Drug kingpin leading Venezuela bond talks has violent streak
VICE President Tareck El Aissami has summoned bondholders to a meeting in Caracas as Venezuela prepares to restructure its crushing debt. For some, the meeting could land them behind bars.
El Aissami, 42, sanctioned by the US Treasury Department this year after accusations he oversaw a cocaine- smuggling network, is one of the nation’s iron- fisted political operatives. Often in charge of delivering President Nicolas Maduro’s most critical messages, he blasts critics publicly, exposing supposed conspiracy rings and threatening legal action against dissident leaders from National Assembly President Julio Borges to Luisa Ortega, the publicprosecutorturned- whist leblower.
Now, he’s in charge of a delicate financial dance in which investors and funds risk running afoul of the US Office of Foreign Assets. Not only do US sanctions prohibit Americans from receiving new bonds that Venezuela would hand them as part of a restructuring, but El Aissami is designated as a narcotics trafficker under the Kingpin Act. American corporate officers dealing with him run the risk of fines and prosecution of as much as US$ 5 million and 30 years in prison.
“Nobody will want to go near something that could be an OFAC violation,” said Robert Koenigsberger, chief investment officer at Gramercy Funds Management, which dumped its Venezuela debt a year ago.
“If the Venezuelans say, ‘We want to talk over the restructuring with you,’ I’d say, ‘ I’m not letting you in the building.’ I like sleeping in my own bed at night.”
Maduro, the handpicked successor of the late socialist firebrand Hugo Chavez, had rejected calls to default after the price of oil, Venezuela’s lifeblood, collapsed three years ago and the economy crumbled under the weight of rigid government controls.
The bonds had enriched Wall Street traders even as Venezuelans went hungry, and they were one of the more profitable trades in emerging markets. Now, though, even Maduro has determined that the debt load is unsustainable, and creditors must deal with an unpalatable negotiating partner.
El Aissami sat by Maduro last week during a marathon televised address in which the president said a US$ 1.1 billion ( RM5 billion) principal payment on bonds from state-run oil company PDVSA that was due Thursday would be the last one made before the country begins talks with creditors.
“We will convene a renegotiation of our sovereign debt, a refinancing that will open up our horizons to keep investing in our social model, to keep guaranteeing the people’s protection of wages, labor and medicine,” El Aissami said. He called it a “historic and sovereign decision.”
Venezuelan debt is teetering toward default, with average prices near 30 cents on the dollar, a record 40.8 percentage points of extra yield over US Treasury bills to hold the country’s bonds.
Far from Wall Street, reaction was similarly unenthusiastic.
“Look, I don’t know what to say about the accusations; everyone’s got an opinion of him, but I don’t trust him,” said Luis Hernandez, 41, a bus driver in the sprawling Caracas slum of Petare. “Things are bad: There are no tires, no work, we’re against the wall and he’s the one negotiating? It feels like we’ve been abandoned and it will only get worse.” — WPBloomberg