Congressman Carlos Ramos of the Venezuelan opposition party UNT, wrote to Williams F1 recently, asking for details of the PDVSA contract. The team replied that this was confidential but Ramos refused to accept that and wrote again. This letter did not get sent but has fallen into the hands of a Venezuelan blogger, who has suggested that the congressman was dissuaded to not continue down this path. However, to underline the feelings that were expressed, here is the letter that was to be sent, which underlines some of the questions involved, which Williams may have to answer at some point.
“Your reply suggests that William F1 has not done sufficient due diligence on Venezuela’s legislation regarding public expenditure.
“As you know, PDVSA is an oil conglomerate, fully owned by the Venezuelan State. Given that PDVSA is the largest contributor of fiscal revenues to the Venezuelan State, its budget needs to be approved by its board and its sole shareholder – the State, on a yearly basis. The amount, and general expenditure, of PDVSA’s budget is, as a matter of law, public matter. Ergo, Venezuela’s Congress receives, once a year, a detailed account of PDVSA’s expenditure, for one very important reason: monies earned by PDVSA in the course of its natural business operations belong to and support the State.
“Sponsoring a F1 racing team is most definitely not a priority expenditure for an entity that can derive NO commercial benefit from such capricious outlay. Bear in mind that PDVSA is not a commercial brand, and that it sells nothing to consumers with its brand – now painted in various places on your race cars. The financial situation of the Williams Formula 1 team is probably a matter of great concern to its owners, employees, and commercial sponsors. However, there is no acceptable explanation as per why 28 million Venezuelans have to foot the bill, to simply help Williams survive. I understand why you would take money from anyone, though it is impossible for me to explain, to my constituents and countrymen, why on earth we are wasting money on your team. That all of this is done by a government that calls itself socialist, a government which has destroyed much of the private sector in my country, and has demonised the practices of capitalism, is even more ironic and perplexing.
“Article 154 of Venezuela’s Constitution: “Treaties agreed to by the Republic must be approved by the National Assembly prior to their ratification by the President of the Republic, with the exception of those which seek to perform or perfect pre-existing obligations of the Republic, apply principles expressly recognised by the Republic, perform ordinary acts in international relations or exercise powers expressly vested by law in the National Executive.”
“Article 222 of Venezuela’s Constitution: “The National Assembly shall be empowered to exercise its control function by means of the following mechanisms: parliamentary questions, investigations, questions, authorisations and parliament’s approvals as provided for in this Constitution and by law, and any other mechanism that may be established by laws and their associated Regulations. In exercising parliamentary control, the National Assembly shall have the power to make a finding of political liability on the part of public officials and call on Citizen Power to initiate the appropriate action to enforce such liability.”
“Article 223 of Venezuela’s Constitution: “The Assembly or its Committees shall have the power to conduct such investigations as they may deem appropriate in matters within their competence, in accordance with the Regulations. All public officials are obligated, subject to the penalties established by law, to appear before such Committees and provide the same with any information and documents they may require in order to carry out their functions. Private citizens are also subject to this obligation, without prejudice to the rights and guarantees embodied in this Constitution.”
“Article 314 of Venezuela’s Constitution: “No expense of any kind shall be disbursed unless the same has been provided for in the budget law. Additional budget credit items may be ordered to cover essential unforeseen expenses or items that had not been adequately funded, only if the treasury has resources to cover the expenditure concerned; this shall be done only following a vote in favor by the Cabinet of Ministers and authorisation by the National Assembly, or in its absence, by the Delegated Committee.”
“The Venezuelan Congress was not informed, according to law, of the sponsorship contract between Williams F1 Team and PDVSA. Neither in 2010, nor in 2011, was the Venezuelan Congress informed by PDVSA of such expenditure within its budget. This is clearly our problem, as it further underlines the institutional collapse of our society. The loss of independence of the Legislative Branch, and the repeated violation of the law on the part of the Executive Branch, are the hallmarks of the so called “Bolivarian Revolution” you have so joyfully tied your team’s future to.
“Therefore, I can not, and will not, accept your argument of confidentiality. What we would expect from any and all counter-parties to a public contract in Venezuela, is that they would seek, and demand, that all legal steps be cleared, and maximum transparency be ensured. Your failure to demand this from PDVSA, coupled with your unwillingness to facilitate the work of the National Assembly, makes Williams F1 Team complicit of unauthorised spending, and so from this moment on that is exactly they way I intend to treat Williams F1 Team, unless, of course, you change your absurd position and start collaborating.
“Until proven otherwise, we will continue to have the suspicion that irregular payments are an integral part of this ruinous contract, as they have become the norm in almost all public contracts signed by the Chavez administration. Rest assured that the contract between Williams F1 Team and PDVSA will not remain confidential, we will not stop investigating this matter, and we will seek any and all means to terminate this contract. Equally, we will ensure that Venezuelan public monies no longer get wasted in such fickle and unproductive sponsorship.”
Ramos finished the letter by requesting that Williams reconsider its answer and send him a copy of the original contract, details of monies disbursed to date by PDVSA and the names of all PDVSA or Venezuelan government officials that have obtained from, or through, Williams F1 Team, VIP treatment and box passes for races in the 2011 F1 season.
While Ramos is in the minority, there is an election coming up next year and President Hugo Chaves has been suffering from cancer. There is a danger therefore that his death or removal from power will result in more open government, which could spell serious trouble for the Grove team.
joeblogsf1 
Very strong words – I wonder if he has asked PDVSA the same questions using such language?
A politician showboating, who would have thought it. Williams should spend hard, get a good result for Pastor and all will be forgotten for a National hero
hence why it should be sutil who has strong sponsorship that is reliable rather than Maldonado who hasnt made a solid impact. Barichello and Sutil, with Valteri Bottas doing Friday practices and GP2.
I see his points, but he is clearly electioneering. He’ll be wading in with his comments on Clarkson next. Surly it would be PDVSA and/or the government that owes the duty to explain this to him, not Williams?
Do you think there is anything in the fact Williams announced Maldonado at 11pm last night (good time for Venezualan audience). I took it at the time as a bit of an ‘up yours’ to this chap, even more so with this update.
I would hope (and am sure) Williams would be pretty clear on the fact the monies they are promised are legally theirs. Because to take the risk for a second year if there is any doubt would leave them right up S**t Creek…
Off@Turn1,
Have you studied the Venezuelan political situation?
I think he’s barking up the wrong tree if he’s after anything other than a bit of press. It’s not the affair of Williams, or any other team, to choose how their sponsors spend their money. Aside from the ethics of tacitly supporting a regime of questionable legitimacy, if PDVSA want to give Williams money, who are Williams to turn it down?
forzaminardi,
I ask the same question that I have asked elsewhere. What would you say if it was your government spending the money?
What an idiotic bully. Is he too scared of PDVSA to ask THEM the question? That, to most normal people, ie non-politicians, would be the rather more sensible approach. But then, attacking the huge multinational on the doorstep rather than picking on a business operating out of a garage near Oxford would be a bit too scary for this silly little man.
Mon Pen,
Have you any idea of the political situation in Venezuela at the moment?
Doesn’t sound a fun time at Williams right now. Still, I had to laugh – that bit about “Citizen Power” just makes me think of the picture of Will Power following his disagreement with the stewards…
“This is clearly our problem”
But that’s not going to stop him threatening a foreign company over which he has no jurisdiction. Clearly if the deal is not sound he will try and stop it – regardless of whether Williams hands over the contract or not. From their perspective, why cooperate with an aggressive official who wants to remove a huge chunk of their funding?
