Holding those involved in Venezuelan State Organized Crime accountable from abroad has inherent challenges, including international cooperation and asset recovery. These can arise even amongst countries that share as a declared foreign policy priority the rule of law in Venezuela. This article sheds light on the challenges, looking at these through the prism of three recent cases involving the United States and Spain.

↑ “Inverted rule of law” and Venezuelan State Organized Crime

Actors involved in State Organized Crime have a paradoxical relationship with State authorities. They require certain State components to enact and enforce the law to be relatively strong to repress opposition and protect themselves against rivals in order to maintain power. On the other hand, they also require the same State components be weak, to ensure continued impunity of their own criminal activities. The balancing strategy resulting from this paradox is well reflected in the words of former Peruvian President Óscar Benavides “for my friends everything, for my enemies, the law.” This kind of governance logic generates a ruling system of “inverted rule of law.” The equilibrium of power resulting from this turns one of the fundamental tenets of democracy upside down, that one according to which no one is above the law.

Venezuela’s ruling system of “inverted rule of law” is characterized by an erosion of the rule of law and of democratic institutions. This has led to a multidimensional crisis with an overarching human rights impact, including on those who oppose the ruling system. Moreover, the situation has become a destabilizing factor in the Latin American region. Reliable sources (including judicial files and expert investigative reporting) indicate that routine criminal exchanges involving high-level public officials and State assets on a large scale are at the core of Venezuela’s ruling system. These illicit exchanges fuel the country’s present crisis.

According to the sources, high-level Venezuelan public officials and their accomplices have been engaging – at the national and transnational level – in diverse criminal activities. These include: (i.) corruption (e.g. kickbacks paid in operations of State-run enterprises); (ii.) related economic crimes (e.g. fraudulent plots in state-run economic activities); (iii.) looting of Venezuela’s natural resources (e.g. illegal extraction of gold and disguising its true origin, in particular, regarding the so-called “Mining Arc of the Orinoco River National Development Strategic Zone”); (iv.) trafficking in illegal markets (e.g. illicit traffic in narcotics and trafficking in firearms); and (v.) professional schemes of international money laundering. Criminal proceedings currently underway in the United States and Spain provide further insight as to the magnitude of the assets stolen by Venezuelan high-level public officials from the State and the spectrum of their criminal activities.

↑ Extensive impunity

Venezuelan State Organized Crime activities profit from the impunity generated by the country’s ruling system of “inverted rule of law”; the reasons for this situation are varied. The Venezuelan judiciary is prone to corruption and lacks independence and the Attorney-General’s Office has regularly failed to investigate and prosecute criminal actors who support the country’s ruling system. Moreover, actors who benefitted from Venezuela’s ruling system to engage in State Organized Crime have left the country and –for whatever reasons– now oppose and/or rival the same system. These actors often cannot be extradited to Venezuela due to recurrent violations of due process rights of political opponents or persons perceived as opposed, or posing a threat, to the country’s ruling system. This is, for instance, the case of the former National Treasurer Claudia Patricia Díaz Guillén. The Spanish Audiencia Nacional rejected her extradition to Venezuela on the basis that her human rights would be at risk if she were extradited.

As a result, Venezuela’s ruling system of “inverted rule of law” generates an extensive impunity balance for current and former Venezuelan high-level public officials. Venezuelan authorities do not hold accountable those who commit acts of State Organized Crime and support the country’s ruling system. Nor can Venezuelan authorities hold accountable those, who –now opposing the ruling system– seek safe haven outside Venezuela for their lawless conduct and illicit wealth previously accumulated while performing prominent public functions in the country’s ruling system. This is where investigations and prosecutions outside Venezuela come in.

↑ Criminal proceedings in the United States and Spain

Among the criminal proceedings currently underway outside Venezuela, cases in the U.S. and Spain against those allegedly involved in Venezuelan State Organized Crime are of particular interest. First, it appears that proceedings of major cases in Spain were encouraged by U.S. authorities. Second, cases in both countries overlap in terms of facts and individuals charged by the respective authorities. Third, the monetary amounts involved in the criminal activities subject of the criminal proceedings in the U.S. and Spain shed light as to the magnitude of the assets stolen from Venezuela.

↑ Cases in the U.S.

