.
In the past the Pranes have been accused of being behind a series of executions in the area involving dozens of miners.
Journalist Jorge Benezra contributed to this article from Venezuela.
Follow Antonio María Delgado in Twitter @DelgadoAntonioM