Venezuela supermarket scramble mixes dearth with gourmet

CARACAS,  (Reuters) – A supermarket in a posh district of Caracas is barren of wheat flour but well stocked with gourmet cream-filled sweetbread imported from Italy. Sugar is nowhere to be found, but sweeteners such as Equal and Splenda take its place on shelves.

In a working class district, shoppers struggle to find chicken, even though shrimp is readily available.

Periodic product shortages have become a fact of life under socialist President Hugo Chavez, who has not been seen since undergoing cancer surgery in Cuba seven weeks ago.

But in Venezuela’s distorted oil-driven economy, it’s the staple products that go scarce while luxury goods and niche-market items are easy to find.

“You can find 18-year whiskey on any street corner. The problem is finding the basic goods,” said Iris Moreno, 63, a retired economist. “Somebody walks by with a shopping bag and you say ‘Is that yellow stuff corn flour?’ And they say, ‘Yes ma’am, hurry before it runs out!'”

Under price controls created by Chavez, merchants can be fined or jailed for selling products such as milk, cooking oil and corn flour – crucial for making pancake-like “arepas” that are a staple in Venezuela – for more than the price set by the state.

But they are free to sell champagne, basmati rice or truffle oil at the price they please, leaving supermarkets and corner stores stocked with a range of goods that many consumers have no use nor budget for.

The scramble for basic staples often requires visiting several stores to find products and waiting in long lines. Many simply do without some types of food.

The situation is a far cry from the famine-inducing dearth portrayed by shrill opposition activists. But it is a growing annoyance even for Chavez supporters who say his self-styled revolution has helped share oil revenue with the poor.

And it is emblematic of the travails of an oil-rich nation that for decades has ensured access to the latest consumer goods and fine liquors, while struggling to create functioning police forces, hospitals and sewers.

“Money is not the problem. On the contrary, the problem is that there is too much money and not enough products to sell,” said Ismael Perez, executive president of the industry group Conindustria.

Business leaders say Chavez’s absence has slowed key policy decisions that could improve supplies. They include a possible devaluation of the bolivar currency, which would make more dollars available for imports, and revisions to price controls that would let merchants raise prices.


Venezuelans are consummate consumers both because the country’s long tradition of oil wealth, and because double-digit inflation makes saving futile. Blowout Christmas spending routinely triggers a breakdown of the stretched supply chain.

Shortages in December reached their highest level since April 2008, the central bank said this month.

Many bakeries – a mainstay of Venezuelan daily life that offer fresh bread, deli meats, coffee and cakes – are now limiting customers to one or two loaves due to lack of flour.

Others, like Macropan in the poor Caracas neighborhood of La Vega, simply have none to offer.

“I can get a kilo or two of flour from the grocery store, but it’s just not enough,” said Ricardo Sousa, 41, Macropan’s part-owner and manager. Soft drinks, U.S. breakfast cereals and much-loved hazelnut chocolate candies sat on shelves surrounding the glaringly empty bread bin.

The government blames the situation on hoarding by merchants seeking to manipulate supplies to make a quick buck, and it has vowed to step up inspections.

“In this middle of this situation with the health of President Chavez, they want to create uncertainty in the population, so they say they don’t have products when they really do,” said Zahira Velasquez, a 23-year-old student.

A Reuters reporter asking about wheat flour at one supermarket was tipped off by a security guard that new supplies had just arrived. It turned out to be a false alarm: the product was in fact pre-sweetened pancake mix.

Nervous shoppers add to the problem by snatching up more than they require each time supplies dwindle.

“People are creating the shortages themselves. As soon as a load of corn flour arrives, people run to buy more than they need,” said Alicia Blanco, 57, a housewife leaving a supermarket after struggling to find detergent, toilet paper and butter.

“It’s very annoying, but it’s not causing hunger.”

