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This throws a wrench in the rights Chavez arguments....

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Old 01-29-2008, 05:27 AM
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Default This throws a wrench in the rights Chavez arguments....

Polo-Loving Banker
Lives Really Large
In Chávez Socialism
Venezuela's Mr. Vargas Has
Yachts, and Good Timing;
'I've Been Rich All My Life'
By JOHN LYONS
January 29, 2008; Page A1

CARACAS, Venezuela -- V*ctor Vargas is a polo-playing banker who zips between his six homes in a fleet of luxury jets. So you might expect him to be struggling in today's Venezuela, where President Hugo Chávez has vowed to build a classless society.

But Mr. Vargas, 55 years old, hasn't missed a beat. His Banco Occidental de Descuento is expanding amid an oil-fueled economic surge. Like other bankers, he snares profits dealing in a flood of government-issued debt. And the Chávez years have done little to damp Mr. Vargas's exuberance for the trappings of wealth.

"People write stories about me saying I have a Ferrari, a plane, a yacht," he said during an interview at one of his homes, in the posh Country Club neighborhood of Caracas. "But it's not true. I've got three planes, two yachts, six houses. I've been rich all my life!"


Mr. Vargas, a dapper, meticulous man, is thriving without even a nod to Mr. Chávez's socialist nostrums. At the wedding party he threw for his daughter at his Dominican Republic mansion in 2004, more than 1,000 guests dined on platters prepared by New York's Le Cirque restaurant and grooved to a show by Grammy-winning Latin pop artist Juan Luis Guerra. The groom, Luis Alfonso de Borbón, is the great-grandson of the Spanish fascist Francisco Franco. Tracing his father's bloodlines, Mr. de Borbón claims he is the rightful King of France (Luis XX, to be exact), according to his biography, "A King Without a Throne."

The wedding's guest list illustrated Mr. Vargas's skill for nurturing contacts across Venezuela's polarized society. There were senior Chávez officials as well as opposition figures, such as Manuel Rosales, who ran against Mr. Chávez in 2006.

Mr. Vargas's success highlights the durability of the country's elites no matter who is in power. Despite his socialist rhetoric, Mr. Chávez has a lot in common with leaders past. In office since 1999, Mr. Chávez is the latest in a long line of Venezuelan presidents who have spent heavily to build populist support, and then needed to use economic tactics like price controls. Venezuelan elites have learned to profit amid repeated volatility.

Venezuelan government officials didn't respond to interview requests.

"Venezuela has developed a special business culture, where the game is played amid high inflation and other distortions," says Venezuela-born Latin America specialist Gilbert W. Merkx, who directs the Duke University Center for International Studies. "You can either get very rich or lose a lot of money playing the game, and it always gets more complicated as the distortions get worse."

Right now, the game is on. Venezuela's 22.5% inflation rate is the highest in the Western Hemisphere. Its currency has lost half its value in the past year on a thriving black market for dollars. To prevent capital flight, Mr. Chávez banned overseas money transfers and has barred Venezuela's media from mentioning the black market. Some now call it the "market that cannot be mentioned."


Victor Vargas playing in a league match of the U.S. Open Polo Championship last year.
Currency Trading

Bankers have made money playing the huge gap between the official and the black-market exchange rates. One common way, which is legally permitted: buying dollar-bonds from the government at the official rate of 2.15 "strong bolivars" per dollar, and reselling them to investors for a price close to the black-market rate of 5.50 per dollar. In an economic boom, net income at Mr. Vargas's bank has more than doubled to $150 million since 2002.

Of course, making money isn't always easy under Mr. Chávez, and it carries risk. The populist former army officer has expropriated majority stakes in oil concerns -- including one owned by Mr. Vargas -- and other assets, and routinely threatens to seize other industries.

Mr. Vargas says his survival strategy is remaining agnostic about politics. In 2002, he helped convince other bankers not to join strikes led by businesses that were aimed at ousting Mr. Chávez. As president of the banks' industry association, he helps negotiate banking regulations. "A businessman has to deal with his government, no matter how far to the right or left it is," he says.

