Venezuela: Two jailed for FCPA violation in fraudulent bond-trading scheme

Two executives from a US securities brokerage with offices in New York and Miami were each jailed for four years after being found guilty of bribing a senior officer of Venezuela’s state-owned development bank in return for being granted fraudulent bond-trading deals that netted the brokerage some USD66m.

The two US executives, Benito Chinea and Joseph DeMeneses, CEO and managing director, respectively, who ran the brokerage Direct Access Partners, had pled guilty in December to conspiring to violate the FCPA.

At least USD5m were paid in bribes to María de los Angeles González de Hernández, who was VP in Miami of the Banco de Desarrollo Económico y Social de Venezuela, BANDES, and in charge of its overseas trading activity.

The bribes, totalling at least USD5m and paid between 2008 and 2012, were relayed through third parties and intermediary corporations, several of which domiciled in Panama.

The bribes were channelled into several private bank accounts in Switzerland, namely at Julius Baer, Rahn & Bodmer, and at Compagnie Bancaire Helvétique, CBH; other related bribes were sent to accounts at Bank Hapoalim and Mirabaud & Cie, according to US court documents.

Direct Access Partners filed for bankruptcy in 2013. Several other defendants have also entered guilty pleas.

BANDES has been at the centre of a series of financial scandals in recent years, and its reputation is that of an institution plagued by corruption.

In 2013, five officials in Venezuela were arrested and charged with embezzling USD84m from a Chinese government-financed development fund managed by BANDES.