Tom,
I wonder what you would say if it was your government?
What grandstanding nonsense. I wonder why he doesn’t just ask PDVSA for the contract? I suppose It’s a professional hazard of being in the public eye but a shame that AT&T Williams get caught up in this sort of nonsense. I recall that Williams did a very well supported running car event in Venezuela so there is positive sentiment toward the team and Pastor. What did F1’s domestic TV audiences show this year compared to last-Up I bet?
That said Adam Parr, who I understand authored this deal was a barrister who should know better. He is known to think that PR and PR people are pointless and sacked some of the most experienced people in the paddock – which he must feel foolish now.
“There is a danger therefore that his death or removal from power will result in more open government…”
unfortunate turn of phrase…ironic i hope!
It seems to me mr. Ramos can’t get an answer from PDVSA so he has decided to put pressure on Williams.
What he says about how the Venezuelan state conducts its business might be and even likely to be true, but it does not make sense for him to grill Williams on the issue. He should talk to PDVSA or Chavez if he has a problem with it. He could also have raised the issue long ago since the sponsorship of Maldonado to race is nothing new, so this is just the “Michelin tread width” trick pulled by Ross Brawn back in 2003, timed to coincide with Chavez’s health and elections. So maybe this guy is an F1 fan just of a different team 😉 The money is not wastefully spent either it put Maldonado at the top rung of the sport and gives Venezuela exposure to the world, something the public arguably benefits from, is not different from any government sponsoring their country’s olympic programs for example.
F1 Kitteh,
I think you should consider how you would feel if it was your money being spent in this way.
Joe, can you think of a reasonable explanation for why this has only become an issue a whole season after the deal was inked, despite numerous well-publicised public appearances in Venezuela by Maldonado and Williams to promote the sponsorship? Surely the legality of the deal should have been called into question far earlier than this?
Mart Anthony,
See my reply to karlt
Further potential woes for Williams. A key sponsor, Thomson Reuters ($3 million p.a., I believe), has just parted company with its CEO, Tom Glocer. Glocer was a key proponent of the Company’s F1 sponsorship — primarily for hospitality purposes, rather than branding — and the Company’s renewed ‘slash and burn’ strategy may cost Williams another big name.
Frankly, he should write to PDVSA and ask a question in his parliament, rather than writing to a foreign listed company and publishing his letter in this way.
The “showboating” comments above is spot on.
Jon,
See my reply to karlt
Well, on this side of the pond, the US government is too busy spending half of the national GDP bailing out banks. So who’d notice another few million going to an F1 team?
Joking aside, this does seem political posturing. Not good for Williams, but it does strike me that this would be PDVSA’s question to answer.
-k-
karlt
You should read up on Mr Ramos. He is a political economist who represents the state of Merida in the Asamblea Nacional de Venezuela. He is one of 17 deputies in the Un Nuevo Tiempo party, an opposition group, and first came to prominence last summer when he discovered, as a member of the Assembly’s Finance Commission, what he reckoned was a $29 billion hole in the government’s off-budget development fund, known as Fonden. The PDVSA story is just another chapter in his fight against what he believes to be corruption. He may be wrong, but if he is then the PDVSA contract with Williams should be seen by his commission, shouldn’t it?
Unless Williams F1 agreed to be directly answerable to the Venezuelan State in their contract, I fail to see why they’ve any obligation to display it. It’s between Williams and the sponsor. And if such intrusion is allowed by operation of public law, I don’t understand why they’re not looking to the PDVSA, over which they plainly have close-range authority, for what they want. Mr. Ramos had it right when he wrote “This is clearly our problem ..,” but does he have the power to make it Williams’ problem too?
@joe; wrong person to ask that question. Will ask my wife though 😉
I agree with him on most counts. Venezuela is a relatively poor country and its government is anti-capitalist, so it is absurd for them to pour money into the most capitalist of sports.
I’m sure his intention here is to embarrass Williams by drawing attention to the questionable pedigree of its major sponsor.
Venezuela is now contributing (for one driver) more money than a lot of larger Governments contribute for the privilege of hosting a Grand Prix.
On the point of PDVSA not being a consumer facing company, when they threw millions at an even worse driver, Milka Duno in IndyCar, at least they used their US “Citgo” gas station brand – although I’m not sure what a gas station gains from being associated with a mobile chicane.
@F1 Kitteh,
I disagree on your last point. How on Earth does Pastor Maldonado’s drive in F1 give Venezuela worldwide exposure?
Sure, he drives in a word championship, but I seriously struggle to see how that is in any way a benefit to Venezuela, especially when such monies could be far better spent elsewhere.
Mr Ramos has a point…
The big difference in asking difficult questions of Frank rather than anyone in Venzuela, is that Frank is much less likely to take out a contract on Mr. Ramos. Patrick maybe but he’s retired from the race team.
Wilson
Even in democratic countries the government may spend money on causes that we don’t necessarily identify with. For example Lance Armstrong used to be sponsored by the USPS, great if you are a cycling fan, but waste of money if would rather see the money being spent on a figure skating program right?
F1 Kitteh,
Yes, but I suspect that was agreed upon.
And all the public money paid to Bernie as sanctioning fees, they must all be clean right ? 🙂
F1 Kitteh,
Yes, it is if it is voted by the necessary authorities.
Frankly Williams having gotten into bed with a despot to keep the lights on has always left a bad taste in the mouth.
Given the situation in the country, they can have little complaint if a genuinely democratic government comes to power and pulls the plug on this deal, as it seems little more than a Chavez vanity project.
At face value, Mr Ramos has a point. It’s always seemed a completely illogical sponsorship…
Though, this venture, together with, Maldonado, must be giving the country good exposure, for tourism/business etc… Have you encountered anything to suggest that, Joe?
Surely this is an issue for the Venezuelans and PDVSA? PDVSA is the state owned company, who the people have the rights to see the accounts of. Williams is a foreign company who they have no rights over what so ever.
The contract could presumably hold non financial details, which classify it as confidential. So PDVSA might be required to release details of financial payments, but not of the specifics of the contract.
I really don’t see where he has the right to speak to Williams like this, accuse them of being complicit, and demand they hand over private company accounts.
This strikes me of a man trying to get a political 1 up, but not having the balls to attack a state champion, so goes after the foreign devil. Much the same way Obama referred to BPplc as “British Petroleum” all through the Gulf saga, even though they haven’t been called that in a decade!
PDVSA are not a new sponsor in Motorsport. The branding has been present in a number of Formula backing different drivers for a few years.
Williams carry branding not only from PDVSA but also the Venezuelan tourist board (rear facing rear wing element) There is no mention of this agreement in the statement above. Spending government funds to promote a country isn’t really a new concept is it?! We’ve seen it in F1 for years!
In response to one of your earlier comments Joe, I am not too aware of the latest political situation in Venezuela, I haven’t been there for a few months now. Having said that if my Government decided to promote a state owned commercial operation through long established and successful marketing channels with a view to increasing sales and contributing to the burden of debt within my country being minimised I think I would be quite happy.
You wrote about this a few weeks ago Joe, at the time this was exactly what we expected would happen.
I think a lot depends on Chavez’s political strength, while he is out of action, if poor then his rivals may use this as a lever to help get him booted out.
In any case if Ramos makes enough noise to get this raised in parliament Williams may be forced to drop Maldonaldo, it cannot possibly be justified as proper expenditure.
Williams F1 have no legal obligation to comply. As repeatedly pointed out, they don’t fall under Venezuelan jurisdiction at any level. That the contract should be validated by auditing committees in Venezuela is not their legal responsibility.