U.S. authorities investigate and prosecute current and former Venezuelan high-level public officials (and accomplices) for a vast series of criminal activities. These range from money laundering and foreign corrupt practices, to the import of cocaine and narco-terrorism conspiracies. A considerable part of the U.S. efforts related to foreign corrupt practices is covered by three case-clusters. One cluster was filed in the Southern District of Texas, including an indictment unsealed recently. Two clusters were filed in the Southern District of Florida. The case clusters encompass professional schemes of international money laundering amounting to several billion US dollars and international bribery in the context of the operations of Venezuelan State-owned energy companies. At the time of writing, the cases involve a variety of shell companies worldwide, bank accounts and properties, and approximately 30 individuals of different nationalities and residencies. Fourteen of these have pleaded guilty and three persons have been convicted.

↑ Cases in Spain

Criminal proceedings in Spain cover two major cases. At the time of writing, both remain in the pre-trial stage at Central Examining Courts sitting at the Audiencia Nacional. After two years of investigations, no indictments have been presented. The first case (“case A”) concerns professional schemes of international money laundering and kickbacks paid by Spanish contractors to former Venezuelan high-level public officials of the country’s energy sector. The second case (“case B”) involves professional money laundering at the international level related to another series of criminal activities. These include fraud schemes based on currency exchange rate manipulations in loan contract transactions with Venezuelan State-owned energy companies denominated in foreign currency, inter alia. Both cases involve hundreds of millions US dollars. An additional (third) smaller case, involves a former Spanish ambassador to Venezuela and his son. They allegedly received payments from a Venezuelan State-owned energy company in exchange for phony consulting work. Like in the three U.S. case-clusters, the cases in Spain include a variety of worldwide shell companies, bank accounts, properties and individuals of different nationalities and residencies. Some of the individuals being investigated in Spain are also involved in the U.S. case-clusters, in particular, two former Venezuelan high-level public officials.

The Spanish investigations were initiated after the U.S. Department of the Treasury provided a Notice of Finding regarding an Andorran bank (parent of a bank registered in Spain) which had facilitated the movement of 4.2 billion US dollars in transfers related to Venezuelan money laundering, including financial flows to Spain. Reportedly, the U.S. Department of the Treasury had issued the notice only after Spanish financial intelligence authorities had ignored, for years, suspicious financial transaction data related to the case. Parallel to this, U.S. authorities also provided the Spanish authorities with a consistent body of conclusive and presumptive evidence on the criminal activities.

↑ Closing safe havens

The cases on both sides of the Atlantic provide insight as to the spectrum of the criminal activities and the magnitude of the stolen State assets. The cases also shed light as to the role of U.S. authorities in generating investigations of Venezuelan State Organized Crime actors by third States. Moreover, the cases illustrate how the relationships within Venezuelan State Organized Crime schemes are multi-jurisdictional by nature, and provide an idea of their scope.

As to the magnitude of the State Organized Crime within the Venezuelan energy sector, it has been described as “a multi-jurisdictional corruption enterprise that makes Odebrecht look like a downtown Caracas pickpocket.” It is an interesting comparison considering that the “Odebrecht” precedent has been called by the U.S. Department of Justice “the largest foreign bribery case in history.” In contrast to the Odebrecht corruption cases and investigations, at the time of writing, many cases regarding Venezuelan State Organized Crime are only beginning to be uncovered. Yet, the cases in the U.S. and Spain have made one thing clear. Altogether, operations of Venezuelan State Organized Crime involve illicit transnational relations at the global level between actors of different nationalities and residencies, be they main figures, active facilitators or enablers.

All this points to how investigations and prosecutions by third States of those involved in Venezuelan State Organized Crime cannot be achieved without effective international cooperation between countries. This is the reason why the UN Convention Against Transnational Organized Crime (UNTOC) and the UN Convention Against Corruption (UNCAC), both ratified by Spain and the U.S., require States parties to provide mutual legal assistance, strengthen law enforcement cooperation and even encourage States parties to establish joint investigative bodies. International cooperation between States is an essential prerequisite for overcoming technical challenges in law enforcement raised by the multi-jurisdictional nature of Venezuelan State Organized Crime. To render lasting results, international cooperation in justice initiatives from abroad seeking accountability outside Venezuela should always take into account that Venezuelan State Organized Crime profits from an extensive impunity balance that shields the actors residing in and outside the country from accountability and justice inside Venezuela.

