Venezuela: How the opposition victory will impact corruption and money-laundering

The Venezuelan government’s loss of majority control in the legislature could affect the real and perceived levels of corruption in the oil-producing nation in two ways.

Firstly, corrupt senior public officials, their testaferros (financial fronts) and intermediaries may see the congressional defeat as a sign that the writing is on the wall for President Nicolás Maduro, prompting them to accelerate moves to shift ill-gotten proceeds into ‘safer’ offshore jurisdictions such as Panama, the BVI, Monaco and Hong Kong.

Secondly, the political opposition’s control of congress increases the chances that major bribery schemes involving foreign companies doing business in Venezuela become publicly exposed.

The likelihood of these two currents occurring will in part depend on the size of the majority the opposition eventually captures in the National Assembly, a result that still hangs in the balance.

As of last night, the electoral authority had acknowledged that the opposition had won 99 of 167 seats, while the government party had 46. The remaining 22 seats had yet to be declared.

With a simple majority of 84 seats, already in the bag, the opposition can approve laws and veto the budget; with a three-fifths majority of 101 seats it can, in theory, censure ministers.

But without a two-thirds majority of 112 seats the opposition will be unable to enact meaningful initiatives such as create a congressional committee to investigate corruption in public contracts, examine embezzlement in oil company PDVSA, or begin moves to replace pro-government Supreme Court judges and the public prosecutor.

Opposition leaders claim to have won 112 seats, but there is room for the electoral authority to massage the results and ensure that a majority remains out of reach.