It is however a moral responsibility and a PR responsibility. Williams F1 should not wish to be associated with such behaviour, whether publicly known or not.
And this is not to say that it’s not their problem as it may well lead to the PDVSA income being brutally cut off.
If the Williams F1 team can find other cash to survive, we F1 fans shouldn’t be too disappointed, given the chance to be rid of Maldonado. But sadly, they probably need him and the oil money so the risk to the team is serious.
Jem,
One wonders what the legal situation is with regard to Williams withholding the contract from a public official, as the letter states: it is public money and one can imagine a situation in which the state of Venezuela might want that money back. I have no idea about the legal implications of all this, but I worry for the team.
WOW! That’s real news and it can’t be good for Williams.
The risk Williams is facing, as do a substantial number of Latin American governments, is that Chavez dies or is not able to run at the next election.
Anybody who is familiar with the political situation in Venezuela knows that the opposition will cancel most of the oil related contracts the Chavez government has concluded, should it get into power. But that was clear when Williams signed the contracts, so they were either desperate, or sure that Chavez will be able to stay in power.
However, it is the job of the executive to provide the necessary information to parliament. The language of the letter also indicates that the author is not really interested in recieving any information from Williams. He is accusing them of taking money from a government he doesn’t like. Besides, looking at the history of PDVSA (and i don’t mean during the Chavez government), squandering a couple of millions on F1 is peanuts, compared to the funds that have allready been embezzled.
So given that there is a gaping hole in Venezuela’s finances, and Sr. Ramos wants to hold people accountable, I can understand his desire to find out what happened. However I don’t see what legal right he has to force a foreign business to reveal a confidential contract, unless my understanding of law is incorrect.
I can understand his right to ask that question of a Venezuelan business (the oil company) or citizen (Sr. Maldonaldo), and not being over-familiar with his legal position in Venezuela or his legal powers even then he may not have a right to force them to respond.
What is true is that Chavez has a powerful grip on power and the state run companies, so Ramos asking his fellow citizens for these answers is probably less likely to have a result than asking Williams. But surely he must know that in asking Williams they have no duty to respond, which makes you wonder why he wrote his screed. Desperation, or another reason?
Am I missing something?
Joe,
He should be asking the Venezuela state organization PDVSA for the document because the contract almost certainly has a confidentiality clause that prevents Williams from showing it to anyone (most business contracts do). No matter what your opinion of Gov spending or current politics in Venezuela a binding agreement (undoubtedly signed under English Law) on Williams is not something they get to break because someone sends a nasty letter or two to them.
I doubt a subpoena will do him much good on a contract signed under UK Law or non Venezuelan law. So he should go to the source he does have control and one would assume subpoena power over.
Mr. Ramos writes almost as well as you Joe, stirring allegations.
I’m sure somewhere in all of the PDVSA budgets is a line item where the Williams subsidy is buried.
The important part of this kerfuffle is how much power does Mr. Ramos wield and can he elevate this issue into a stop payment to Williams.
Hey Joe,
I read Alek Boyd´s blog on the subject, have bene following it for some time now, and he spoke to mr Ramos who said he did NOT send the letter to Ms Williams, call it pressure, threats, other.
His words, copy-pasted from Boyd´s blog:
“I can’t be seen as an anti-sport Congressman… The fight is against corruption, I can’t make it personal against Pastor… Chavistas are manipulating this… I am frontal against corruption but we need public support for this… In Venezuela we risk everything…”
Jakob,
I have now seen that and modified my story accordingly.
Jumping into bed with a tinpot dictatorship funding n very poor, by F1 standards, driver was always going to end in tears.
Adam, Frank or whoever is in charge should do the sensible thing. Dump Maldanado and take Sutil with his more appropiate sponsors. Otherwise this has all the ingredients to horribly wrong.
Joe,
Apparently the UK doesn’t have an extradition treaty with Venezuela so it’d be highly unlikely to see Williams F1 officials arrested and taken to Ramos for questioning or any sort of trial even IF they were accused of serious wrong-doing.
I’m not certain that other countries on the F1 circus might not be so anti-Venezuela given the dodgy regimes Bernie is chummy with, but it looks unlikely that any serious action could be taken against the team.
Having said that, cutting off the income would be a pretty damaging blow for Williams, who’d suddenly be desperately in need of a major sponsor at a time when such money is hardly forthcoming.
Why haven’t any of us F1 fans who grew up with Williams somehow become billionaires? If I had squillions of pounds I’d cough up to keep Williams going – and all I ask is that they put my idiotic grinning face on their cars, a bit like that helmet Valentino Rossi ran in Italy a few years ago…
This Carlos Ramos made me laugh. He certainly chose the worst words to ask for what he wants.
So that you have the correct information, part of the problem is Pastor himself. Although sponsoring a pilot is nothing out of the ordinary, for people living in Venezuela it is enfuriating to see a Venezuelan pilot who has lived ALL his life outside of Venezuela, participating in one of the most expensive sports in the world, travelling all around Europe with all the necessary comforts, Praising the current government as the best thing in the world. He has NO idea of what it means to live under the day to day reality of Venezuelan life, without propper services, transport, and becoming poorer everyday. He is just happy that Chavez is using him for political purposes, as long as he can get the money to be in F1 racing. He does not care if his principles are compromised. In other words, the ends justify the means. He sold his soul, principles and beliefs for a car!!! But the worst of all is that while he mocks everyone by participating in ads parising the Venezuelan government and taking the Venezuelan´s money, the people who live there become poorer everyday without any mercy from the president and his newely enriched friends in government. That is why the congresman demands to know what is the extent of the agreement between Williams and PDVSA. The people of Venezuela have the right to know where THEIR money is going.
PDVSA have been bankrolling Ernesto Viso & Pastor for years. Have they written to BCN, iSport, Racing Engineering, Trident, Piquet sports, ART, Rapax, HVM & KV Racing also?
Or is it just a politician trying to make a name by associating himslef with F1?
Peter,
Read my other comments about this guy.
This all presumes Mr. Chavez views his country as a democracy. Somehow I doubt it.
Pretty clear that this Ramos dude doesn’t have a leg to stand on. Legally or morally.
Rohan,
And if you felt the same was happening in your country?
Presumably Williams will have recieved this letter before they announced Maldonado as confirmed as part of their driver line-up. Since i’m not the politically minded sort i’m hoping you could help me understand why Williams would immediately announce Maldonado? And in a way shove it Carlos Ramos face.
Joe, thanks for posting this, I´m an F1 fan and regular reader, but first and foremost I´m a Venezuelan and appreciate not only that you post about the situation, but also that you understand what´s going on and educate your readers on the subject.
We all love F1, but as with Bahrain, Venezuela and other cases, there are more important things than our beloved sport.
The level of naivety about the situation in Venezuala demonstrated by some of the comments here is beyond belief. I don’t really think that all Mr Ramos has to do is send a nice polite letter to a civil servant in Venezuala asking for more information about this deal. That just ain’t going to work, so of course he’s going to put pressure on Williams. Presumably Williams were well aware of the risks of this happening when they signed with PDVSA to get some of this ‘murky’ funding. If they weren’t then they were daft.
There’s a bit of a difference putting up ~$2 million so that Milka could run around with Marty Roth at the tail of the (pre-“blendification”) IndyCar field to $25m+ to run around at the back of the mid-field in F1. At least PDVSA get air time in the ‘States when E.J. Viso slaps it into the wall again (well, not much good on Versus).
