Venezuelan Economy Losing Billions from Corrupt Importers

Importers are able to inflate the value of foreign goods brought into the country in order to exchange them for US dollars at low rates. Many times, they fake the shipments altogether and walk away with the money at no cost or effort.

By Trevor Armstrong, Marketing —

Tens of billions of dollars have been sapped from Venezuela by businessmen and importers who never imported anything at all. These importers collect money in advance to ship goods into the country, but then deliver fake shipments instead of the actual goods. One instance of this occurred when Venezuelan police responsible for checking shipments discovered a rusted scrap metal in place of machinery to kill and gut chickens valued at $1.8 million. Yet other businessmen made away with $74 million, promising to deliver chemicals from abroad, but never fulfilling their end of the bargain.

Easy Money

This elaborate scheme to make away with government money is made possible by the complexity of the country’s currency system. Importers are able to inflate the value of foreign goods brought into the country in order to exchange them for US dollars at low rates. Many times, they fake the shipments altogether and walk away with the money at no cost or effort. Venezuelan officials say that tens of billions of dollars have been drained from Venezuela’s government this way. One consulting firm, Ecoanalítica, estimated that between 2003 and 2012 about $69.5 billion was stolen through import fraud.

This loss is particularly hurting the country now. Because of the huge drop in oil prices, the Venezuelan economy has suffered a devastating blow. The country’s essential foreign currency reserves are at the lowest they have been in almost twelve years. Venezuela needs these reserves to be able to maintain trade with foreign countries. This issue is so critical that Venezuelan political parties on both sides are scrambling for a solution to put an end to this fraud.

Countries and companies all over the world struggle to eliminate fraud, but often find it difficult due to corruption among individuals and organizations contracted to perform labor. Yet, if corrupt individuals are left unchecked, they can damage national economies as seen in the instance of Venezuela. Sooner or later someone will have to pay for this.

Prevention: The Best Solution

Prevention is the best solution to keep such damages from occurring. This most often comes in the form of using lie detection devices to screen hired individuals. In the past, the reliability and cost efficiency of lie detection has been questioned, but today the company Converus offers a new solution through its EyeDetect technology. EyeDetect can determine a person’s truthfulness with over 90% accuracy in a one-hour test using an infrared camera that examines eye movements. If EyeDetect is implemented, the technology will successfully weed out individuals with less-than-honest intentions and protect any organization or government, preventing multi-billion dollar losses in the process. Because of this, companies and governments should consider EyeDetect as a solution to prevent fraud.

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