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Delcidio do Amaral

Brazil corruption probe widens; Senate leader, BTG Pactual CEO arrested SAO PAULO/BRASILIA, (Reuters) – The chief executive of Brazil’s biggest independent investment bank and the leading senator in the governing coalition were arrested yesterday on suspicion of obstructing the country’s most sweeping corruption investigation ever. The detention of such prominent power brokers on orders from the Supreme Court raised the stakes dramatically in a bribery scandal that started with state-run oil company Petrobras and now threatens the heights of Brazilian banking and politics. The arrest of Andre Esteves, the billionaire CEO and controlling shareholder of BTG Pactual SA and Brazil’s most influential dealmaker, sent the bank’s listed shares into a dive that wiped out a fifth of its market value and raised red flags at the central bank. Brazil’s Congress also ground to a halt with the arrest of ruling Workers’ Party Senator Delcidio do Amaral, a veteran lawmaker who has run the economic affairs committee and who has been key to President Dilma Rousseff’s unpopular austerity program. Brazil’s currency fell as much as 2 percent as the scandal threatened both the country’s sixth-largest bank and the president’s sputtering efforts to pass a new budget and avoid another credit ratings downgrade to junk. Brazil’s central bank said it was monitoring the arrest of Esteves to see whether it would impact operations at BTG Pactual and trigger regulatory action. Banking analysts warned that BTG Pactual, the largest independent investment bank in Latin America, could struggle to navigate Brazil’s worst recession in a quarter century without its wunderkind founder at the helm. Clients withdrew funds equivalent to less than 1 percent of assets under management at BTG Pactual, which was less than had initially been expected by some, said a source with knowledge of the bank’s strategy. The six-year-old BTG Pactual, which manages about 230 billion reais ($61 billion), tapped less than 5 percent of its about 40 billion reais in cash reserves to cover those redemptions, said the source, who requested anonymity because of the sensitivity of the issue. SHOCKWAVES IN CONGRESS The political gridlock that has obstructed economic policy this year is likely to worsen with the jailing of Amaral, one of about 50 Brazilian politicians under investigation for their alleged roles in a vast kickback scandal at the oil giant known as Petroleo Brasileiro SA. Amaral’s arrest was the first ever for a sitting senator in Brazil and it sent shockwaves through the capital. Congress suspended its sessions as senators met to discuss how to handle the arrest. After a heated debate in which some government supporters defended Amaral, the Senate voted 59-13 to uphold the top court’s decision to order his arrest. Supreme Court Justice Teori Zavascki said he authorized the arrest after prosecutors presented a taped conversation in which Amaral tried to bribe Petrobras’ former international director, Nestor Cervero, out of taking a plea bargain that could implicate the senator and other politicians. Prosecutors alleged that Amaral conspired to help Cervero flee authorities. They also said the senator offered a monthly stipend to the former executive’s family, financed by Esteves, who had obtained a copy of a plea bargain based on Cervero’s testimony. Cervero was received a 12-year sentence in August for corruption and money laundering in connection to bribes paid on two drillship contracts. Another defendant in the case testified that Cervero had passed bribe money to Amaral skimmed from Petrobras’ controversial 2006 purchase of a refinery in Pasadena, Texas. Amaral’s lawyer, Mauricio Silva Leite, dismissed the accusation that his client obstructed the Petrobras investigation, saying it was based on the word of a convict. He also criticized the Supreme Court for ignoring the senator’s immunity as an elected official. SHARES DIVE BTG Pactual confirmed the arrest of its chief executive and said the bank was available to cooperate with the investigation. Esteves’ lawyer, Antonio Carlos de Almeida Castro, told reporters that the banker “certainly” had not acted to obstruct the investigation. The bank’s listed units, a blend of shares in its investment banking and private equity divisions, tumbled as much as 39 percent to an all-time low on the Sao Paulo stock exchange before paring losses to 21 percent. Court representatives said Esteves had been arrested temporarily for five days, with a potential extension of five days. Amaral was arrested for an indefinite period. Esteves, 47, has drawn on powerful connections in politics and global finance to steer BTG Pactual through turbulent times as Brazil’s economy plunged into a sharp recession. BTG Pactual’s major deals with Petrobras have drawn the attention of investigators, including the bank’s stake in Sete Brasil Participacoes SA, a supplier of oil-drilling platforms that has been swept up in the probe. BTG Pactual also bought half of Petrobras’ Africa unit in 2013. Last quarter, credit to oil and gas and infrastructure companies, which are the most impacted industries in the widening graft probe, accounted for about 16 percent of BTG’s loan book. That is the largest exposure among Brazil’s listed traded banks, according to Thomson Reuters data. Brazil’s central bank said in a press statement that it was monitoring the arrest of Esteves, adding that BTG Pactual has solid liquidity indicators and continues to operate normally. The net worth of Esteves was last estimated at $2.2 billion by Forbes Magazine.


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