Maldonado funds jeopardised by currency row

F1 Fanatic Round-up

Pastor Maldonado, Williams, Singapore, 2013In the round-up: Venezuela’s state funding for racing drivers including Pastor Maldonado could be in jeopardy.

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Engines idled for Venezuelan race car drivers (AP)

“Sports Minister Alejandra Benitez said in a newspaper interview published Thursday that an initial investigation into the Cadivi disbursements found that one driver got $66 million. She did not name the driver.”

F1 Strategy Group ‘is illegal’ (The Telegraph)

Bob Fernley: “All teams basically pay the same amount to go racing. The only differentials are in drivers? salaries and hospitality. And yet some teams have no say in how the sport is run. It could certainly be deemed abuse of a dominant position.”

Todt should win re-election after Bin Sulayem pulls out of FIA presidency race (Daily Mail)

“Frenchman Todt, 67, may ultimately be unopposed because the only declared candidate, Englishman David Ward, is struggling to enlist the 26 nominations he requires by the deadline of November 15.”

McLaren Young Drivers in action: Circuit de Catalunya, Barcelona (McLaren)

“[Kevin] Magnussen wins in Barcelona to claim the Formula Renault 3.5 championship.”

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Comment of the day

Readers were divided over whether Ferrari, Mercedes or Lotus will come out ahead this year. Here’s @George’s view:

Mercedes have the fastest car and the best driver line-up, but their race pace isn?t quite there still, and their strategy has been questionable.

Ferrari have had a bit of a dip in form but they?ve still been picking up what they can. I think between these two it will depend on how their cars perform at the last few events.

Lotus I think are just too far behind unless the front two have a lot of DNFs, although I expect them to outscore the other two for the remaining races.
@George

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60 comments on Maldonado funds jeopardised by currency row

  1. OmarR-Pepper (@omarr-pepper) said on 20th October 2013, 0:04

    “They didn’t name the driver”… but of course it’s Maldonado. 66 million. Wow! Now I understand why Williams allow him to keep crashing their cars. It’s just because all his crashing is fixed by his cashflow into the team.

    • crr917 (@crr917) said on 20th October 2013, 0:10

      You missed the stealing part :P Venezuela gave 66mln but I doubt Williams received 66mln.

    • celeste (@celeste) said on 20th October 2013, 0:16

      If I understand correctly the money is other then the one that the PDVSA pays the teams. The minister saids that her signature has been forged, but the contract is been public in internet for ages. So I believe most of the money should be sed for travel “expenses” and “salary” of the drivers.

      Even so I bet Maldonado is really one of the ones getting more money.

      • Prisoner Monkeys (@prisoner-monkeys) said on 20th October 2013, 0:30

        It’s more likely that someone is siphoning funds off through the sponsorship accounts. I find it extremely unlikely that a driver would be in a position to embezzle the funds himself. It would have to be someone with direct access to the accounts, who could maintain a constant presence and deflect unwanted attention away from their activities. This kind of fraud works best when the perpetrator takes the money in small amounts here and there over time. If they tried to steal one lump sum in a single take, they would get caught pretty quickly.

        • Prisoner Monkeys (@prisoner-monkeys) said on 20th October 2013, 0:32

          Also, that contract that was published on the internet has been demonstrated to be a fake.

        • I find it extremely unlikely that a driver would be in a position to embezzle the funds himself.

          Exactly. The article makes it clear that the crime being committed is the forging of the minister’s signature. That she personally is jealous of Maldonado’s sponsorship, which was negotiated w/o her input, before her arrival, is to be expected. But what would be highly unusual would be for someone in Maldonado’s position to personally risk his very lucrative contract to engage in F/X shenanigans, when he’s already earning “legitimate” millions.

          Please. This is just a jealous 30-something woman who hates men angry that Pastor is Venezuela’s hero…

      • mantresx (@mantresx) said on 20th October 2013, 0:49

        Well he does live in Monaco ;)

      • celeste (@celeste) said on 20th October 2013, 2:26

        I really dislike that my laptop autocorrect.
        Then = than
        sed= send

      • The interesting part of it is that the date cited is 30 October 2011, in preparation for the 2012 season. If it’s the correct contract, and if the dates aren’t set to change each year, it would give credence to the timing of the current dispute – the sponsorship package for next year would be due for Williams’ bank account in 10 days, locking Maldonado in for 2014. No wonder then that Venezuela has stopped all racing funding before this date, and that Claire Williams has flown there to see what is going on.

