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C O N F I D E N T I A L SECTION 01 OF 02 CARACAS 000155 
 
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E.O. 12958: DECL: 2020/02/05 
TAGS: EPET EINV ENRG ECON VE
SUBJECT: VENEZUELA: PDVSA Official's Comments on Bariven and PDVSA 
Naval 
 
CLASSIFIED BY: Darnall Steuart, Economic Counselor, DOS, Econ; 
REASON: 1.4(B), (D) 
 
¶1. (C) SUMMARY: According to George Kabboul, the former President 
of PDVSA procurement subsidiary Bariven, the Venezuelan national 
oil company continues to be concerned that the USG might decide to 
close down its Houston operations.  Kabboul maintains that Bariven 
provides procurement services for all of PDVSA's divisions 
(including President Chavez's national subsidized grocery store, 
PDVAL) and other GBRV ministries and agencies (including Mercal, 
another national subsidized grocery store and Corpolec, the 
national electricity umbrella corporation) and its U.S. operations 
account for a majority of all international purchases.  END 
SUMMARY. 
 
 
 
¶2. (SBU) On January 14, 2010, Petroleum AttachC) (PetAtt) 
interviewed Anaisabel Pino Infante (protect).  Infante works for 
PDVSA as the executive assistant to Vice-president of Refining, 
Trading, and Supply Asdrubal Chavez.  Chavez assigned her 
temporarily to Georges Kabboul, President of PDVSA Naval (PDVSA's 
tanker and ship construction division).  Kabboul learned of the 
interview and invited PetAtt to pay him a January 20 courtesy call. 
[NOTE: Georges Kabboul is the older brother of PDVSA Director Fadi 
Kabboul, formerly Minister Counselor for Energy Affairs at the 
Venezuelan Embassy in Washington.  END NOTE.] 
 
 
 
BARIVEN: PDVSA's Corruption - err Procurement Arm 
 
 
 
¶3. (C) Kabboul was the president of PDVSA Bariven from 2003 to 
early 2009.  Bariven is PDVSA's international procurement division, 
with overseas offices in Houston (with approximately 120 employees) 
and the Netherlands.  He stated that in 2008, it purchased over $10 
billion in goods and services (80% for PDVSA's traditional oil 
activities).  Kabboul said that 55% of Bariven's oil-related 
purchases are sourced from U.S. suppliers and that Bariven is the 
Port of Houston's second largest client.  [NOTE: Deputy Minister of 
Energy and Petroleum for Hydrocarbons and PDVSA External Director 
Ivan Orellana (protect) told PetAtt on January 26 that all Bariven 
contracts are being signed in the Netherlands, but that Houston 
remains open as a Bariven logistics center.  END NOTE] Kabboul 
claimed that his greatest achievements during his tenure running 
Bariven included: greater transparency in the procurement process 
and an expansion of PDVSA's supplier database (up to 4,000 
companies/contractors).  Citing the USG ban on selling 
defense-related material to Venezuela, he mentioned PDVSA's fear 
that difficulties in the bilateral relationship would lead the USG 
to close PDVSA's Houston office. 
 
 
 
PDVSA - Expert Food Procurement Agent 
 
 
 
¶4. (C) Since the 2002-2003 petroleum sector strike, Bariven has 
purchased all imported food on behalf of the GBRV's low cost 
grocery stores (Mercal was created in 2003 and PDVAL was created in 
¶2008.  Kabboul admitted that given Bariven's lack of technical 
expertise in food purchases, its early endeavors to support PDVAL 
were plagued with mistakes and errors.  As Bariven needed to 
diversify its supplier database in the food industry, its lack of 
due diligence resulted in mistakenly signing contracts with 
"briefcase companies" that served as front companies for Panamanian 
and U.S. companies and defrauded PDVSA.  In order to improve its 
management controls over Bariven, PDVSA contracted with US company 
AGS to provide quality control services verifying product purchases 
and supplier data.  Kabboul shared that PDVSA Bariven has two 
on-going court cases pending against U.S. companies in Miami.  One 
 
CARACAS 00000155  002 OF 002 
 
 
of the cases involves a delivery of contaminated powdered milk 
produced in China that received quality control approval from AGS. 
Another case involves a company that registered multiple times in 
Bariven's database using different corporate names and attempted to 
manipulate bidding processes in its favor. 
 
 
 
PDVSA Naval - Building Boats, None in the U.S. 
 
 
 
¶5. (C) Kabboul stated that PDVSA Naval has leased space in several 
shipyards to permit it to construct a dozen vessels by 2015. 
Infante told PetAtt that PDV Naval has leased shipyards in Brazil 
and Argentina while PDVSA's new shipyard near Cumana is under 
construction.  She added that there are on-going discussions with 
Iran concerning a possible boat construction contract.  Kabboul 
claimed that contrary to some reports, PDVSA has not signed a 
contract with a Spanish shipyard to construct two oceanographic and 
seismographic vessels, as PDVSA Naval currently is evaluating 
Norwegian technology.  These vessels will be shared by PDVSA and 
Venezuela's navy. 
 
 
 
Kabboul Bio Notes 
 
 
 
¶6. (C) Georges Kabboul, born and raised in Lebanon, graduated third 
in his class from Venezuela's Simon Bolivar University as a 
mechanical engineer.  He claims that he was hired by Procter & 
Gamble upon graduation, where he worked for two years.  He then 
entered the oil industry, starting with the Creole Corporation.  He 
began his employment with PDVSA in 1985 and has held various 
positions, including secretary of PDVSA's Board of Directors for 
four years and as president of PDVSA Bariven.  International 
petroleum service company executives have shared with PetAtt 
industry suspicions that Georges Kabboul is "Ramirez's bagman" - 
that he used his position in Bariven to secure lucrative bonuses 
and kick-backs for the Minister. 
 
 
 
¶7. (C) COMMENT: Even though Kabboul emphasized that there are no 
restrictions against PDVSA executives meeting with Embassy 
officials, this is the first time in several years that an EmbOff 
has been invited to a PDVSA office.  Kabboul noted the importance 
of the bilateral economic and petroleum relationship with the U.S. 
while being critical of the USG.  His infrequent digressions into 
politics raised standard GBRV talking points (e.g. that the U.S. is 
to blame for the situation in Honduras).  PDVSA's fears of a 
US-initiated blockade of Venezuela are understandable and 
demonstrate that PDVSA (and Venezuela) depend on the U.S. not only 
to purchase its oil but to provide many of the petroleum sector 
inputs needed to produce the oil.  END COMMENT. 
DUDDY