A Question of Graft; As gushing petrodollars stick to the wrong hands, corruption threatens the regime of Hugo ChAvez.(Venezuela)

Byline: Phil Gunson

Luis Velazquez alvaray is an unlikely whistle-blower in the Venezuela of Hugo ChAvez. The 54-year-old, mercurial provincial lawyer rose to prominence as a congressman from ChAvez's Fifth Republic Movement, and as a lawmaker VelAzquez drafted legislation enabling the Venezuelan president to pack the nation's Supreme Court with his supporters--one of whom turned out to be VelAzquez himself. He quickly established himself as one of the court's most powerful justices and sacked dozens of judges on corruption charges last year before ChAvez's Interior minister accused VelAzquez himself of pocketing $4 million in kickbacks from a contract to build new courthouse complexes. Today VelAzquez's whereabouts are unknown: he fled the country in June after no-showing a congressional hearing where he was scheduled to testify about the kickback accusations against him. VelAzquez has denied any wrongdoing, and in one of his last public statements he issued a ringing indictment of the corruption inside the Venezuelan judiciary. To end the rot, he declared, "a bomb should be put in the Palace of Justice."

The VelAzquez affair is just one symptom of the cancer eating away at ChAvez's so-called Bolivarian Revolution. The Venezuelan leader, who turns 52 later this month, swept to power in the 1998 presidential election on an anti-graft platform. But in the intervening years, the soaring price of oil has flooded government coffers with petrodollars and fanned the same endemic corruption that thoroughly discredited Venezuela's two major political parties in the 1990s. As part of his commitment to end poverty within 20 years, ChAvez has lavished government largesse on a plethora of welfare programs mostly devoid of parliamentary oversight or any other supervision. Not surprisingly, vast sums of money have stuck to the wrong hands, and most polls show that corruption now ranks among the top three concerns of ordinary citizens. "Only 18 percent of voters think the government is resolving the issue," notes Caracas pollster Alfredo Keller.

The problem has captured ChAvez's attention. Mindful of the parallels that critics can draw to the kleptocracy that preceded his ascent, ChAvez has OK'd a few high-profile investigations led by a congressional audit commission. He personally has not set the most inspiring of examples; several family members occupy choice government posts. But the corruption issue has nonetheless become a source of mounting frustration for him, judging from a recent presidential outburst. "I swear that in cases like these," fumed ChAvez in January, "if I could have people shot I would." Pro-government legislators share the concern. "If the government doesn't put a stop to corruption," warns congressional audit-commission vice president Eustoquio Contreras, "corruption will put a stop to the government."

The biggest headache of all is rooted in a government agricultural-development fund known as Fondafa. The fund was established under a government plan to achieve food self-sufficiency, but early results have not been encouraging: despite a 50 percent increase in farm credits issued by Fondafa last year, the number of hectares planted nationwide rose by a paltry 1.4 percent, according to official figures. Investigators are fingering corrupt bureaucrats in cahoots with rural business interests, who have allegedly channeled Fondafa credits into phantom agricultural cooperatives. As a result, food imports have soared to record levels.

The town of Zaraza illustrates the problem. The community of 70,000 produces about 40 percent of the corn in the breadbasket state of GuArico, which accounts for nearly half the country's total annual harvest. But corn production has slumped by 70 percent despite a multimillion-dollar influx of new agricultural ...