Support for sport in the form of sponsorship of athletes, teams, the construction of facilities is always subject to the whims of politics if the source of funds is a public one (see the goings on in Austin, Texas for proof). I know in Canada funding for the Canadian Grands Prix hasn’t always been free of controversy, but the debate has been public. In a country run by a strongman like Chavez, this kind of involvement can take on an aspect of vanity being for the greater glory of the leadership (Berlin Olymoics 1936 for example), and I am not surprised that Mr Ramos has had to go to Williams for info regarding where public funds are being spent due to stonewalling on the part of PDVSA. In countries where one man has too much power concentrated in his hands, the various organs of government become responsible to the leader and tend to ignore requests from other branches of government. It does look like Williams is in the middle of a mess, but this is a country with a dodgy governing system and, like Bahrain, a risky bedfellow. Frank Williams should have been aware of this when he made this deal with the Devil.
@Jem
Williams may be in England but there must be some business accountability with Venezuela through international agreements. Williams has signed a contract and that contract must be enforceable internationally; if it’s not then it has no validity. One of the parties to that contract is a business wholly owned by the government of Venezuela. Why shouldn’t that government have access to an agreement it is party to? Yes, Williams is in England and yes, they may be forced to produce their contract, and yes, this may be a problem for Williams.
Let me see, someone was just tweeting about how difficult it is becoming for F1 to squeeze normal businessmen in the USA and Europe for cash. Bernie’s strong arm tactics work where normal politicians are too scared to question government spending, or there is no Democracy. Expect F1 to continue to move away from Europe and the USA in the foreseeable future.
The whole situation around williams makes me sad – it;s like watching the last few years of Lotus (the Real lotus that died in 1994) all over again.
Joe – no, clearly I haven’t studied the Venezualan political situation!
I did say I understand fully where he’s coming from, especially on his points about there being no clear marketing gain as PDVSA isn’t a comsumer facing brand. I’d love my government to get more behind motorsport as a British success-story – but I’d be more than vexed if they sponsored Hamilton and Button’s drives!
I’m just hoping – really hoping – that Williams have taken this serioulsy over the past few weeks, and are very clear they will get the money Maldonado should bring next year. I would be very sad to see Williams leave F1 – but I can’t see how it would be any less than devastating if it got too far down the line and all of a sudden the money either doesn’t appear or gets recouped.
So, while I’m hoping Williams are clear that this guy is electioneering from an opposition politician without a leg to stand on. Hoping, however, is not the same as believing or trusting…!
I find the Venezuelan Tourist Authority an interesting concept. In January we are going to the Caribbean. Due to a mix up, we ended up with a spare week with nowhere to go. My wife suggested Venezuela, as we were down at that end of the Caribbean and flights are fairly cheap to there from Barbados. Just before I booked, I rang up a friend, who I knew had been a director of a foreign bank there in the recent past. He asked if I was totally mad and did I want to get mugged/robbed at best or kidnapped and possibly murdered at worst. The murder rate in Caracas is close to 10 times that in Bagdad. With a country in that state, spending millions on F1 sponsorship does not seem the best use of funds.
Wilson
I get it why this Mr Ramos is getting upset. I would like to compare PDVSA sponsorship with that of Petronas.
PDVSA is unlike Petronas and Venezuela is not Malaysia. PDVSA like he said, is “not a commercial brand, and that it sells nothing to consumers with its brand” so basically there’s no need for them to spend on branding on F1 cars or any other motorsports. Petronas is a state-owned company too, but it has a global (at least developing countries) presence and CLEARLY benefit from branding within F1. Venezuela and Malaysia interestingly have similar population number and more than a decade ago, similar GDP. Petronas spends a lot on helping Msian government to develop the country, and I am sure PDVSA does too, but clearly Mr Ramos doesnt see it contributing enough. Hence, he believe the money from PDVSA would be better spent elsewhere but an F1 team.
Joe, I believe most of commenter here doesnt understand the whole of point of the article. I suggest you insert that phrase “I wonder what you would say if it was your government?” in the article, so that they get your point. I’m with you on this one.
And one more thing, most people here asks “Why doesnt he ask PDVSA?” Hahaha, you people seriously doesnt understand socialist government. Go to China and asks for a copy of the state budget. Make sure you bring a coffin with you. Same goes with Venezuela, if he hadnt asked PDVSA why would he go to Williams then?
Your welcome Joe.
I’d ahve no problem whatsoever – 28million is peanuts compared to government wastage on Defense etc.
On the subject of “happening in your own country”, I don’t think any private citizen or company is going to release confidential information simply on the basis of a politician requesting it, in any circumstances. In the UK or Ireland, this sort of information could be extracted via a Freedom Of Information request, BUT not from a private company – only from a semi-state, and even then likely heavily redacted, as I’m sure you’re more than aware, as I’d say you’ve put in a few FOI requests yourself over the years, Joe!
Whilst I’d be pretty damn certain Ramos’ allegations are correct, and the threats that seem to have been made against him are alarming, Williams’ hands are tied here. Especially given that they’re a publicly traded company now – releasing those kind of confidential contractual details without a court order would surely lead them open to sanction from the relevant stock exchange.
Rohan, you clearly didnt read the article well enough. 28million is Venezuelan population number not the sponsorship value. If he knows that, he wouldnt have asked in the first place.
Senor Ramos does not understand that 28m of his countrymen are not simply financing a failing british team. The participation of Pastor M in a high profile international sport is raising the profile of his nation on the world stage, albeit it in a small way, and even if his performance does not match the anticipated degree of success. In its roundabout way, that profile may help to attract inward investment into the country and so justify what is actually, in the grand scheme of things, a relatively small outlay.
If Pastor fails to do well, that can hardly be blamed on his own government
Jo,
This is all irrelevant. The point is whether the sponsorship went through the necessary processes of democratic decision-making? If it did and it was agreed for the reasons that you state (or whatever) then that is fine. If not, why not?
On some level I’d be in favour of the UK government supporting a British F1 driver and, by extension, a British F1 team. But that’s more in light of the fact that the majority of those teams are in the UK and make an important contribution to the high-tech engineering sector of the economy.
Clearly this argument in no way applies to Venezuelan money going on Maldonado.
Whilst the constitutional case is clear cut and in favour of Ramos, the PR points made (that PDVSA has no need to promote) seems a little hollow and short sighted. I admit that I know very little of the company and its place in the corporate chain, however there are a great many companies who spend large amounts on advertising to raise their profile despite having little to no public end-users.
This can be seen in a considerable amount of advertising seen on TV news networks, which are often more aimed at corporate clients and brand recognition rather than selling a product to a consumer sat at home.
To a lesser extent it can be seen in F1, though normally of the order of the supplier/sponsor deals which are at least promoting their products within certain very specific sectors.
That said, I fully back Ramos’s case for transparency on the deal. An ideal, if highly unlikely, resolution would be for the car to be splashed with Venezuelan tourism livery – though there are clear safety and human rights issues that the country needs to address for that to be entirely palatable.
Much like the Bahrain GP really…
The US would love to see a coloured revolution in Venezuela and it’s certain the CIA will be doing ‘opposition research’ and ‘democracy assistance’ as it did in Georgia, Ukraine and numerous other places. To portray Ramos as a ‘white knight’ is simply naive. Think Yulia Tymoshenko.
copydude,
What are you talking about? This has got nothing to do with the CIA or Yulia Tymoshenko. It is very clearly a question of whether the PDVSA deal with Williams went through the correct processes. If it did then there is no problem and Ramos is a grandstanding politician, if it did not, then I think he is doing his job, as he was elected to do.
