30.6.11

[Updated] Corruption of the XXI century: F1 contract between PDVSA and Williams F1 team

Venezuelan website La Patilla has published the contract between PDVSA and Williams F1 team (see below), so that chavista Pastor Maldonado could compete in F1. I declare that I am not an expert in these kinds of contracts, but it seems to me that the contract is incredibly slanted in Williams team favour. It goes without saying that Williams must have another contract with Maldonado, with all kinds of performance clauses, and it would be foolish to think that Frank Williams is committed to keep a third-rate racing driver like Maldonado for five years, which is the length of the PDVSA-Williams contract. In fact, as far as PDVSA-Williams contract is concerned, Maldonado is the designated driver only for the 2011 season.

The contract contains three different sponsorship options (page 17), according to placement of PDVSA logos and images on Williams F1 team cars and drivers' overalls. Starting 2010, Option 1 is worth £110.5 millions over the period. Option 2 is worth £138.14 millions, while Option 3 is worth £154.7 millions. The questions that as Venezuelan I am asking are: what tangible benefit accrual does all this represent to the citizens of my country? What do we get in return? How does this contract's clauses compare with other contracts, for instance the one between AT & T and Williams?

Williams can end the contract at any time, without fear of loosing full payments for the entire  period of the contract. Williams can also sack Maldonado and has to "consider" other Venezuelan drivers (Cecotto Jr?) proposed by PDVSA, though it has no obligation to accept such drivers, in which case PDVSA can terminate the contract.

Reiterating that I am no expert in F1 contracts, this one looks to me incredibly feeble, and damaging for Venezuelan taxpayers. For Williams F1 team will end up with the cash, regardless of whether Maldonado remains at the team, or whether other Venezuelan drivers take his seat in future seasons.

That Frank Williams deems proper to take millions of pounds from a State-owned company of an utterly underdeveloped country, where most people live under the poverty line, is indicative of the terribly sad and amoral state of affairs in the world. Alas that's what Europe excels at: to plunder without scruples whatever can be plundered from the third world.

Update: I sent an email to Williams F1 team, to Claire Williams, Head of Communications & Investor Relations, asking for comment. This is what Ms Williams replied:
Dear Alek, 
This is not our contract with PDVSA. We have no further comment to make on this subject. 
Regards, 
Claire Williams 
Honestly, while I appreciate Ms Williams reply, I do not think her reply is appropriate. Her team is dealing, and entered into a contract, with a State owned company. A company that belongs to all of us Venezuelans. A company whose contract with Williams was never approved in the Venezuelan Congress, but was rather a unilateral decision of Hugo Chavez, who has no power to enter into such contracts, or spend public money, without Congress' approval. Were  Hugo Chavez to lose the elections in 2012, the new administration would be entirely capable of unilaterally shredding this contract, and not pay a dime more to Williams F1, for this was done illegally in the first place. Furthermore, it would be entirely possible for a new administration to issue legal proceedings against Williams F1 team, for misappropriation of Venezuelan public funds. It is unreasonable to expect expertise of Venezuelan internal legislation from Williams F1 team. However that does not change the fact that a minimum of due diligence should have been done, while PDVSA should have provided enough guarantees of its ability to enter into this contract according to Venezuelan law. I would like to publicly ask Ms Williams, was that done? What evidence did PDVSA provided to that effect? Who signed the contract? Who drafted it? How much money has already been paid? These and other questions should be asked by the opposition in Venezuela's Congress [see Venezuela: Congressman Carlos Ramos questions Williams F1]. PDVSA owes a lot in the way of explanations to the Venezuelan people, and so does Williams F1, as a publicly traded company.
Pastor Maldonado PDVSA 2010

2 comments:

Roberto N said...

I am by no means an expert in F1 contracts, but have seen my share of racing contracts in other series.

Structurally it seems correct, as is the terminology used. What La Patilla posted seems to be a draft, not the final version.

However, I think you will not see one more word from Williams F1 on the subject.

We need to pressure PDVSA to reveal it.

And I'll be the first one to ask that this stupidity be abolished one Thugo loses next year.

AB said...

Perhaps we should start lobbying our Congressmen in Venezuela for the formation of an investigative commission to determine the [il]legality of the deal, and to take the appropriate measures under Venezuelan and international law.