        If the 10 days pass then it could be seen that PDVSA have breached the contract, and also mean that Massa could be coming in to Williams, although they would then be £25 million worse off for 2014, pending any cancellation fee from PDVSA (and if Venezuela can/will pay it) or increased backing from Massa’s current 6 million Euro package for 2014.

        Budget falling from $145m to $108m would hurt them, along with engine costs rising to $20m-ish. Hard to see how other teams like Caterham’s $96m at present will cope with changes like this (someone like Pic is now critical for engine subsidy). Williams also have more staff than the other midfield teams from the slightly higher budget.

        The other Venezuelan races like Viso probably have similar dates in their contract, hence Andretti now confirming other drivers like Kanaan and Hinchcliffe, as it is now apparent Viso probably won’t return next year (no idea if their contracts would be as tight as Williams’).

    • Cosmas (@cosmas) said on 20th October 2013, 9:33

      How can the most rich-oil country in the world have so much poverty?
      How can the most mineral wealth country have the greatest inflation in the world?
      How is it possible to buy there gas for 0,0016 €/lt when in europe it costs about 1,5 €/lt?
      Why is their currency not in the international markets and company’s and individuals must buy dollars from the state?
      There are so many question marks about this country but the most important is where all this oil money go. And obviously not only in Maldonados and Williams pockets.

      • Prisoner Monkeys (@prisoner-monkeys) said on 20th October 2013, 10:02

        @cosmas – Because economic management is not something that you just do and that you don’t have to worry about ever again. It requires constant attention, and the slightest mis-step can have devastating consequences. Take, for instance, Hungary circa 1946: the value of the pengo nosedived as the economy went into hyperinflation, and in less than a year, the combined value of every single pengo in circulation was worth less than one US cent.

      • Breno (@austus) said on 20th October 2013, 10:53

        Natural resources mean nothing when your goverment doesnt care about poverty, national industries or things like that. If you live in US or Europe I can kinda understand those questions, but for someone who lives in poorer countries, like myself, that’s normal.

      • schumonen said on 20th October 2013, 17:15

        Too many questions, only one answer: “Hugo Chavez” go read about his government and also read about “Nicolas Maduro” his “heir”. Here is a link to start if you wanna really understand what is happening there, but it is a real rabbit-hole

      • Jay Menon (@jaymenon10) said on 21st October 2013, 0:45

        Well you obviously havent heard of the Democratic Republic of Congo.

      • How can the most rich-oil country in the world have so much poverty?

        Uhh, rampant corruption and economic mismanagement which squandered hundreds of millions (billions, probably) all in the pursuit of keeping Chavez in power. While I’ve nothing against genuine socialist projects like the NHS, what Chavez and his cronies instituted in Venezuela was mass-looting of state companies for the benefit of a private oligarchy – and I say that as one who’s traveled extensively to the region (incld’g Venezuela) and formally studied the problem.

  2. Mike Dee (@mike-dee) said on 20th October 2013, 0:09

    Laps led in 2013 (out of 889): VET 471 (52.98%) ROS 104 ALO 89 HAM 66 WEB 48 RAI 41 GRO 34 SUT 11

    Vettel no surprise, but wow, who would have thought Rosberg would be runner-up? I guess Monaco helped.

  3. Fer no.65 (@fer-no65) said on 20th October 2013, 0:57

    Just imagine if that driver was Milka Duno…

  4. George (@george) said on 20th October 2013, 1:03

    Thanks Keith, first CotD!

  5. Breno (@austus) said on 20th October 2013, 2:00

    All teams basically pay the same amount to go racing

    Thats increadibly difficult to believe. Am I supposed to believe Marussia and Ferrari basically spend the same amount of money and the disparity between is all due to salaries?

    • Hamish said on 20th October 2013, 3:22

      Its in regards fees paid to go racing.

