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Inside, confidential and off the record


Con Men

Our friend who writes Setty's Notebook blog has writen a very interesting story on the wheels and deals of today's white collar criminal elite in the energy industry.

How long can Arevenca con men keep winning?

Good news! Arevenca and China signed an oil deal for $200 billion a year over 10 years . That press release also has a video report .

If you are asking, “who is Arevenca,” all I can say is, don't you know? Haven't you heard of this vast multinational vertically integrated oil company, with its 2.2 million barrels a day of refining capacity (more than 2% of world capacity), a fleet of 72 ships, and plans to build a 2 million barrel-a-day refinery in Côte d'Ivoire? How could you possibly have missed it?

Actually it's pretty easy to miss, because the whole thing is a transparent scam. Arevenca is nothing but a website full of lies and one or more con men who travel the world seeking suckers and trying to sell non-existent oil to hapless marks. They are now facing a $100 million lawsuit in New York — possibly from another gang of scammers — even as they try to move on to new tricks, namely starting an airline in Aruba.

The signs of Arevenca's fakeness are there for all to see.

- The U.S. operation has a fax number but no phone number. There's also a street address without a city.

- The Venezuela contact info gives a phone number on Isla Margarita to go with an address in Cabimas, on the other side of the country. This is still a step up from a few years ago, when it had an 11-digit Venezuela number, even though all phone numbers in that country have 10 digits.

- The website says the Aruba office is in something called the Arevenca Building, at LG Smith Boulevard #60 in Oranjestad. Oddly, everyone else seems to call it the Marisol Building. Plenty of companies are based there, but it is amusing that Stanford Group Aruba N.V. was one of them.

- The Madrid offices are conveniently shared with a car rental company , engineering company , and something called Ibercaribbean Trading .

- They claim to have 72 ships , even though I can't find any list of the vessels, and shipping registries don't turn up any hits on the name Arevenca.

- Grades of fuel for sale that are only available from scam artists — along with something called “ pet cock ,” perhaps related to “pet coke.”

- The PR video about the $2 trillion oil deal can be found on the EFE YouTube feed. However, this version is posted on the Youtube channel of Jago1717 , the webmaster of various small business websites. In his channel, the Arevenca news comes right after a small dog playing with a bone .

- The unencrypted registration form asks all comers for information that no one should ever give to anyone without due diligence, such as passport number, full bank account details, and banker's name. Note that refiners such as Exxon Mobil, Valero and PDVSA have no comparable form on their public websites.

- Bizarre change of business: A company called Arevenca shows up in Venezuelan court records as as a sand and gravel company. The name itself is short for Arenera de Venezuela, Corporacion Compañía Anonima. Starting in about 2003, the company touted its plans for an intermodal shipping port in Venezuela. Then, in 2008, it shifted and at the stroke of a website upload, became one of the world's biggest owners of refineries and ships.

- No list of officers or directors, much less indication of where the workers are. The only way to find out who is in charge of the company is in the court documents. Never a good sign.

- Insufferable translation on all the English pages.

- No indication of the company's RIF, or Venezuelan tax ID number, which typically shows up on every page of Venezuelan corporate websites.

- A record of unbelievably huge deals that never materialize. Such as plans for a refinery buy in Curacao or the world's biggest oil refinery in Côte d'Ivoire .

- Bizarre uses of numbers. The Cote d'Ivoire refinery was supposed to cost $7 billion, but the same day it was announced, China said it would build a 400,000 barrel-a-day facility for $8 billion. So $7 billion is an impossible lowball. Conversely, EFE didn't notice that the guy was announcing a $200 billion a year deal — do they know numbers? That Venezuela's GDP is less than twice that? Or that $200 billion a year is equal to all sales by such global oil giants as ConocoPhillips ?

- If all that fails, there is this excellent post about Arevenca's apparent fraudulent activity .

You can also try to talk to Arevenca President Francisco Javier Gonzalez. I got him on the phone a couple years ago. Mexico at that time was even stricter than Venezuela when it came to foreigners in the oil industry. Only state oil company Pemex could operate in the oil industry. So I asked what Arevenca did in Mexico, and Gonzalez said the company had a refinery unit in Veracruz. I checked, and sure enough, no. No foreign companies had any refinery units in Mexico.