Neutralizing the prevailing impunity balance for Venezuelan State Organized Crime can only be achieved if safe havens outside Venezuela are effectively closed. This is precisely the reason why UNTOC and UNCAC contain anti-safe-haven provisions on jurisdiction (article 15.4 UNTOC and article 42.4 UNCAC), as do other UN Conventions (primarily, linked to the fight against terrorism, but also in matters of illicit traffic in narcotics). These provisions regulate the jurisdiction of States Parties, regardless of the nationality of the offender, if present on the State’s territory. This includes compulsory treaty-based jurisdiction under the so-called “Hague Model,” whether or not the offence has been committed on the State’s territory and even without having denied extradition to other States. In the event that a request for extradition is made, the State party is obliged to either extradite the individual to the pursuing State or take good faith measures toward prosecution under its own judicial system (aut dedere aut judicare). While providing a fundamental mechanism for closing safe havens, the principle to extradite or prosecute often comes hand-in-hand with issues between States.

↑ Case studies

So far, the cases against Venezuelan State Organized Crime pending in the United States and Spain have benefited from a certain degree of cooperation between both countries (in particular, relating to international police cooperation). Yet, the cases of Javier Alvarado Ochoa and Nervis G. Villalobos Cardenas, former Venezuelan high-level public officials, illustrate that international cooperation between the U.S. and Spain is not without challenges. Both were indicted in the U.S. case cluster filed in the Southern District of Texas, and have resided, on and off, at least since 2014 in Spain. Reportedly, they have both invested millions of euros in property. Both are currently under investigation by the Spanish authorities. In addition, a third case emerged recently, involving former top Venezuelan military intelligence officer Hugo Armando Carvajal Barrios.

↑ The Alvarado Ochoa case

On September 13, 2019 U.S. authorities unsealed an indictment related to the case cluster filed in the Southern District of Texas against Javier Alvarado Ochoa, former Venezuelan Deputy Minister for electric power development. By then, Alvarado Ochoa and Nervis Villalobos Cárdenas, former Venezuelan Deputy Minister for Energy and Mines, had been under investigations under Case A in Spain for over two years. Weeks before the indictment was filed (still sealed at that point), Javier Alvarado received Spanish citizenship. Subsequently, he was arrested (May 9, 2019), both for the purpose of extradition to the U.S. and for the case pending against him in Spain. At the time of writing, Alvarado Ochoa remains in custody. Alvarado’s new Spanish-Venezuelan double nationality renders his extradition to the U.S. de facto considerably more difficult. This due to the restrictive handling of extradition of Spanish citizens in both Spanish law and extradition law in force between Spain and the U.S. as well as to longstanding extradition and prisoner-transfer issues between Spain and the U.S. involving Spanish nationals, including those with a double nationality.

↑ The Villalobos Cárdenas case

On October 26, 2017, Spanish authorities arrested Nervis Villalobos Cárdenas (former Venezuelan Deputy Minister for Energy and Mines). Previously, the U.S. had requested Spain to extradite Villalobos Cárdenas, based on an indictment related to the case cluster filed in the Southern District of Texas (superseded by the same indictment that –now also– includes Alvarado Ochoa). The Spanish authorities decided that Villalobos’ extradition would be postponed due to pending criminal proceedings against him in Spain (cases A and B). This decision was consistent with the position of the Special Prosecutor for Corruption and Organized Crime at the Office of the Attorney General of Spain, José Grinda González. Grinda González alleged that the “extradition to the U.S. would lead to a more difficult trial [and] that [this] would constitute a breach of international obligations arising, inter alia, from [the fact of] Spain belonging to the OECD [emphasis added by author].” This argument might appear convincing at first sight, given that –some 17 years after the relevant law came into force– Spain had prosecuted only one case for bribery of foreign officials. Yet, the development of the Villalobos Cárdenas case following the decision to postpone his extradition to the U.S. contrasted sharply with the will expressed by the Special Prosecutor in complying with Spain’s international obligations.

Following the postponement of Villalobos’ extradition to the U.S., Spanish judges released Villalobos Cárdenas from pre-trial detention on two occasions in 2018. They argued that presumptive evidence against him was not strong enough to hold him in custody. In this context (more than two years after his first arrest in Spain), U.S. authorities requested his temporary surrender for at least 12 months. Subsequently, an Examining Court sitting at the Spanish Audiencia Nacional decided that a temporary surrender could be granted, if only for six months. Though at first glance this appears as a concession to the U.S. request, such a period usually does not allow for trials of such complex cases to be completed. Especially if one bears in mind that, at that point, cases against Villalobos Cárdenas in Spain had not moved from the pre-trial stage for over two years. Additionally, the second division of the of the Spanish Audiencia Nacional’s Penal Chamber revoked, on appeal, the decision to extradite him to the U.S. temporarily. This was done noting a lack of “binding commitment” of the U.S. to return Villalobos. In addition, after two years of no visible success of Spanish investigations that had initiated only once U.S. authorities had made public their findings following inattentive Spanish financial intelligence, the Audiencia Nacional argued that Villalobos’ temporary extradition to the U.S. would generate “a significant delay in the proceedings followed in Spain, whose completion [while being] undoubtedly complex, is a priority.”