      Look at it like Marussia and Ferrari go to the same movie together and both paid the same price for the tickets. While Marussia didn’t buy any popcorn Ferrari bought heaps of it, bought in a ton of cameras to watch the movie from every possible angle, and thinks because they’ve seen the movie so many times they should get a portion of the cinemas takings. They also get creative input into the sequel and can veto aspects of the sequel they don’t like.

      • kcarrey (@kcarrey) said on 20th October 2013, 4:28

        fees not pegged to WCC points?

        • i thought driver superlicense was tied to wdc points but each team pays a flat entry fee to the series – onto which any surcharges based on points could be attached, were that the case (the point though that FI is making is that the inscription cost for each participating team is the same, whilst their ability to participate in governance is not equitable – and I agree!). You can’t run an int’l federation – or a race series – like this! watch for the EU competition committee or some other body to get involved (read Adam Parr’s book if you haven’t, or any Dieter Rencken articles).

      • Mike (@mike) said on 20th October 2013, 8:51

        I think it’d be better if you just said,

        Ferrari and Marussia go to the movies, they each pay for their own tickets but Ferrari gets to choose the movie.

  6. Mark in Florida said on 20th October 2013, 2:37

    Chavez is gone.now they want to clean up their act.

    • Prisoner Monkeys (@prisoner-monkeys) said on 20th October 2013, 12:19

      I suggest you read the full article. Whatever corruption existed within the Venezuelan government during the Chavez years isn’t the problem – the problem is that the political balance of power has been in turmoil since his death and corruption has spread like a wildfire with no-one to put it out.

      • A shame, but not surprising – look at what has happened in other places like Libya since the fall of Gaddafi and Iraq since the fall of Hussein. Losing a big leader like that creates a massive power vacuum.

  7. HoHum (@hohum) said on 20th October 2013, 5:08

    Tyre disaster in MotoGP now, Phillip Island racetrack has been given a beautiful, smooth, high grip surface, track records are tumbling but the tyres are failing which you can understand is even more of a concern with only 2 wheels and speeds of 340Kph. The 30 lap main event has had to be shortened to 19 laps with the riders having to change bikes mid race because the tyres are not safe for more than 10 laps. The moto2 race was shortened from 19 to 13 laps, at least no-one was nursing the tyres during the race.

    • William (@william) said on 21st October 2013, 9:32

      I know right as I watching it on Channel Ten. It caught Bridgestone and Dunlop by surprise. MotoGP was supposed to be 27 laps and then 26 and on race day 19. Marc Marquez forgot to put within the window, as it clearly was his error. Black flag for him and both Aussies. Paul Hay should win it from Motegi in the wet. Moto2 was suppose to be 25 laps as they raced half distance.

  8. Hamish said on 20th October 2013, 6:49

    I simply don’t get it with some of these smaller teams. Based in the financial performance and the above story – why on earth would a team enter F1?

  9. karter22 (@karter22) said on 20th October 2013, 10:38

    Well, I remember saying this a while ago when Chavez died… I knew Maldonado´s fate was sealed and I was right! It seems now they are starting to realize how much money was poured into one person´s bank account to go racing!
    Now they realize that the country isn´t in such a good shape as Chavez used to paint it and now they are cutting back! Sad but true! Well Pastor… you had a nice run…. and it seems you bought yourself a win, who cares right? You´re never going back to Venezuela it seems! Enjoy what´s left of the 66mil.

  10. Alex Bkk (@alex-bkk) said on 20th October 2013, 11:12

    I’m trying to imagine 66 million; Never mind, paying for a seat for a single season to go racing…

  11. Alex Bkk (@alex-bkk) said on 20th October 2013, 11:14

    Williams aren’t worth being on the track if that’s the way they want to go racing.

    • Prisoner Monkeys (@prisoner-monkeys) said on 20th October 2013, 12:17

      @alex-bkk – Since there’s nothing else in the round-up on Williams, I’m going to take it that you are referring to the Maldonado story.

      In that case, I invite you to read the full article, which expands upon the extract posted here. The article makes it pretty clear that the corruption is coming from within the Venezuelan Ministry of Sports. Although their books are showing that drivers like Maldonado are being paid these extravagant sums, Maldonado and Williams aren’t actually seeing any of it – or, more likely, they are getting the amount that they originally agreed to, and somebody in the ministry is using that relationship to embezzle money. Williams might be getting, say $40 million from Venezuela as per their contract. But the government’s accounts show they are getting $60 million. Williams and Maldonado aren’t getting that extra $20 million – rather, someone inside the ministry falsified the minister’s signature and allocated the extra $20 million to Williams on top of the $40 million they received, and then redirected the extra money after it had left the ministry but before it reached Williams.

