Venezuela’s Asset Forfeiture Law Unlikely to End Corruption

Venezuelan president Nicolas Maduro (c)

Venezuela’s asset forfeiture law may serve as one more instrument for the persecution of the opposition and rivals within the ruling party.

By InSight Crime

HAVANA TIMES – Venezuela’s National Assembly has passed an asset forfeiture law aimed at strengthening the fight against corruption. But in the hands of a corrupt state with politicized institutions, the law is likely to be ineffective.

The asset forfeiture law was approved on April 27 by the Venezuelan legislature, controlled by the ruling United Socialist Party of Venezuela (Partido Socialista Unido de Venezuela – PSUV). The legislation permits the Attorney General’s Office to request the confiscation of assets allegedly linked to corruption or other crimes without the need for a criminal conviction.

Around 10,000 assets linked to corruption and other illicit activities are already registered and could be subject to this law, said Congressman Diosdado Cabello, who introduced the legislation.

President Nicolas Maduro signed the law into effect on April 28, calling it “the first law to strike a hard blow against the corrupt mafias that have tried to position themselves in political and national life.”

The law passed amid a large anti-corruption operation against state institutions. Sixty-one people had been detained as of April 19. Among them are former officials of the state-owned oil company Petróleos de Venezuela (PDVSA); the Superintendency of Cryptocurrencies (Superintendencia Nacional de Criptoactivos – Sunacrip); the mining conglomerate the Venezuelan Corporation of Guyana (Corporación Venezolana de Guayana – CVG); as well as mayors, judges, and businessmen.

The law incorporates elements of the Model Law on In Rem Forfeiture developed by the United Nations Office on Drugs and Crime (UNODC).

Implementing similar forfeiture laws has proved difficult in Latin America and the outlook for Venezuela’s new law is all the more difficult considering the country’s extremely divided political sphere, the absence of the rule of law, corruption in its institutions of justice, and a range of other circumstances particular to the country.

Below, InSight Crime looks at four reasons why the application of the law could fail.

Politicized and Corrupt State Institutions

Venezuela’s asset forfeiture law may serve simply as one more instrument for the persecution of members of the opposition and internal rivals within the ruling party.

The Attorney General’s Office, the institution charged with enforcing the new law, is headed by Tarek William Saab. Prior to his appointment as attorney general, Saab was a prominent member of the ruling PSUV, raising serious doubts as to his impartiality.

The judges in charge of ruling on the law are part of a judiciary that has repeatedly shown its partisanship toward the Maduro government. In 2022, Venezuela ranked last out of 140 countries analyzed in the World Justice Project’s Rule of Law Index.

Mismanagement of Seized Assets

There is a significant risk that confiscated assets may be subject to corruption or mismanagement by police officers and the authorities in charge of administering them.

In the past, assets seized from drug traffickers by the National Anti-Drug Office (Oficina Nacional Antidrogas – ONA) — including houses, airplanes, and yachts — have been used freely by military and civilian officials, according to an investigation by Venezuelan newspaper El Nacional.

Houses seized from drug traffickers have been used as torture centers by the General Directorate of Military Counterintelligence (Dirección General de Contrainteligencia Militar – DGCIM), an intelligence institution that often targets dissidents, according to a DGCIM officer who defected.

This misuse of seized assets could be repeated under the new law.

Corruption Assets Abroad

The law will only apply in Venezuela, but many of the assets and money resulting from corruption in Venezuela are located abroad.

Countries abroad opened 108 cases related to corruption by Venezuelans between 2009 and 2021, according to the Venezuelan chapter of Transparency International. The cases included money laundering, bribery, and embezzlement of Venezuelan state funds. Of these, 48 were opened in the United States, with almost $1.5 billion recovered. However, the law approved in Venezuela would not apply to these trials.

Three emblematic corruption cases brought by US authorities against Venezuelans underscore the limits of the law in recouping funds.

Alejandro Andrade, the former head of the treasury, pleaded guilty to taking in bribes in 2018. He is now serving a 10-year prison sentence in the United States.

Raúl Gorrín, a businessman with links to the Venezuelan government, was accused in 2017 of paying millions of dollars in bribes to Venezuelan officials. He is included on the most wanted list of US Immigration and Customs Enforcement (ICE).

And Operation Money Flight, a money laundering investigation centering on PDVSA, led to a guilty plea by the oil company’s former general counsel, Alvaro Ledo Nass, who admitted to taking $11.5 million in bribes, among other crimes.

Properties and assets in these three examples alone are calculated to be worth at least $277 million, according to Transparency International’s local chapter.

Inoperative Bureaucracy

Forfeiture laws in Latin America have frequently proved ineffective, in large part because they rely on slow-moving bureaucracies staffed with underpaid workers ripe for corruption. In Venezuela, salaries are low and state apparatuses are extremely politicized, adding to concerns the law’s theories may not be put into practice.

Mexico implemented a similar law over a decade ago, but during the first six years of its implementation, only 64 asset forfeiture actions related to organized crime were filed, reported Excelsior. 

The successful implementation of Venezuela’s asset forfeiture law, where other Latin American countries have failed, seems unlikely. While Maduro supporters are selling the law’s passing as a panacea against corruption, it looks more like rhetoric.

Read more investigative reports on InSight Crime.