Isn’t the next logical step to nationalize the Williams team?
Joe,
Were it my government, and if we assume that Ramos is correct, I imagine I’d be thoroughly pissed off.
However, the way I see it, Ramos is overplaying a weak hand. His aggression will likely not endear him to a company which he has already acknowledged is probably not all that bothered about where the money comes from, and he is offering Williams no incentive to assist him. If the deal is secure while Chavez is still around but almost certain to be revoked should he lose power, and if they had no qualms about making the deal in the first place, why would they help to kill it now?
I don’t know anywhere near enough about the situation in Venezuela but to me this stinks of a guy who likes to make himself feel and appear important – in other words, a typical politician.
Joe, personally speaking if my government chose to spend money on F1 I’d think it a bit of a waste of money but as an F1 fan I’d see it as less of a waste of money than spending it on, say, a nuclear weapons system which is much more expensive and to my mind grossly more pointless. Not being a Venezuelan taxpayer I have no political opinion one way or the other on PDVSA’s support of Williams through Maldonado; the point I was making was that the politician in question ought be addressing his enquiries not to the organisation recieving the money, as they have done nothing wrong, but instead to the organisation giving the money.
I note Simon B’s point about “naivity about the situation in Venezuela” and take that situation fully on board. I have little doubt Mr. Chavez gets what Mr. Chavez wants or that he is unlikely to just write a nice letter back saying “oops, sorry old bean” and enclosing a cheque. But aside from the moral implications of accepting money from a questionable regime (and lets face it, there have been plenty of those in sport generally and F1 in particular), Williams are under no legal obligation to do anything. On that note it strikes me that if Venezuela is as awful as it is being made out to be here, I’d suggest that perhaps your national oil company spending money on F1 cars might be the least of your worries!
As an F1 fan, its sad that Williams are clearly reliant on this money, and that it comes with a driver whose abilities are at best questionable. In an ideal world I think most F1 fans would like a competitive Williams team with two drivers chosen solely for their ability, but there we go – if we were in an ideal world I doubt Mr. Chavez would be in charge in Venezuela, would he?
Dangerous and damaging situation for Williams. The simple fact that this letter is out in the open is bad publicity for the team and jeopardizes their future funding. Assuming that Ramos has no leg to stand on is naive. I have not heard or seen the president laughing or bullying him away – as Chavez does with his opponents, who ever they are – so what would that mean? Ramos is a political nobody? Or is it a non-issue? Or Chavez thinks he can do what he wants?
I have looked up the first letter send to Willems (http://scr.bi/vm9zME) and, if I where the team legal representative, I would not have send anything to Mr. Ramos just because of this letter. He can question the contract, but should point his arrows at the Government and PDVSA. Probably, he has done that too (would no assume that he is afraid to do so) as his public political profile in Venezuela is one of a crusader against corruption and fighting for transparency in public spending and ruling. He attacks the government on all kind of matters (directly supporting the fellow government in Nicaragua with money and oil for example), so he does not keep his mouth shut apparently.
Some very colorful comments can be read here (http://bit.ly/tiQCKs) on a news item published on La Patilla, and they are not very flattering for Williams and Sir Frank himself. On a side note: down here inLatinamerica the comments on news sites are much rougher then the ones I see appear/being published on UK or NL sites.
Browsing around a bit on news and twitter sites in Venezuela shows (very) negative comments on Maldonado -probably they are Chavez opponents too and positive ones from Chavez supporters (http://bit.ly/s3TDiZ), where you can read that ‘we are proud to see our flag waving around the world and hear our national anthem (well that will take a while before we will hear that one in F1) so that is money well spend’.
It is clear that this contract is a very political driven one, as it depends on the support of Chavez party, and therefore supports directly the Chavez Bolivarian revolution in Venezuela and other Latinamerican countries (Ecuador, Bolivia, NIcaragua) . So the question F1 journalist should ask Sir Frank Williams is: Why do you support the politics of Chavez’s Government?
WSH,
The answer is very simple. Williams needed the cash.
It appears to me that Mr. Ramos doesn’t actually expect Williams to show him their contract with PDSVA. He just wants to shine a spotlight on the fact that it isn’t on the up & up. The more people know about it, the better, from his point of view. When you live in a country that doesn’t have a lot of transparency about it’s discretionary spending you aren’t going to be able to nicely ask the government to hand over documents of potentially shady business deals. What you do is you make the fact that it exists known to the public so they can pressure the government to come clean, or look like they have something to hide.
Argh…always read the opening paragraph!
Joe, thanks very much for airing this news.
Interesting comments above. Just to be certain on some points.
Confidentiality: Claire Williams’ argument in that respect is beyond preposterous. Whoever legal expert she consulted before sending Congressman Ramos and me a communication with that argument, I assume, deep down, they know it isn’t going to fly. As I explained in my post, PDVSA is a fully owned Venezuelan State company. Its monies belong to the State, and fund each and every pet project of Chavez, and so, no law of the land allows PDVSA to agree to confidentiality clauses. Period.
As soon as we get our hands in that contract, and Venezuela being Venezuela a leak may come sooner than expected, we will publish it. Authorities will act on it, and responsibilities will be established in case of breach of legislation.
I believe RBS used to sponsor Williams F1. Hypothetically speaking, would Claire Williams have dared to answer in similar fashion irresponsible fashion to MPs questioning the sponsorship deal, upon the government bailing out and, effectively, taking over RBS?
Then there is the issue of jurisdiction. Again, PDVSA can not agree, according to legislation, to contracts that have any jurisdiction other than Venezuelan tribunals. And this, before anyone refutes, is something Hugo Chavez implemented as a matter of national pride and sovereignty.
Congressman Ramos is being subjected to all kinds of pressures, and almost certainly threats. For otherwise, why would he send one letter, requesting information, to then backtrack and refuse to carry on investigating? Especially considering that he has the law on his side?
As per PDVSA lack of transparency, that is indeed our problem. A problem we hope will come to an immediate end as soon as Chavez is out.
What Williams F1 is doing could be interpreted as complicity in illegal expenditure of Venezuelan public money. Sooner or later, it’s going to catch up with them, and it will have to face the music.
Joe. I think what people are missing is corruption is potentially prevalent here and all this guy is doing is blowing the whistle. If Williams are knowingly involved in a contract which involves corruption I think its a very poor state of affairs.
Is there any anti corruption measures in F1?
This is surely an important issue as F1 branches out to more developing nations.
nate
you are not getting shot for asking for information in venezuela. if that were the case, mr ramos would not have written this letter. as a matter of fact, people where able to stage a failed coup against chavez, shooting his supporters in the process, whitout getting killed as a consequence.
you are free to speak your mind in venzuela, and the opposition does exactly that, loud and clear, poisening the political debate. the letter joe presented here is exactly how they articulate their feelings in venezuela, and that is part of the problem. just as you can’t approach a business like williams f1 in that tone, you can not have a constructive political debate by being that polemic.
mr ramos can ask pdvsa or the executive for the information he desires, only he will probably get either no response, or the same response he got from williams f1.
the country is deeply divided, but a small majority still sees its interests best represented by mr chavez, and that is why he is still in power.
while it is true that chavez government is personalistic, intransparent, populist, partly corrupt and has certain authoritarian features, it is not socialist, it does not commit human rights violations, and it most certainly does not engage in acts of state terrorism.
take off your ideologic glasses and inform yourself before you draw conclusions.
the conflict in venezuela is between an oligarchic elite, which used to plunder pdvsa in order to fill its own pockets, and a populist government, who plunders pdvsa in order to pay for government subsidies that are intended to establish the appearence of a wellfare state.
the former are mad that mr chavez cut their access to state resources off, while the latter tries to mask the fact that it did not succeed in doing away with any of the many social problems venezuela has to deal with.
there was a reason why hugo chavez was elected in 1998, unfortunately, he prefers to engage in socialist and anti imperialist rethoric instead of actually trying to solve the countries problems. however, those who oppose him are the ones that ruined the country in the first place. or, as chavez himself said “yo no soy el problema, yo soy el resultado de un problema”.
now, it is pretty much true that chavez policies are unsustainable, and the whole thing will sooner or later collapse, but his opponents would probably not have done a better job. the only difference would have been that the money would have wandered into different pockets. in contrast to his predecessors, chavez at least provides the countries poor with some crumbs, even if that might be only out of self interest and for populist reasons.
vitaly,
The question is whether or not it is right to spend government money without proper processes being gone through.
