Bancorp of Nicaragua reached by US sanctions to PDVSA and Albanisa

 

For a decade, the bank has managed without supervision the billions in funds of the Venezuelan cooperation, but now it is trying to disassociate.

After the announcement of sanctions, shareholding of Albanisa and PDVSA or subsidiaries is denied.

 

By Confidencial

HAVANA TIMES – US sanctions to Petroleos de Venezuela SA (PDVSA), that already include Alba of Nicaragua (Albanisa), have also reached the Banco Corporativo SA (Bancorp) and all majority-owned subsidiaries, announced the Deputy Secretary of State for the Western Hemisphere Affairs, Kimberly Breier on Friday, Feb. 8th.

The bank that for a decade managed the billions in funds of the Venezuelan cooperation, now dwindling, issued a statement after the announcement of the eventual sanctions, in which it tries to disassociate itself from any shareholding relationship with “PDVSA, Albanisa or subsidiaries.”

However, since its installation their participation in those companies was public knowledge, functioning as the financial arm of Albanisa, and even the president of Petroleos de Nicaragua, vice president of Albanisa and treasurer of the FSLN, Francisco “Chico” Lopez, was part of its board of directors.

“With a police state, arbitrary arrests and daily attacks on the free press, Daniel Ortega, an ally of (Nicolas) Maduro, continues his campaign of repression in Nicaragua. The sanctions against PDVSA are also aimed at Albanisa, Bancorp and all majority-owned subsidiaries. We will continue to hold the Ortega regime accountable,” Breier announced through her Twitter account on Feb. 8th.

That same Friday afternoon, Bancorp published a “clarifying note” alleging that it has no connections with PDVSA, Albanisa or any subsidiary.

“Bancorp is a private bank of national capital where there is no shareholding in Albanisa, PDVSA or any subsidiaries of these. In the same way, we clarify that these companies have no impact on our operations,” says the note.

In January 2018, a report by Confidencial revealed that after closing the accounts in three Nicaraguan banks, for fear of US sanctions against PDVSA, deposits of Bancorp the so-called Albanisa bank grew by 225%, according to the data of the Superintendency registered between January and November of 2017.

The increase, which then amounted to 5.39 billion cordobas*, didn’t compare with the pace of growth of any other Nicaraguan bank, which would only be explained by Alba de Nicaragua SA (Albanisa)—Bancorp’s main investor—having to hastily withdraw the funds it had in three other banks of the national financial system, when they closed the accounts after the United States implemented sanctions against its parent company, Petroleos de Venezuela SA. 

The deposits in Bancorp grew by 471.7 million cordobas in the month of December of 2017, completing an accumulated increase of 236.5% during the course of the year.

The bank of Albanisa

Three months before that date, the composition of the Board of Directors of Bancorp had changed, when suddenly the departures of the vice president of Albanisa “Chico” Lopez; the President of the finance company Caruna, Jorge Martinez Gonzalez, and of one conspicuous business operator of the private sector, were recorded.

According to the data of the Superintendency of Banks and other Financial Institutions (Siboif), the current Board of Directors is composed of Luis Orlando Barcenas Reyes, as President, and Francisco Quinonez Murphy, vice president.

In 2015, the Venezuela government indicated to its local partners that all assets and liabilities related to the oil cooperation scheme should be transferred from Caruna to Albanisa. The binational capital company, in which Venezuela is a majority shareholder, thus came to manage billions of cordobas, part of which was transferred to accounts in Bancorp, its bank, which also came to manage trust funds, among other financial operations. However, Albanisa continued to maintain most of its deposits in three other private banks.

Thus, the history of Bancorp began. On April 30, 2015, it reflected total deposits for a little more than 1.3 million cordobas, which a month later, as of May 31, amounted to almost 2,676 million cordobas, that is a growth of 2,058%, presumably, after beginning to receive the first deposits from Caruna. It closed 2016 with 4.293.3 billion cordobas in its coffers. Then October and November of 2017 were spectacular months, with funds raising 2.150.2 billion cordobas and 1.866 billion cordobas respectively, to close November 2017 with 9.683 billion cordobas.

The sudden increase coincided then with the revelation of a banking source, which confirmed to Confidencial that in November, senior representatives of Lafise, Banpro and BDF informed the vice president of Albanisa “Chico” Lopez, of the closure of his accounts to avoid being implicated in the US sanctions against PDVSA, the Venezuelan company that owns 51% of Albanisa shares, in partnership with Petronic. Months later, Lopez was sanctioned by the United States, along with the now director of the National Police, Francisco “Paco” Diaz, and the secretary of the Mayor’s Office of Managua, Fidel Moreno.

On September 7, 2017, the United States Embassy in Nicaragua, and the American Chamber of Commerce of Nicaragua (AmCham), organized a video conference with an official of the US Treasury Department in Washington, to discuss the sanctions against Venezuela. The source of these sanctions was is an executive decree signed by President Donald Trump on August 25 of that year, which, among other decisions, prohibits “dealings on new debt securities and shares of the Government of Venezuela and its corrupt state oil company (PDVSA).”

Although at that meeting, to which lawyers and senior representatives of national banks were also invited, it was not expressly stated that Albanisa was sanctioned, it was advised that United States citizens and entities “should review closely all transactions with Albanisa to ensure compliance with OFAC sanctions.”

The big businesses of Caruna

The trusts of the “Caja Rural Nacional” (CARUNA) managed by the “Banco Corporativo” (Bancorp), were by August the most profitable operation of that bank which operates as the financial arm of Albanisa, according to Bancorp’s financial statements in 2017, to which Confidencial had access.

The report, prepared by the accounting firm Grant Thornton, points out that the administration of the funds in trust reported to Bancorp the sum of 64.3 million cordobas, which represent an explosive growth of 1,148.2% when compared to 5.6 million cordobas deposited for the same reason in 2016.

The document reflects the importance of the management of these contracts, by specifying that “these operations have a significant effect on the net income of Bancorp for the year, since the total amount for commissions represented 70% of the various operating revenues, and 38% of the total financial income recorded” in 2017.

In 2016, the aforementioned Bank handled two trust funds of Caruna: one for “Credit Portfolio Recovery and Administration,’ and another for “Fund Management,’ which together totaled 45.684.6 billion cordobas, equivalent to about 1.55 billion dollars.

Both trusts were cancelled in advance, the first dated October 5, and the second on November 28, both of last year.

Although the report did not detail the reasons for the cancellation of both trust agreements, it does say what happened next: Caruna and Bancorp signed five new ‘irrevocable trust agreements,” with which the amount and depth the operations was broadened.

These five new agreements are designed to ‘recover institutional credit portfolio;’ ‘recover private credit portfolio;’ ‘housing programs;’ and two for ‘administration and recovery of funds.” The sum than Bancorp managed for Caruna thanks to these five instruments is of 75.449.3 billion cordobas, equivalent to 2.450.4 billion dollars.

The document was received and approved by the Bank’s Board of Directors, and endorsed with its seal and signature, by three of its highest officials: its General Manager, Luis Morales; the Financial Manager, Walter Baltodano, and its General Accountant, Olga Maradiaga.

*(1 USD = 32.85 cordobas on Feb. 11, 2019)