30 July 2011

[UPDATED] Cuba subcontracts Gemalto for provision e-IDs in Venezuela

In another twist in the ongoing saga of Hugo Chavez ceding sovereign matters to Cuba, El Nacional reported on 17 July that the new electronic IDs will be handled  by a branch of a Cuban "technology" university, called ALBET, which in turn has subcontracted Dutch multinational Gemalto's 100% owned Mexican subsidiary -to the tune of $40,500,000- for the provision of 6 million e-IDs. ALBET's contract with Venezuela dates from 2005, according to Spain's El Pais. More worrying still, Ramiro Valdés, one of communist Cuba most feared party apparatchiks, is meant to be behind the contract.

But Gemalto, that as a publicly traded Dutch company is the only party to this deal that has to operate according to some transparency rules, has refused to answer any of my requests for information. In fact, there's nothing in Gemalto's last three years annual reports indicative of a contract between its fully owned Mexican subsidiary and ALBET. The $40,500,000 that allegedly exchanged hands aren't reflected anywhere. Below, the emails that I have sent thus far.

From: Alek Boyd
Date: 21 July 2011 12:47:29 GMT+01:00
To: vincent.bonnot@gemalto.com
Cc: comercial@albet.cu, sampedro@albet.cu, francesc.ortodo@gemalto.com, arturo.ortiz-de-zarate@gemalto.com
Subject: Re Gemalto's provision of IDs in Venezuela

Dear Mr Bonnot,

My name is Alek Boyd, Venezuelan blogger based in London, who has called your office on a couple of occasions regarding an alleged contract between a Gemalto subsidiary (Mexico) and a Cuban agent for the provision of IDs to the government of my country. Your name was given to me by a kind secretary in your office in London (Vicky).

I should be most grateful if you could read the message below, and provide information as per who may be the correct person to contact regarding issues raised. Furthermore, I'd like to add to the questions below, the following:

- Why would a multinational, publicly traded company, like Gemalto, not contract their services directly with the Venezuelan government? Why use, instead, a dodgy Cuban intermediary?


Alek Boyd

From: Alek Boyd
Date: 20 July 2011 16:55:47 GMT+01:00
To: Ramzi.Abdine@gemalto.com
Cc: peggy.edoire@gemalto.com, Isabelle.Marand@gemalto.com
Subject: Re Gemalto's provision of IDs in Venezuela

Dear Mr Abdine,

El Nacional, which is one of Venezuela's leading newspapers, reported on 17 July [link], that Gemalto de Mexico had been contracted by a Cuban company called ALBET, to the tune of USD $40,500,000, for the provision of IDs to the government of Venezuela. The alleged contract between Gemalto de Mexico and ALBET can be read, in Spanish, following this link:


The contract is meant to have been signed on 20 August 2008. Given the amount of the contract, and the sensible nature of the services provided, one would be forgiven for thinking that Gemalto would boast about it in its annual reports. However, I could not find any indication in Gemalto's annual reports of 2008, 2009, or indeed 2010, about the contract between ALBET and Gemalto de Mexico, which is described in your reports as Gemalto's 100% owned subsidiary.

This of course raises a few issues, given that Gemalto is a publicly traded company. To be frank, we Venezuelans couldn't care less about how Gemalto conducts his business, where or how declares its income, where or how pays its taxes, etc. What we do care about is the fact that Gemalto de Mexico seems to have been subcontracted by a Cuban joint in violation to Venezuela's legislation, and, as a consequence, may have received, in case the contract is legit and has been acted upon, millions of dollars of Venezuelans tax payers' money illegally.

Yesterday I called your office here in London to ask for verifications. After a short explanation, a kind secretary, called Vicky, replied by saying that "someone senior would get back to me, either by phone or email." Alas, as of this hour, no one has.

Therefore, I should be most grateful if you could indicate the name, and contact details of a Gemalto representative that could answer a few questions about the issues raised above, namely:

1- Did Gemalto de Mexico, represented by Messrs. Arnaud Jean Loic and Martin Djunte Ghomsi, signed a contract with ALBET?

2- If it did, what due diligence was made by Gemalto de Mexico with regards to whether ALBET had the power to enter into contracts for the provision of IDs to the government of Venezuela?

3- If it did, how much has Gemalto de Mexico received to date (in USD), as per contractual clauses?

4- If it did, what has Gemalto de Mexico delivered, as per contractual clauses?

Cordially yours,

Alek Boyd

UPDATE, 2 August 2011: a comment by Rodrigo has pointed me in the direction of what he defines as common practice: i.e. European companies paying bribes to officials through dodgy intermediaries. That could be the reason why Gemalto did not enter into a contract directly with the Chavez regime. Rodrigo cites three Panamanian companies (Billingsley Global Corporation, Ferdell Business Inc., and Selbor International Inc.) involved in some inexplicable payments on a €46 million deal of Germany's Bundesdruckerei with Venezuela (reported here by German media). Ferdell and Selbor share the same directors (Thays Herrera de Salas, Mariela de Cristi, and Eligio Rodriguez).

But that's not the issue. Gemalto's ADR are traded in the US, and its shares are also traded in Paris' stock exchange. Perhaps it's time to blow the whistle with American and European authorities?


Anonymous said...

This is because some commissions have to be paid to politicians in Venezuela. GEMALTO is not able to do directly. GEMALTO sell to a lower price to ALBET and ALBET sells to Venezuela`s government
They have learnt from Bundesdruckerei. They made it before with some companies from Cuba and Panama called Billingslay, Ferdell Business Inc or Selbor.
Ask Mr Hamann @ Bundesdruckerei or Mr Baumgartl, hierwith the responsible

AB said...

