Laundering the Bolichicos’ cash: how a Malta firm assisted the Venezuelan elites

How a Maltese firm is believed to have assisted in a money laundering network for the Venezuelan elite, aided by an experienced Swiss banker

'Ethical and sovereign socialist working class': Venezuelan president Nicolas Maduro greets PVDSA workers. The Miami Herald says he is one of the unnamed conspirators in the HSI complaint filed in Miami
'Ethical and sovereign socialist working class': Venezuelan president Nicolas Maduro greets PVDSA workers. The Miami Herald says he is one of the unnamed conspirators in the HSI complaint filed in Miami

The revelation that a Maltese wealth management firm could be implicated in a money laundering network reaching up to Venezuela’s highest echelons – the strongman president Nicolás Maduro – is yet another piece of the jigsaw puzzle of piratic financial elites exploiting corrupt governments and willing conspirators.

What was surprising this week was the quick admission of Matthias Krull, a German banker and resident of Panama, formerly a vice-chairman of the Julius Baer bank, to confirm most of the findings of the United States Homeland Security Investigations’ ‘Operation Money Flight’.

With a confidential source at the heart of the conspiracy, and access to email servers, the HIS investigation revealed a money laundering network led by the so called ‘boliburgués’ – the Venezuelan elite, running through the US, Spain, Malta, and Hong Kong.

Earlier in the week, police swooped in at the offices of Portmann Capital Management, owned by the Swiss financier Kurt Portmann and his son Yves-Alain, to carry out a data extraction of the company’s records. The company was formed in 2011 and banked with Bank of Valletta up until mid-2015, when the bank shut down the accounts and filed a suspicious transaction report with the Maltese FIAU. A site visit by the Malta Financial Services Authority revealed the company had been providing unlicensed payment services, and since then has been fined over €62,000, and ordered to cease activity. Portmann last banked with Sparkasse, an Austrian-owned international bank in Malta.

But central to the money laundering network was Krull – a ‘door opener’ who used the Maltese firm to assist his Venezuelan clients in laundering the cash. 

Portmann Capital Managment's owner Kurt Portmann
Portmann Capital Managment's owner Kurt Portmann

Krull is accused of having conspired to launder hundreds of millions of US dollars along with Jose Vincente Amparan Croquer and six other co-conspirators – known colloquially as the ‘Bolivarian’ bourgeoisie or ‘boliburgués’ or ‘bolichicos’ (boliboys), a term coined by journalist Juan Carlos Zapata to describe the oligarchy created under protection of the Chavez government.

Even Amparan has been associated with Portmann Capital Management.

The embezzlement was made possible through Venezuela’s foreign-currency exchange system under which the government exchanges local currency (Bolivars) at a fixed rate for US Dollars.

According to the US investigators, the fixed exchange rate has been well below the true economic rate by a substantial factor for several years.

“For example, in 2014, an individual could exchange 10 million US Dollars for 600 million Bolivars at the true economic rate. Then, if that individual had access to the government fixed rate, he could convert that same 600 million Bolivars into 100 million US Dollars. Essentially, in two transactions, that person could buy 100 million US Dollars for 10 million US Dollars,” the complaint in court reads.

The difference between the fixed rate and the true economic rate created an opportunity for fraud and abuse, where the Venezuelan officials engaged in these foreign currency exchange schemes in return for bribes and kickbacks.

“These corrupt foreign currency exchange schemes occur in significant amount within Venezuelan state-owned oil company Petroleos de Venezuela, S.A. (PDVSA),” the HSI said – the PDVSA is Venezuela’s primary source of income and dollar and euro currency.

The HSO, which had a confidential source inside the conspiracy, said that Amparan told the source that a fake joint-venture contract had been provided to Portmann Capital Management’s banks in Canada and Malta.

‘Sophisticated’ operator

Krull, a 44-year-old former vice-president of the Julius Baer bank, was described as a sophisticated operator who was well aware of banks’ general due diligence and anti­money laundering practices, including know-your-customer (KYC) requirements.

German banker Matthias Krull
German banker Matthias Krull

Importantly, for one party to wire funds to a third party, there must be some legitimate business justification provided to the bank: for instance, a payment for the purchase of real estate or equipment. A bank will ask for documents supporting the justification, which – depending on the transaction – can be difficult to manufacture; “for instance, a bank may be able to verify whether a supposed real estate transaction took place. This verification poses a problem for money laundering transactions in which large sums of criminal proceeds must be moved around the financial system from one person to another as bribes, kickbacks, transfers, or exorbitant expenditures, for instance.”

So false investments in fake securities are convenient justifications because they are more difficult for a bank to investigate and verify: one party might wire US$30 million claiming this is a loan to a third party, supported by a US$30 million promissory note due at some point in the future, which neither party actually intends to honour.

