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Venezuela: PDVSA can not be audited

By Miguel Octavio | The Devil's Excrement

11.07.05 | As recently as May 25th., a Deputy from Chavez' MVR stated categorically that the proof that things were back to normal in PDVSA was that the company was going to submit its financials to the SEC on June 30th., only twelve months late. The next day the President of PDVSA and Minister of Oil said he had hired a former Superintendent of Banks to insure the financials would be handed in to the SEC on time. Well, June 30th. went by and the financials were not only not handed in to the SEC, but reportedly the Government informed the SEC that it will not do it. Apparently ever!

PDVSA has become simply unauditable according to today's El Nacional. The auditors, a local subsidiary of KPMG was simply unable to complete its work and has yet to receive any response to the many requests for information. Things are not only not normal, they are simply absurd, the company's numbers are unknown and this simply confirms the many lies we have been hearing about the company's production. Moreover, it is perhaps an ironic end to Chavez taking over PDVSA that his main complaint was always that the company was not transparent, that the technocrats did not tell the "people" what or why they were doing with the most important asset the country had.

The inability of the auditors to complete their job shows the mess the company is in. Whether there is corruption or not within PDVSA can not even be determined, since the whole financial structure and supervision of the company is simply non-existent. Among other pearls, the audit determined that of Cuba's debt of US$ 584 million, $478 million was past due, only 30 of the 49 buyers of crude have confirmed their balances are correct, there are $266 million inn accounts receivable, $163 millions in unknown receivables, accounts overdue amount to US$ 874 million, debt with fired employees is unknown, no shareholders meeting has been held since 2002 and on and on...

The end result is that we "the people" have no clue as to how the company is being run. The "promises" of completed financials is well overdue and simply the company can not borrow funds in the international markets. What a way to mortgage the future of all Venezuelans! PDVSA belongs to the Chavistas, not to the people and in essence what is being done is to kill the golden goose. Unaccountability is the name of the game for the Chavistas, but they don't even care.

It is easy to find all of this irrelevant when oil prices are reaching all time highs. But much like the 2000 stock market bubble burst, so will the rise in oil prices. Economic cycles are here to stay, the US has been doing well for a while, so has China, oil inventories are near all time high, but speculators seem to have taken over the oil markets. It is just a matter of time for us to see $35 per barrel again, "this time it is different" is always said just before the end of bubbles. You heard it here first, lower oil prices will be here before the end of the year. At that time, PDVSA will need funding, but it will simply not be able to get it. What a sad end for the revolution, they simply did not know what to do with the flag they waved for so long. History will never forgive those that turned PDVSA into a black hole and have turned it into a useless carcass.

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