Rodrigo, are you implying that European companies don't pay bribes to get deals in third world countries? Let me rephrase that, how come Bundesdruckerei does and Gemalto can't? Furthermore, have you got any evidence that Bundescruckerei has paid commissions to Venezuelan government/officials through Cuban dodgy intermediaries?

I'd love to see it...

ollie said...

As a Dutchman i need to respond. The problem is not that a company pays bribes to officials, the problem is the officials who demand the bribes. And that is the current government.

I am quite pessimistic about the future of this country. I wrote a post on this. it might be worth a read http://dianuevo.wordpress.com/2011/08/02/88/.

This government will do anything to stay in power. In the end they probably will resort to violence, just like the Junta back in her days

AB said...

I have to disagree with your comment Ollie. It is a problem that Dutch companies, or any other for that matter, go to Venezuela and engage in practices that would land them in jail in the Netherlands. The problem, is the belief that they can go around developing countries, and make millions, and not declare those millions, and do all that knowing that they are breaking the law. The problem is making millions and not pay their tax dues. The problem is using dodgy intermediaries, whose contracting has been done in violation to Venezuelan legislation, to get contracts. I am sure the concept of corporate responsibility has arrived in the Netherlands. As far as I am aware, Gemalto is conducting itself in ways that could bring much harm to its shareholders should authorities decide to investigate, and in so doing is pocketing millions of dollars of Venezuelan taxpayers money illegally.

ollie said...

Again, it is the corrupt system that allows these practices. If a company wants to do business in Venezuela it needs to corrupt itself. One way or the other. Also domestic companies.

Right now the only one who does business in Venezuela is the state. And when the state is corrupt, than that is where the problem lies.

Your are saying that foreign companies are exploiting Venezuela and it People. This is not the case. It is the government who is doing so.

AB said...

Absolute rubbish Ollie. It takes two to tango. Yes the Venezuelan government is utterly corrupt, and so are the multinational corporations cutting deals with it. Gemalto would NOT engage in such practices in Europe, or in the USA. It has to operate according to strict regulations given that it is a publicly traded company. Failure to report earnings, and thus avoid paying corresponding tax, is a crime. But those regulations are easily disregarded when they go to Venezuela. Why?

If you can't see the difference, then you have a problem.

ollie said...

Hi Alek, I think that you are still missing my point. It might be a chicken and egg story but you cannot do anything in Venezuela without using the corrupt system and thus corrupting yourself.

You make it sound that these companies are imposing corruption. No they are not, they are just using the corrupt system for their own benefit.

Ofcourse this is not the way to do business and you always have to ask yourself if you want do business this way. You will also need to accept the consequences.

But on the other hand, if it would not be this publicly traded company it would be another. It is human nature I think. I wrote a post about it on my blog: http://dianuevo.wordpress.com/2011/08/03/we-are-what-we-are/

AB said...

I am missing no point Ollie. None. Publicly traded multinational corporations HAVE to operate according to strict regulations. If Venezuela is an utterly corrupt country, and I have never denied that, publicly traded multinational corporations have a duty of care towards their shareholders and the regulatory authorities that forces them to ensure that everything is done above board.

Now, if you have problem understanding that, that is completely irrelevant. The fact of the matter is, publicly traded multinational corporations can not go around flaunting regulations just because the country where they happen to be conducting business in is called Venezuela. Period.

I have not said that these companies are imposing corruption, Frankly I don't understand why you're defending something that it's patently dodgy, and attribute to me things that I have not said.

Your point is moot. Read the post again, read the communications, and come back and make sensible comments. Otherwise I'm not interested in continuing with this exchange.

Gemalto, Bundesdruckerei, Williams F1, etc., all these companies that have gone into dodgy deals with chavismo must know that their actions carry consequences. They can, of course, pray to the devil that Chavez remains in power forever. But if he doesn't, future administrations will ensure that all monies illegally pocketed by foreigners willing to engage in corruption are recovered, legal proceedings are issued so that the rule of law prevails.

ollie said...

Of course I understand that a publicly traded company has its obligations.And yes they should be held responsible and yes they should be prosecuted. I do not disagree with you on this and please do continue with this. I just might even alert some media here on your post.

But what I am trying to say is that there is NO other option. Every business deal in Venezuela is dodgy and cherry picking some companies does not solve anything.

It is the government which sets the boundaries for doing business and it is the government and the system that is corrupt. It is just my opinion

ollie said...

Hi Alek,
I just sent out an email to the dutch press with a link to your blog. I hope they will pick it up.

AB said...

Mate, I honestly can't figure out your point.

There is always an option, like, erm, not do business in corrupt banana republics? How's that sound? Doable, or impossible?

Gemalto has been contracted for the provision of IDs, though a fucking Cuban intermediary that has lacks any resemblance to know-how and expertise to carry out any meaningful contract anywhere on earth, besides the communist prison island of course.

So I will repeat, yet again, why would a Dutch company engage in corrupt practices in Venezuela, when doing so in the Netherlands would carry hefty fines, and possibly, jail?

It is not cherry picking, it is called naming and shaming multinationals that, by mandate and law, can not behave in such dishonest.

ollie said...

You do not have to explain to me on how to conduct business. You are absolutely right in naming these companies.

My point is that this is only the tip of the iceberg. Believe me the system is so corrupt that if everything should come to light, that not only these companies would be fined or jailed, but also every government official in Venezuela. Including Chavez.

Just take a look at the football stadium in Merida. The company who built it is owned by a close relative of Chavez and it was millions over budget. Guess where the money went.

Also it is very strange that someone who was a bus driver now has millions in foreign reserves..

AB said...

Ollie, you don't have to tell me how corrupt my country is, for I am convinced I know it much better than you.

what you should do, is try and make your country a better place, by denouncing corrupt practices undertaken by Dutch companies / individuals, wherever in the world this may occur.