The second point is why, if it is such a free country, did Ramos not send the second letter to Williams? It seems a reasonable response to me.
Joe,
Thank you for your reporting on this matter.
While Ramos’ letter to Williams most obviously explains his frustrations with Venezuelan politics and the Venezuelan administration, I find it also offers an olive branch to Williams. As I understand it, the directors of a corporation have a statutory obligation to ensure the actions of the corporation are legal and a moral obligation that they are ethical. Therefore it will do Williams no good at all to be publicly exposed as party to an illegal contract and possibly a conspirator with others to defraud the Venezuelan state. So I read Ramos’ letter as providing Williams the opportunity to demonstrate that the contract is a legal one or on learning it is illegal, to withdraw from it. The alternative appears to be to, minimally, for Williams to expect major embarrassments to its stockholders, other (potential) sponsors and fans, with the possible worst case being legal action by a future Venezuelan government.
This is my opportunity to thank you also for your consistently well informed and timely F1 news.
Please have some facts straight before commenting. This cannot be dismissed as a “tin pot dictator” or totalitarian/communist state. Chavez is a democratically elected president, albeit a politically powerful one. The point is, Venezuela is a democracy with laws and as such I think Joe’s fears are well founded if this issue gets traction with Venezuelans.
I can’t believe all the folks dissing Ramos, as if he has overstepped his bounds in asking why the gov’t is spending money on a racing team without approval.
As much as I like F1, it seems like an excellent question for a citizen’s representative to be asking. He seems like the kind of elected official people would like. We certainly need more folks like him over here in place of those who are bought and paid for.
Now, watch folks split hairs and say he’s not asking the question properly…
Seems to me that one should not dismiss “grandstanding” politicians per se. Oftentimes, particularly when they are yakking about issues such as wide and deep corruption, they will be thrown a few bones along with a cautionary whisper. Meanwhile there seem to be a number of plausible Chavez successors and all of them have opposed him. Even with all that oil money the economy is a mess with 29% inflation in 2010 and massive economic imbalances. A rich, remote race driver subsidized by the government with a secret contract has got to be vulnerable. Let him follow Milka Duno into the IRL with PDVSA subsidiary (in the US) Citgo. That would be a better fit to his talent anyway.
Of course Ramos is not really talking to Williams, he’s relaying a message to Chavez and to the general Venezuelan public. Making good use of the fact that the sponsored company is in the focus of the international sporting, automobile and financial press. So attacking him or belittling his efforts because he’s addressing an entity which is not legally required to answer his questions just misses the point.
I guess this the same blogger who posted the contract between Maldonado and Williams à while ago.
He asked Williams to confirm, but they said that this was not their contract.
Wondering what’ll come from all this…
Very grim and sad on so many levels. I will be sorry to see Williams go if it comes to that – equally I am sorry that the sport we love should lower itself in this way. Nothing especially new there though.
You ask what I would feel if it was my government. I am just deeply thankful that it is NOT my government.
Joe,
You keep repeating the question “what would you say if it was your government?” . . . I’m not sure if you’re just playing Paxman but, seriously? the deal is worth about 0.4% of the UK’s Department for Culture Media and Sport http://image.guardian.co.uk/sys-files/Guardian/documents/2008/09/12/13.09.08.Public.spending.pdf and it seems to me that the spend is irrelevant when the revenue generated by the expendidture is not quantified (either projected or actual). Mr Ramos, in typical third world stylee (forgive the cynical realism for a second) has chosen to ignore all of that and is himself as guilty as he a accuses his government of being by using Williams as a PR vehicle for his own politicaly motivated goals.
This letter is too full of emotional rhetoric to be taken as anything other than electioneering for which you and anyone else who has “dug up” (not wishing to cast any aspersions on your sluething and investigative journalistic prowess!) this unsent letter were used/manipulated/conned.
Frankly, its laughable and short of having a fucking great 20 foot neon sign proclaiming “PR” in bright flashing red letters I don’t think it could be more obvious.
Williams are quite right to keep schtum, after all they never even received this letter.
Griz
Griz,
I am not worried whether Williams keeps tum or not. I am worried about the possible long term implications of this deal on the team. Chaves is not going to last forever, one way or another, and what will Williams do, for example, if the new government decides to demand its money back?
USPS is independently run and has not received US taxpayers dollars since the mid 80’s.
I can’t say I know much about the political situation in Venezuela, but I do know a few Venezuelans who do not think highly of Chavez and believe their country is a broken one with little or no prospects. One of my friends was a big Formula 1 fan (even taking part in Formula Student) until he found out about this PDVSA deal and Pastor’s praise for the current government. He has told me he has no interest in the sport any more, which indicates the high feeling amongst my group of friends at least.
The whole deal shows to me how desperate Williams were for cash – hiring an average driver with massive backing from a shaky and dodgy government, who operate with only a passing glance to democracy (as far as I have been told) – it was only ever going to end in tears and I fear for the team if this matter is taken further 😦
Joe you don’t know if that is a real letter, and you’ve admitted that you have no legal understanding of the contents.
What’s your angle here? Not really sure why you are so vehemently arguing for something you don’t understand.
Purely from a moral standpoint? Something to do with Williams?
Nico,
The man is a member of the country’s congress finance committee. He is questioning a multi-million deal that his government has made. He has what appear to be many valid points. If the government changes in Venezuela and the new people decide to pursue the matter I am worried for Williams. That is all. This is how it is a motorsport story and as I happen to be a huge Williams fan, I think it is entirely valid to ask whether this is all wise.
Given that PDVSA is basically a holding company, the sponsorship signage on the Williams cars seems to me to be very similar to the Beatrice Foods deal that largely bankrolled Carl Haas’s F1 team in the 1985-86 time period. That deal was apparently done between James L Dutt, the Beatrice CEO, and Carl Haas after a chance meeting in a restaurant, fuelled by Dutt’s desire to make Beatrice a brand, despite it being little more than a holding company for dozens of other brands. When Dutt was forced out of the CEO position 18 months later, Beatrice swiftly terminated the F1 sponsorship and Haas closed down the F1 team after failing to find alternative funding.
Any sponsorship deal based on vanity not linked to business results, whether comprising private or public funding, is always liable to be cancelled PDQ if the climate at the top of the funding organization changes, which it has a tendency to do in dysfunctional corporations or countries.
The state is the company,the company is the state.That’s what Venezuala is now.
So everyone who is outraged with WF1 dealing with a dictatorship must also be outraged with F1 dealing with dictatorships around the world??? from the likes of China, Russia and Bahrain!