Mr. Vargas's high-level government contacts have attracted critics who say he's suddenly become rich as "Mr. Chávez's banker." Mr. Vargas says he's only met Mr. Chávez twice, and besides, he's always been wealthy, having owned his Dominican Republic home and others for decades. "Juan Luis Guerra played at my first daughter's wedding [at the start of Mr. Chávez's presidency] too, and no one made a big deal about it," he says.

Mr. Vargas is the son of a doctor and Venezuela's first female Supreme Court justice. As a young man, he married into one of the country's most connected families, the Santaella clan. Fellow law students at Andrés Bello Catholic University remember him cruising campus in a 1967 Ford Mustang Shelby Cobra.

His passion for top-of-the line toys has hardly slowed in the Chávez years. An avid pilot since his 20s, Mr. Vargas flies his ultra-long-range Gulfstream 550 when shuttling between homes. His massive yacht, Allegro, attracts society magazines when it docks at the Spanish resort of Sotogrande, where the polo team he founded and plays for sometimes competes.

A reason for Mr. Vargas's wealth is his ability to time Venezuela's booms and busts. In 1992, he sold a small bank he helped form to Banco Latino, one of Venezuela's biggest banks. The sale came just weeks after a young Mr. Chávez launched a failed coup attempt that marked the beginning of a volatile year.

A year later, flush with some $50 million from the sale, Mr. Vargas bought a small regional bank, Banco Occidental de Descuento, known for its A-list of oil-services clients.

In 1994, Banco Latino collapsed as a run on deposits exposed questionable loans. Venezuela's currency crashed and the country fell into recession. But Mr. Vargas was fine. His new bank's chief regional competitor also collapsed, and he later snapped up its customers, bringing them to Banco Occidental de Descuento. "I am an intuitive guy," he says.

New York Venture

Mr. Vargas had less success with a banking venture in New York. In the 1980s, he bought at least 21% of New York-based CapitalBanc Corp. In the early 1990s, banking authorities seized the bank and jailed several executives after discovering fraud. Mr. Vargas wasn't accused of fraud. Authorities alleged, however, that he lied about when he discovered the misdeeds. He paid a $1.15 million fine and signed an order agreeing not to invest in U.S. banks again without written permission from U.S. authorities. He didn't admit or deny guilt.

Mr. Vargas described the episode as the "worst business" of his life, the product of being "naive." He has put it behind him. In October, he moderated a panel on corporate governance at a Miami conference of the Florida International Bankers Association and the Latin American Banks Federation, where he is vice president.

Despite his wealth, Mr. Vargas says he is a humble man who cares deeply about Venezuela. He operates three foundations to help the poor. He says he talks to his chauffeurs and bodyguards, who he has employed for decades, in the same tone he uses with business associates. Employees at his bank get raises every year -- except for those who should be fired, he says.

"I am a socialist in the real sense of the word," Mr. Vargas says.
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Old 01-29-2008, 05:57 AM
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Default Excellent example Mommy, a man born into one of the Country's most connect families is still wealthy

therefore Chavez must be good. So I guess you would then agree that since W became President anyone in the US can?

So now you trumpet those born into wealth as a sign of political stability?

Make up your mind already.
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Old 01-29-2008, 08:01 AM
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Default So the politically connected are permitted to be wealthy. Is that supposed to be a surprise?

It amazes me when you people make your points by proving ours.
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Old 01-29-2008, 08:24 AM
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Default LOL

If you actually had a clue as regards Venezuela, you'd see what this article represents.


Sadly, you don't......
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Old 01-29-2008, 08:30 AM
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Nor do you given the example you provided.
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Old 01-29-2008, 09:26 AM
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Default Since I'm obviously "not getting it" why don't you explain what that story means to the right?

What belief of mine is disproven by that article?
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Old 01-29-2008, 10:15 AM
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Gee. Good point. Obviously you're far too busy to elaborate.
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Old 01-29-2008, 10:43 AM
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Default not worth the time and effort

if you can't see the hypocrisy in the right's stance and this article, it's a lost cause
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Old 01-29-2008, 11:40 AM
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Default Hugo will "self-solve"...

<ul><li><a href="http://www.powerlineblog.com/archives2/2008/01/019661.php">All we have to do is wait.....</a></li></ul>
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Old 01-29-2008, 11:53 AM
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Default No, really. I genuinely want to hear how that article makes me a hypocrite.

If there's something I'm not seeing, let me know.
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