Moreover, it is surprising to note that Villalobos Cárdenas, still under investigation by Spanish authorities and indicted by U.S. authorities, at the time of writing, is not being detained preventively – albeit Spanish authorities have retained his passport. This despite the special circumstances of the case, in particular the risk of tampering with evidence, influencing witnesses and other forms of obstructing justice. In this context, investigations of the Spanish Audiencia Nacional into the recent death in Madrid of one potential witness related to the Villalobos Cárdenas case are a case in point of this concern. Finally, it is worth noting that, according to his own statements made to the press, just like in the case of Alvarado Ochoa, Villalobos Cárdenas is currently seeking Spanish citizenship.

↑ The Hugo Carvajal case

In addition to the challenges in international cooperation between the U.S. and Spain related to Venezuelan State Organized Crime that are apparent in the cases of Alvarado Ochoa y Villalobos Cárdenas, recently a third major case has come to light. The case involves charges by U.S. authorities for importing cocaine and narco-terrorism conspiracies against Hugo Carvajal, former Venezuelan top military intelligence officer. He was arrested in Spain in April 2019, one month before Spanish authorities arrested Alvarado Ochoa. In a judicial decision from September 16, 2019, the third division of the Audiencia Nacional’s Penal Chamber rejected a U.S. request to Spain for the extradition of Hugo Carvajal. Of particular concern are the reasons given by the Audiencia Nacional’s third penal division in the case. Not only does it invoke the “military offense exception” –in today’s extradition practice scarcely relevant– against the U.S. extradition request, but it also suggests that the U.S. request was motivated by political aims. The decision erred in law at all levels, as is further explained by the author in a separate article.

Reportedly, the decision of the Audiencia Nacional’s third penal division created frustration among U.S. authorities, within a context of general discontent about Spain being a destination for Venezuelans who are able to shelter the funds acquired through the theft of State assets. Further grounds for discontent about Spain emerged after the plenum of the Audiencia Nacional’s Penal Chamber reversed on November 8, 2019 the decision of its third division (Auto no. 77/2019). At this stage, Carvajal reportedly had already prepared his escape. At the time of writing, he remains untraceable for the Spanish authorities. The U.S. Special Representative for Venezuela, Elliott Abrams, called the disappearance of Carvajal as “quite embarrassing for the Spanish government,” commenting, “they went to his home and, what a surprise, he was not there.” Given Carvajal’s ties to the Spanish intelligence service and his professional background, the risk that he would evade an arrest for the purpose of extradition to the U.S. was indeed evident. It is also fair to say that the Hugo Carvajal case is a clear marker of the issues in international cooperation in criminal matters between Spain and the U.S. related to Venezuelan State Organized Crime.

↑ Conclusions

The cases analyzed show that closing safe havens for Venezuelan State Organized Crime actors is no easy task, at least, between the U.S. and Spain. Not only do the corrupt actors rely on global networks to launder large amounts of money siphoned off from public services away from the Venezuelan people. As has become apparent, these actors also seem to profit from challenges in the field of international cooperation in criminal matters between the U.S. and Spain, in particular regarding the principle to extradite or prosecute (aut dedere aut judicare). It appears that Venezuelan State Organized Crime actors residing in Spain seek safe haven not only from Venezuelan prosecution, but also from being held accountable for their crimes by U.S. authorities.

Difficulties in coordination between States are not infrequent in international cooperation in criminal matters, including in corruption matters. However, it is surprising that a common political objective, such as ensuring the rule of law in Venezuela, could cause such challenges between friendly nations and allies. Proceedings regarding Hugo Carvajal, Villalobos Cárdenas and more recently Alvarado Ochoa are a case in point. To ensure that the cases do not remain in impunity, Spain must take good faith measures toward prosecution and ensure due diligence or extradite these persons to the United States. Failing to do so conflicts with Spain’s multilateral and bilateral obligations in criminal matters, including in transnational organized crime and corruption matters regarding the principle aut dedere aut judicare. What is more, it could create a risk that Spanish jurisdiction could be perceived as a safe haven for those involved in Venezuelan State Organized Crime.