Come on, Chavez has not trampled on human rights like some of the other countries F1 deals with, this dictatorship is nothing like those countries. Their contract is no doubt written in English Law not Venezuelan so no doubt the letter was only ever intended to be leaked to the press to try and cause issues with the team.
All this shows is that the Senator can not fight his cause with his own legal system so he tries and make it as hard as possible for anyone who has a contract with his state owned companies to reveal the confidential details. It is nothing more than posturing.
Let’s not forget that in that country petrol is only a few pence per litre because of Chavez taking all the profits and “giving” it to the people unlike our country where the government takes money from the people for buying petrol! Chavez is not universally disliked (unlike some of the western Governments of this world!)
Taking the premise (I don’t know Venezuelan politics so I can just go on face value) that Ramos is truly anti-corruption, the line “Until proven otherwise, we will continue to have the suspicion that irregular payments are an integral part of this ruinous contract” implies that the contract may include (dodgy) payments back to certain individuals. From the rest of the post, it appears that it’s something that is standard in Venezuelan contracts, and therefore without evidence to the contrary, the feeling is that similar arrangements are in place here. That would not be good.
Joe – no doubt the contract has been signed under UK law and therefore whatever the opposition wants, they are unlikely to get under the commercial confidentiality clauses.
The issue of whether countries should sponsor F1 is no different to whether they should spend money on their Olympic teams (although that benefits more athletes). Its all about national grandstanding or the President’s ego (as you point out).
Giving some extra information of this case… The letter that you are seeming here was never sent to Williams. It was wrote but it was not sent. He sent a previous letter asking about the contract because PDVSA did not inform about the contract and never answer to Ramos or to anybody. PDVSA acts by its own following chavez and not the laws and constitution. The letter was published by a blogger who was in contact with Ramos. Alek Void in Vcrisis. Actually, Ramos must be under pressure or his family to leave the case and forget it. This second letter was wrote as an answer to Williams when they said that the are cover by confidentiallity agreement but the problem is that PDVSA is a public industry which expenditures MUST be approved by the congress or national assembly. If you knew about internal situation in Venezuela many of you will understand why we can laugh when we see the UK in crisis when few pounds were claimed inapropiately/unethically by some MP’s. The corruption is Venezuela and the way to work of the actual chavez’s goverment there is out of the mind and conceivable logic of more or less a non corrupt goverment.
Joe,
Eh? . . . “and what will Williams do, for example, if the new government decides to demand its money back?” Tell the new govt where to go I’d think is what they would do, just as they would have if RBS had demanded their money back . . .
Also, PDVSA are not really promoting themselves are they? Its Venezuela that’s being promoted, as evidenced by the rear of the rear wing, and as capitalistic as that may be, it can not be argued that its not for the good of the country. Tourism equals money and visibillity..
As I said before, if the numbers were quantified then maybe we’d all be in a position to comment more acurately. If venezuela has seen an increase in tourist revenue and this actually gives the opposition the (somewhat reversed into) option to publicise their situation to the good, then it may well be that they keep the deal going after the coming power change you predict – which is of course unquantifiable in itself. Mugabe has been on his way out of Zimbabwe for the last 10 years, but is still firmly ensconced in power. . . . equally the situation could change tomorrow as in Egypt etc.
Again, Williams never recieved this letter. Its and internal political positioning/points scoring device, if there is a power change, they’ll have their hands full of sorting out the country before they worry about what amounts to a pittance in context.
If there is a power change, well then williams may lose the sponsorship, just as they lost the RBS sponsorship (which i beleive was worth coniderably more than the PDVSA deal) when UK PLC collapsed in a heap. They didn’t have to pay the RBS money back.
Quite why you think they’d “have to” pay the money back I really don’t know. Its all a bit Chicken Little isn’t it?
As for others’ moral outrage at Willams doing the deal . . please! How many teams would still be in F1 and what would the F1 championship look like if it/they adhered to this Disney moral code? Would that bee the same championship that was mostly funded by tobacco money? Pffft!
Griz,
And if the government considers the money to have been stolen, what do you think it will do? Shrug its shoulders and say “Never mind” or try to find way to get its money back – like any self-respecting government that believes in the rule of law.
🙂 again, too Chicken Little; he govt will have too many much bigger fish to fry. And I’ll wager that the contract is pretty secure; Williams have been doing this for a while (as you of course know).
Griz,
The money might not be the issue. F1 has profile and it would be a good way to show the world that Venezuela was changing. Either way, I would like to know how a contract can be secure if the money was stolen from the public and the team has been appraised of that situation by an elected official who is involved in the financial commission of the country’s congress.
Hi Joe,
Unconnected, but a bomb has just been set off outside the UK Embassy in Manama, Bahrain. Is there any update of what the situation is / maybe with regards to the GP in Sakhir next season?
Joe
An interesting article and I have similiar worries about Williams to you, as they have always been a team I liked, primarily through their drivers, AJ, Keke, Piquet, Prost, Damon Hill, JV and now Reubens. But did the old fashioned race team “die” when Adam Parr came in. He comes across when interviewed like a second hand car salesman at a lot right in the middle of the wrong part of town who will do anything for the deal. He seems to have “retired” Patrick Head, rather than Patrick Head deciding to retire as well.
I recall a deal in 1992 when Sasol sponsored the Jordan team and South Africa seemed to get nothing out of the deal (That we could see). We had a couple of drivers (George Fouche and Wayne Taylor) who may have been able to do the job in the cockpit and both had been sponsored by Sasol in local and International racing, but no drivers were part of the deal. At the time I wrote a scathing letter to our local motorsport magazine as I was appalled that the government (it was not my government, as I was an ANC supporter and did not like the way the government was squandering money on vanity projects). It was also strange as we had very strict currency control in place at the time. So that answers the question of oters governments doing it and how I would feel.
Finally, I really do worry about people on your forum who just link what you have written without any common sense in the linking. If the PDVSA contract is illegal and has not followed due process then potentially Williams could be pursued through the courts. The link to RBS is ridiculious. That contract was entered into and like all contracts had a time limit. When RBS fell over the only way out could have been break clauses etc. The contract was always valid, only when RBS collapsed did we see it was another vanity contract. From memory there was an option to renew, which was not taken up. It also seemed to be just another nationalistic payday for Sir Jackie Stewart as he was part of the deal. It was no different to Northern Rock and Newcastle United. That shirt sponsorship had to be honoured until the contract ended.
The bottom line is Maldonado has no place in F1 and he is there because of Chavez and state money, by all accounts.
The whole situation is a mess and should never have happened.
Thanks for great stories. Your blog is the highlight of my motor racing surfing every day.
The issue isn’t so much whether Ramos has the right to ask the question (by my understanding of the situation he clearly does) but the manner in which he considered doing so.
The stance immediately taken is very critical and threatening of Williams. Being, like yourself Joe, a Brit living in France, I’m aware that it is quite possible a question of culture, but the letter seems to imply that Williams are fully complicit in the situation, that the sponsorship provides zero value for PDVSA and that they (Williams) should provide a solution.
If the upper structures at PDVSA aren’t doing their jobs properly (i.e. discussing the deal made) then that is their own fault. Williams aren’t beholden to the Venezuelan constitution (though PDVSA obviously are) and hence shouldn’t find themselves at risk of anything more than the plug being pulled on the deal. A potential tragedy for the team admittedly, and one which understandably they won’t be keen to bring upon themselves.
Flatly though, the fault lies in Venezuela somewhere. Whilst Williams are indeed in a contract with a Venezuelan corporate entity, this isn’t a question of breach of contract; someone at PDVSA signed a contract that they shouldn’t have.