      They haven’t done anything wrong – they have just been used by a third party to facilitate a crime.

  12. Regarding Maldonado and VZ money, as for the money that they are getting out of the country, also remember that PDVSA is a “sanctioned entity” under U.S. law for its dealings with Iran. This means that, in the view of the legitmate international banking community that enjoys doing business with the U.S. financial system, i.e., all of it, PDVSA’s money is radioactive. And this means that is more difficult to get it out the country in a form acceptable to legitimate businesses. http://www.state.gov/r/pa/prs/ps/2011/05/164132.htm. (Strangely enough, PDVSA operates in the U.S. as “Citgo,” though which Chavez (in)famously sought to troll the U.S. Administration by giving away fuel-oil to poor people in the U.S. north east.)

    • @dmw, I, for one, always appreciate when a reader cites sources for the info in their comment, so I hope you won’t be upset that I question what’s implied in your post. While it’s true that PDVSA engaged in some prohibited transactions with Iran, their money is not radioactive and they’re even free to continue to export crude to the USA!

      PDVSA now can’t compete for USGOVT contracts, they’re cut-off from USA Exp./Imp.-bank funding and they can’t get US export licenses, but they can absolutely still do business w/ the US (not to mention the rest of the world), and the penalties don’t even apply to PDVSA subsidiaries like Citgo! (details below) Just wanted to make others aware of this fact, that PDVSA is not radioactive in the eyes of the global banking system…

      PDVSA, the state-owned oil company of Venezuela, has delivered at least two cargoes of reformate to Iran between December 2010 and March 2011, worth approximately $50 million. Reformate is a blending component that improves the quality of gasoline. The sanctions we have imposed on PDVSA prohibit the company from competing for U.S. government procurement contracts, from securing financing from the Export-Import Bank of the United States, and from obtaining U.S. export licenses. These sanctions do not apply to PDVSA subsidiaries and do not prohibit the export of crude oil to the United States.

      • I pointed out that PDVSA affiliates like Citgo can operate in the U.S. You are mixing up two different things. VZ is a major supplier to the U.S. (~12% of net imports), which is what keeps its companies from getting properly listed, which would prevent Americans from doing business with it. The U.S. tolerates Citgo because the U.S. needs the supply. Nonetheless, the issue is not the sanctions against PDVSA per se. It’s the general regime of sanctions aganst banks, insurers, etc., that do business which facilitates, among other things, oil refinining in Iran. As noted by an experienced practitioner:

        “Because the sanctions have only limited effect, they do not preclude transactions between US persons and PDVSA outside the scope of the above-described prohibitions. However, US regulatory authorities presumably will expect US financial institutions to conduct enhanced due diligence of accounts that they maintain or transactions that they process for PDVSA to confirm that such accounts or transactions do not facilitate any business prohibited under the sanctions or any Iran-related activity of PDVSA.”

        That diligence will include screening correspondent account and clearing transacitons with foreign institutions. If you run a bank, you will have to ask yourself whether the PDVSA money you have in hand relates to PDVSA’s sanctionable Iran business, relates to “blocked” property involved in such business, monies of the Government of Iran, or just some business on the OK side of the ledger—and whether you will have a good answer for these questions when you get a call from the Treasury. Note that this was written in 2011, at the time of the State Dept action. Since then there have been two siginficant new sanctions laws passed expanding “extraterritiorial” U.S. sanctions aganist non-U.S. banks and companies, which have extended both possible sanctions and the definition of “prohibited.”

        If I ran a bank, I would see a curious glow around PDVSA’s money. You already know that PDVSA is involved in “prohibited” activities. The only issue is whether a particular tranch of money is technically “clean.” From a risk-management perspective, the PDVSA money is radioactive. The upside for PDVSA in this regard is that its money is plentful, and the U.S. need for oil is stronger than its purported principles. However, U.S. sanctions agianst Iran continue to escalate with new measures coming out continually.

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