Venezuela: The Citibank Building Affaire
Jose Mora, Caracas Chronicles
Picture for a second, if you will, a building; a building worth 5 million dollars (US that is, no their Canadian, Jamaican or even Australian counterpart). Imagine, it is owned by an international Bank, which decides to put the building up for sale, because their current needs are not met by an aging building located by the way in a neighborhood, which has, by the way, become less and less desirable. Let's say the bank decides to offer it to the best and richest customer in the country: the Venezuelan Government, in the figure of the Ministry of Finances. "Not interested," is the Ministry's answer, "not interested."
Time passes, the building is put out in the market and within a few days it is bought by a third party for the 5 Million it was going for. In cash. That figure translates into 9.6 Billion Bs. at the official rate or 14 Billion calculated at a conservative black market rate of 2800 Bs per US$. Nothing wrong with that. A simple real estate transaction, right? Well, not exactly, not after what happened next. What if I were to tell you, that the person who bought the building for 5 Million, you know, "the third party", turned that 5 Million purchase into an instant 100% gain on his original investment? How, you ask, could that be possible? How can someone double his original investment within a few days?
Well, here's how (and please tell me if you think there's anything wrong with this): Let's say the investor who bought that magnificent piece of real estate, sold that same block of concrete, steel and glass to ... (fanfare! No, better yet, big fanfare!) yes, you guessed right, the Ministry of Finances. Let's say, hypothetically, that "third party" sells the building for 9.6 Million Dollars to the Ministry. He is paid 5 Million in cash and the rest in government bonds. "Aha, there's something rotten in your story!" you say, "that does not add up to 100% gain! GOTCHA! That is officially only a 92% gain!". Well, I know, I was just rounding numbers, but here's the little detail that throws a monkey wrench into your line of thinking: Imagine the 4.6 Million $ in government bonds, to be paid in hard currency whenever they expire, were not counted at their face value, but at a cool 60%.
"What do you mean?" you ask. Exactly that is what I mean, 60% of its face value: for every dollar owed to that person, he got 1.66 dollars in government bonds. That adds up to 7.64 Million dollars. A 152% return on their investment. Not 52, 152%. "How is that possible?" you ask "How could the Ministry of Finances not figure out there was something wrong with that deal?" My answer to you: there is something rotten in Denmark, and it sure as hell ain't the herring.
Note: If you do the math, it is not a 7.64 Million gain, it is only 7.636.000 US$, I rounded up 4.000 US$ for dramatic effect.
Satire Alert: This is a piece of satire and does not exactly reflect the facts. I recommend the reading of this to clarify dates and facts.
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