Business Corruption

Companies intending to operate in Venezuela should note that corruption in relation to public procurement is common. According to the US Department of State 2011, companies report that corruption exists in government procurement processes, and companies are generally recommended to use a specialised public procurement due diligence tool in order to mitigate the corruption risks associated with public procurement in Venezuela.

According to the law, major public procurements should be advertised; however Global Integrity 2009 reports that this is not always the case in practice. Moreover, companies are in practice guilty of major violations of procurement regulations, such as bribery, are not prohibited from participating in future procurement bids. In practice, public procurement officials have a great deal of discretionary power over procurement processes. Companies should note that it is common among public procurement officials to demand commissions in exchange for awarding contracts.

In the process of nationalising the oil sector, private companies had their operating service agreements cancelled and were forced into joint ventures with the state oil company, PDVSA, without negotiation, according to the US Department of State 2011. Concerns have thus been raised over the respect for contracts.

Read more about public procurement and contracting under 'Public Anti-Corruption Initiatives' in the Initiatives section.

Political Corruption

According to the US Department of State 2011, the vast majority of government contracts are awarded without open competition. Moreover, government contracts are vulnerable to corruption because the tender process frequently lacks transparency, according to the report.

Examples of corruption cases include the Supreme Court judge Luis Velazquez, who has been investigated for taking kickbacks involving a new judicial building.

Read more about public procurement under 'Public Anti-Corruption Initiatives' in the Initiatives section.

Frequency

World Economic Forum: The Global Competitiveness Report 2010-2011:
- Business executives give the diversion of public funds to companies, individuals, or groups due to corruption a score of 1.9 on a 7-point scale (1 'very common' and 7 'never occurs').

- Business executives give the favouritism of government officials towards well-connected companies and individuals when deciding upon policies and contracts a score of 2 on a 7-point scale (1 'always show favouritism' and 7 'never show favouritism').