The court transcripts from the U.S. trial of a Venezuelan multimillionaire, Franklin Duran, are yielding glimpses into possible corruption in the government of President Hugo Chávez. Mr. Duran is on trial in federal court in Miami on charges related to a suitcase of cash allegedly transported by an associate of his from Venezuela to Argentina for use in Argentine President Cristina Kirchner's 2007 election campaign.
While Mr. Duran's guilt or innocence will be decided by a jury in coming days, the eight-week trial has produced an array of allegations of illegal activity in Venezuela. A key prosecution witness has implicated Venezuelan governors, bankers, National Guard officers and former members of Mr. Chávez's cabinet in a variety of corruption schemes. None of the testimony has implicated Mr. Chávez himself.
Since the alleged crimes occurred in Venezuela, they won't produce any new U.S. charges. They will, however, provide ammunition for critics who say corruption has become rampant in the years since Mr. Chávez took power in early 1999. Testimony during the trial outlined allegations of activity that many Venezuelans believe common, but few have heard in such stark detail by a witness under oath in a U.S. court.
Most of the potentially incriminating testimony about corruption in the government comes from Carlos Kauffmann, Mr. Duran's longtime business partner. Edward Shohat, Mr. Duran's lawyer, says his client isn't guilty, and introduced witness testimony in an attempt to cast doubt on the veracity of Mr. Kauffmann's testimony. Observers expect Mr. Shohat to charge in closing arguments that the prosecution provided no evidence to back up Mr. Kauffmann's claims. Mr. Shohat declined to comment.
The court case has its roots in the 2007 discovery by Argentine customs of a suitcase stuffed with $800,000 in cash at the Buenos Aires airport. U.S. officials say the money came from Mr. Chavez's government for the campaign of Argentina's President Kirchner. The man carrying the suitcase, a Venezuelan-U.S. dual national named Guido Alejandro Antonini, fled to Miami. Mr. Antonini couldn't be reached for comment.
U.S. prosecutors allege that the Chávez government relied on Mr. Duran and Mr. Kauffmann to pressure Mr. Antonini to keep quiet about the origins of the suitcase. Mr. Kauffmann pleaded guilty to acting as an unregistered agent of a foreign government and is now testifying for the prosecution at Mr. Duran's trial.
In his testimony, Mr. Kauffmann described a decade-long relationship with Mr. Duran during which the two men earned tens of millions of dollars arranging kickback schemes for Venezuelan government officials, who also deposited the proceeds with the men for safekeeping. The men provided financial statements to their clients. But their fiduciary standards were lax, Mr. Kauffmann testified. "Apart from doing whatever we wanted with the money, because we had it, we could invest it in whatever we wanted," Mr. Kauffmann testified. "We charged them 10% for managing the money."
According to Mr. Kauffmann, the scheme began in 1998, when the business partners learned through an intermediary that Venezuelan National Guard officers needed help stashing the millions they were making from kickbacks on equipment purchases. Messrs. Kauffmann and Duran offered their services transporting the money and depositing it in secret accounts they managed, according to Mr. Kauffmann's testimony. The pair's National Guard contacts introduced them to a range of new clients, Mr. Kauffmann said, all of whom were managing public budgets that ballooned as spending soared under Mr. Chávez.
The clients, which included two state governors and at least two federal agencies, obtained kickbacks arranged by the pair for depositing their government budgets at certain banks, Mr. Kauffmann testified.
Some of the schemes favored Mr. Chavez's then-finance minister, Tobias Nobrega, according to Mr. Kauffmann's testimony. Messrs. Kauffmann and Duran sought to build a "bond" that might yield "big time favors" from Mr. Nobrega and his senior aides at the ministry, Mr. Kauffmann testified. To do it, they purchased a building for $4 million, and then sold it to the Finance Ministry 15 days later for $9.5 million, according to Mr. Kauffmann's testimony; they gave most of the $5.5 million profit to Mr. Nobrega and his aides.
Mr. Shohat is seeking to convince the jury that Mr. Kauffmann is making these exploits up. For example, Mr. Shohat will point to testimony by a Venezuelan stockbroker whom Mr. Kauffmann described as his "best friend" that he was unaware of the kickback schemes alleged by Mr. Kauffmann, even though his father's real estate company was involved in selling the building to the Finance Ministry. The man also testified that he and Mr. Kauffmann no longer did business together because it infringed on their friendship.
Venezuelan authorities are now investigating possible corruption at the Finance Ministry, focusing on Mr. Nobrega and and an aide. Mr. Nobrega couldn't immediately be reached for comment.
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