For the bank, ascertaining the true intent of the parties and the fraudulent nature of the investment is difficult.

Supporting these false-investment laundering schemes are complicit money managers, brokers and banks, operating as a network of professional money launderers.

Corrupt PDVSA exchange scheme

According to the HSI court complaint, the purpose of the money laundering conspiracy was to launder US$1.2 billion in funds embezzled from PDVSA by Venezuelan officials – including by ‘Venezuelan Official l’, now widely believed to be Venezuelan President Nicolás Maduro

The embezzlement operated by way of a PDVSA foreign-currency exchange scheme benefitting a Hong Kong firm called Eaton Global.

The scheme was disguised as a “financing” arrangement using the following three documents:

1. A loan contract between PDVSA and Rantor Capital C.A., a Venezuelan shell company, in which Rantor agreed to loan 7.2 billion Bolivars to PDVSA. The loan contract was executed by ‘Venezuelan Official 1’ and the PDVSA’s vice-president.

2. An assignment contract between Rantor and Eaton Global, in which Rantor assigns its rights as PDVSA’s creditor to Eaton Global, while giving the PDVSA the right to cancel the debt within 180 days by paying US$600 million.

3. Finally, a notice of assignment letter in which Eaton Global informs PDVSA  of the assignment and suggests that PDVSA repay the 7.2 billion Bolivar loan in the Euro equivalent of US$600 million. The letter included instructions for PDVSA to wire the funds to “European Financial Institution 1” – allegedly Portmann’s accounts, for the benefit of Eaton Global.

In short, Eaton Global, which was controlled by members of the conspiracy, received about €511 million Euros from PDVSA after loaning PDVSA about 7.2 billion Bolivars (worth around €35 million) for no more than a few months. The members of the conspiracy split the proceeds between them, including three stepsons of Maduro, known as “los Chamos”.

Francisco Convit Guruceaga
Francisco Convit Guruceaga

To conceal the nature, source and control of the PDVSA funds, the members of the conspiracy included an array of straw owners, bankers, and money managers whose role was to facilitate the laundering.

Krull’s role

Krull is described as the banker and money laundering facilitator for Francisco Convit Guruceaga, his contact to the conspiracy. Until approximately May 2018, Krull was employed at a Swiss bank where he was a managing director and vice-chairman. Krull’s role was that of attracting private banking clients to the bank, primarily from Venezuela.

Described as a ‘door opener’, Krull already knew the co-conspirators dating back several years. Around 2016, one of them contacted Krull about laundering the proceeds of the PDVSA foreign exchange embezzlement scheme.

Krull asked the conspirator for the source of the funds, to which he was given a copy of the PDVSA-Rantor loan contract. Later, Krull was summoned to Venezuela, where he was told that an urgent solution was needed to move the funds.

There Krull met the other conspirators, including Maduro’s stepsons, where an agreement was set out on how to use straw men to receive the cash, including a plan to launder the money through deposits made to a US financial institution.

“Krull knew that he was participating in an illegal money laundering conspiracy and that the funds he was attempting to conceal and transact in were the proceeds of criminal activity and bribery in particular,” the HSI said.

In November 2016, Krull met the HSI’s confidential source in Panama where he said he needed an additional solution for US$200 held in the “European Financial Institution 1” – allegedly Portmann – in the name of the straw owner believed to be holding the cash for Maduro’s stepsons.

Krull sent the confidential source photos of the conspirators’ passports, as well as forwarding an email with documents from Portmann that had been sent to Amparan and other conspirators. In a January 31, 2017 recorded call, the source informed Krull that he is in Miami and both discussed the laundering further. Krull acknowledged receiving money from the “European Financial Institution 1” accounts before, when he described how the wires work.

Perhaps the most incriminating evidence in the hands of the HSI are records obtained from email search warrants that confirm the flow of the PVDSA funds to the defendants and other conspirators through “European Financial Institution 1”. One email included the attachment titled “Operation 600k” which contained the following worksheets:

1. Worksheet ‘Detailed Income from PDVSA’ shows ten transfers from PDVSA from December 29, 2014 through February 3, 2015 totaling €511.9 million.

2. Worksheet ‘Summary of the 600 Operation shows that of the €511m, €20.4 million was assigned to ‘European Financial Institution 1’ – allegedly Portmann – as a 4% fee; €227 million went to two co-conspirators; €159 million to the Maduro stepsons; and €36.9 million as the cost to convert the 7.2 million Bolivars into €511 million.

3. Another worksheet showing how the money moved: One conspirator moved €78.8 million through shell companies Volber, Vontobel and Vencon Holding; another sent dozens of US dollar wires through banks in Malta and Austria, including to aviation and yacht services and brokerage companies in Miami, Florida.

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