Sports Stars May Have Profited From Venezuela Currency Scams

quicklist: curated

quote: “Driven by black market profits, ‘currency tourism’ has become yet another headache for the government of President Nicolas Maduro”

their: Reuters

their_title: Venezuela investigates sports stars in big currency scam

their_url: reuters.com

their_copy: Prosecutors in Venezuela are investigating members of its national motor sports teams for possible currency violations, officials said on Thursday. The sports minister said tens of millions of U.S. dollars were claimed by people forging her signature.

theirCTA: Read the full story on Reuters.

our_copy: The strict exchange controls implemented by Venezuela’s socialist government have all sorts of people performing all sorts of tricks [and acts of forgery] in order to get their hands on U.S. dollars.

And as this Reuters article points out, Venezuelan motor sports stars might be the latest citizens to join that bandwagon.

The issue in Venezuela is the following: The government sets the exchange rate at 6.3 bolivars per U.S. dollar, and tightly controls how many dollars individuals and companies can buy at this rate.

Dollars are scarce, so on the black market they sell for at least 30 bolivares each. Notice the gigantic difference between the “official” rate for U.S. dollars and the black market rate? Well, it allows you to make huge profits if you can somehow buy dollars at the official rate, and sell them on the street.

Here’s where things get really interesting.

The government allows people who are traveling abroad, for example, to buy up to $3,000 at the official rate. This has encouraged some folks to make short trips, just for the sake of purchasing “cheap” U.S. dollars. Others, pretend they are going to travel, by buying plane tickets to places like the U.S. or Peru, so that they can apply for cheap dollars from the government agency that sells them. But they never actually get on the plane.

Instead, they give their credit cards to friends who retrieve dollars for them in a foreign country and bring the highly prized currency back home.

The practice, known as “el raspao,” has become a big money maker in Venezuela. So it’s no surprise that Venezuelan sports figures caught on to it as well, and applied for millions of dollars, which they said they needed in order to participate in competitions abroad.

Of course, the allegations that some of these people may have actually faked the sports minister’s signature in order to apply for dollars, are quite serious and could land them in one of Venezuela’s notorious prisons.

Want to learn more about Venezuelan socialism and the wild [or desperate] forms of currency trading it has unleashed? Click here and here.

Manuel Rueda is a correspondent for Fusion, covering Mexico and South America. He travels from donkey festivals, to salsa clubs to steamy places with cartel activity.