I tried to reach Gonzalez again today so he could respond to issues raised in this article. I left messages at two of the three Skype numbers listed on the company web page. The other one didn't work. The phone numbers in Mexico and Venezuela were out of service. Two of the numbers in Spain, and the number in Aruba, went unanswered. The Suriname phone number (and address) turned out to be for the Royal Torarica Hotel . Someone did answer at one of the Spain numbers, but kept saying “Oye,” and then hung up. Two additional calls to that number went unanswered.

Arevenca's luck may turn in the same place that ends so many other Venezuela-based scams: US federal court.

Here's the case . It's remarkable.

Arevenca stands accused of having sold some oil products to a supposed Nigerian state oil company called Skanga Energy & Marine. Skanga claims that in 2006 and 2007, Arevenca said it was a subsidiary of Venezuelan state oil company PDVSA. The Nigerians did some minimal due diligence, asking the Venezuelan embassy whether Arevenca was legit. The embassy supposedly said yes. The Nigerians claim to have sent $11.2 million in advance freight payments. Needless to say, the fuel never showed up. Skanga supposedly asked Arevenca to refund their money, which didn't happen. So in 2008, they sued Gonzalez, Arevenca and PDVSA in New York state court for $100 million.

PDVSA got the case moved to federal court and filed this response , denying ever having any relationship with Arevenca. Which may well be true.

The money, if it ever existed, may be gone. A Venezuelan court filing by a lawyer suing Gonzalez for allegedly unpaid bills provides some tidbits about Gonzalez's alleged spending habits. The lawyer says he helped with legal work around the purchase of a Falcon 900EX private jet and an Augusta AB139 luxury helicopter in December 2008 — several months after the Skanga lawsuit was filed. The lawyer is demanding fees of almost 14 million bolivars, or USD$3.25 million at the official exchange rate. I don't know if Gonzalez ended up buying those aircraft, but each one sells for about $20 million. (Odd thing about the exact helicopter mentioned in the case is that upon being sold in Florida, it was exported to Lebanon — apparently to be used as the presidential transport , and was reported as a gift from Qatar. So if Gonzalez had any role in that, it's certainly not clear what the role would have been.)

Of course, it's not certain that Skanga Energy & Marine is telling the truth, either. How about a little Google for “ Skanga Energy “? If you exclude the term “Arevenca,” you get a big 8 hits. OK, maybe it will increase to 9 when I post this. Four are from a maritime directory with no contact info for the company. And one is a site warning of a scam e-mail that mentions Skanga.

Skanga's lawyers didn't return two calls for comment.

The point here is, please be aware that there are scams out there. They want your money and will do anything to get it. Fake oil marketers also sometimes target rich individuals for this sort of “advance-fraud scam.”

After following this company on and (mostly) off for years, I was inspired to write about it today because Quico at Caracas Chronicles has been following up on Cesar Batiz's excellent reporting in Últimas Noticias (Caracas) and trying to find out more about Ovarb , a tiny company with huge procurement deals in Venezuela. He says Ovarb is a total obvious scam . I say sure, it looks scammy — at the least, it doesn't have any record — but I wanted to show what a real obvious scam looks like.

And look: even the most obvious scam manages to hold a pretty signing ceremony with Avic XAC , which at least appears to maybe be a real company. And they get a paper deal to build the world's biggest refinery in Cote d'Ivoire, and supposedly get cash money $11.2 million. Nice work if you can get it!

PS: Looks like Arevenca now wants to open a “ bank .” Note that the website has the same sort of weird omissions — if it's a bank, how about instead of telling me you'll have offices in 20-odd countries, just tell me about account and loan terms? Or what regulatory body you report to? Or whether deposits are guaranteed? Pretty basic stuff — and all missing. But hey, don't worry, it's still just an idea. Every page says, “The Bank will be soon open for the public.”

PPS: Meanwhile, they are also trying to start an airline, Fly Aruba . And according to this report , they just flew an Airbus 320 to Aruba, and touted it as the start of the airline. Hm, note that Avic XAC is not a refining company at all, but an aviation company. And the Airbus flight landed in Aruba on the afternoon of Sept. 15, while the signing ceremony news article hit the EFE wire from Madrid the same day. Odd.

PPPS: I hope EFE picks this up, cause the first story is an embarrassment .

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09/26/2011 / - Send Us Your Issues

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