I note from the original text that article 223 explains the responsibility to investigation committees of all public officials and private citizens – which no member of the Williams F1 Team is likely to be… with the notable exception of one Mr Pastor Maldonado.
If he’s legally a Venezuelan citizen then he’s a legitimate person for Ramos to summon and pressure for the information required.
So we’re left doing what we always do : we wait and see.
Joe please disregard my earlier post. Below is what i meant to say
Joe,
It’s rare for me to say, as your analysis is generally spot on, but I think you’re barking up the wrong tree at the end of this time line.
Any contractual agreement that was made between PDVSA and Williams would likely be respected by an international arbitration service. Williams are very unlikely to be considered to have had a duty of care to the Venezuelan state. They would have a DOC to their own shareholders, that would include checking the credit worthiness, anti-money laundering etc. but would be very unlikely to reach so far as to check the relevant legislation and articles of association. In any case PDVSA will have warrantied Williams that they are able to form the agreement.
The nation may have a case against PDVSA, but it would be unlikely to claim. If one is a nation going through growing pain related to joining the international business community the last thing that one wants to do is to show that a contract with a major state enterprise isn’t worth the paper it’s written on.
The real question is going on at Williams. A miner for a Chairman, FW remote, pay drivers, poor engineering environment and decimated commercial team. They have forgotten how to win.
. . . a better way to show the world would be to use it positively rather than negatively. Sueing or trying to claw back money from previous contracts that you don’t happen to agree with is emphatically not showing the world you are changing. Woking with people to romote a positive and progressive Venezuela would be much more productive, no?
You have no idea how they will react (you can not take this PR, leaked and undelivered letter from one person as demonstrating the new government’s mindset) You’re making too many assumptions about what the new government might do, what their mindset is and the strength (or not) of Williams’ contract., ven if they get in any time soon – who’s to say that Maldonado/PDVSA aren’t long gone from Williams’ garage before the govt. changes?
. . . does that mean that Mercedes, Glufstream/Learjet, Shell/BP/Texaco et al will have to pay back the money given to them ?
I’m sure that sky is looking lower! 😉
Griz,
I am sure that the Venezuela taxpayers will be delighted to know that their money has been so spectacular wasted.
Total confusion between legality and morality.
I can’t imagine what would impose an obligation on Williams to disclose this agreement. It was a commercial agreement with binding terms. Just because one politician thinks that Venezuelan procedures weren’t complied doesn’t mean that Williams should just roll over and start dishing out confidential documents. If the deal should be disclosed because if impropriety in Venezuela then it should be disclosed by PDVSA.
Hopefully Williams will have taken some legal advice on this document and will not have left themselves in a position vulnerable to this cash being clawed back. It seems much more likely that if allegations of misconduct are proven within PDVSA individuals within that organisation would be in the firing line.
Morally, if an organisation which has, or is perceived to have, great wealth offers some tiny percentage of that wealth to a company as sponsorship is there any duty on the recipient to evaluate the benefit to that organisation? It seems clear to me that the duty to make good investments lies within the sponsoring organisation. If the sponsors have done something with little benefit for their own organisation then isn’t it them who should be the ones being scrutinised? On the face of it I can’t see how Williams are complicit in any irregularity just because they were given some money.
Having said all that they clearly need to keep looking for sponsors but I imagine that is the normal position for most F1 teams!
Andrew Mac – please don’t worry about me 🙂 “i really do worry about people on your forum . . ”
Your calling my liking the PDVSA contract to RBS ridiculous is based on _your_ assumption that the PDVSA contract is proven to be illegal. . . my position is that it is not ilegal and will be very difficult to be proven illegal (see Jem’s post above) and in that context it is not ridiculous at all – it is EXACTLY the same as the RBS contract.
conjecture, negative assumption and doomsday whatifs is the mainstay of this blog posting.
Finally, without wishing to give this blog posting any more life or head off on un resolvable tangents – if you removed from F1 all drivers that “have no place in F1” becasue they are pay drivers, the history books would look quite different. Maldonado faired well against his team mate Hulkenburg in GP2 and won GP2 before entering F1. Barrichello has commented more than once on how quick he is. There are many more before him and will be more after him who deserve their place in F1 less if driving skill were the only crterion.
Joe,
spectacularly wasted? Really? Once again, you have no basis for saying that. How much did PDVSA spend, how much (if any) of an increase in tourism and any other deals/profits can be directly attributed to PDVSA’s spend?
What is spectacular is the extent to which this has diverged from my original point so I’m gonna bow out gracefully and leave it at that.
cheers
Griz
don’t look up 😉
Griz,
PDVSA is not a commercial brand. No tourists will go to Venezuela because of the sponsorship.
Venezuela appears much like Cuba in that you do deals with the government and not the company. On that basis how can PDVSA do any deals and further would you want to deal with a country / company that appears so poorly run, where contracts are signed for huge amounts of money wioth no tangible benefit. Its like adverts for London Underground on the radio in London.
As for tourism; there are places more conveniently located with a far better reputation to visit, unless you fancy going to see the PDVSA headquarters and a refinery possibly.
Joe,
In the same way that Abu Dhabi is not commercial? (all over the ford WRC cars) Venezuela.com is plastered all over the back of the Williams car, did Williams just write that on the rear wing out of kindness? More likely they’re contractually obligated to (but, again we don’t know)
You have no idea (nor do the rest of us) what commercial gain (or saving) was intended to be had by the deal.
My original point was, and still remmains, that this ridiculous _never delivered_ letter is thinly veiled political posturing that has no bearing on Williams’ future other than it may not be extended for 2013.
Griz,
The deal is very simple. Chaves wanted an F1 driver for the greater glory of himself. Maldonado is well-connected.
End of story. If that is democratic then I am the Pope. It does not matter that Ramos has to resort to unusual ways to get his voice heard. At least his voice is being heard. I see no reason why you can pronounce that this will have effect on anything.
Joe,
As per your assertion that you can see no reason that I can pronounce . . . I see no reason that you can pronounce “No tourists will go to Venezuela because of the sponsorship.”
I’m still confused; is this posting about being worried for WF1’s future, the moral stance of bad contracts, the political support of an opposition party you believe is being wronged, something else, all of the above? I sure don’t know.
Lets hope your righteous opposition doens’t turn out to be more of the same. I suspect they will, but without some sort of change they’ll never know.(now we are seriously off topic and sailing close to the rules of your blog! 🙂 )
As I said in my first post, I think you’re playing a bit of Paxman/devils advocate, but I think we’re getting into symantecs now and as I failed to do at 14:55, I will decline to comment further.
cheers
Griz
@joesaward fair enough, thanks for clarifying.
Joe’s reply to Griz.
Exactly right. I’ve worked in Venezuela and still visit semi-regularly.
There was never any intention to ‘go after’ Williams. But then again there’s sod-all that this politician can do in Venezuela either.
This way the point gets aired. The point being that Chav is shown trousers down spending the ‘peoples’ money for his own good. No vote, no accounts, no yes, no no, just hand in the pot, grab a load and sling it at Grove with a favorite son to follow. Not a lot of money but certainly an edge of principle.
Williams have nothing to worry about beyond the (‘highly remote today- but maybe not next week’) chance that the tap may just get turned off. In which case they count their blessings at the sums received and sit back on the reduced – but no doubt hedged – income that they’ve already had.
If anyone from the Ven Consulate is reading this I would just like to say that I think Hugo is a really great guy, deserving of universal recognition for the enlightened progress made to date.
@Interested Party
. . . pretty much exactly what I was saying with reference to a) the intent of this never delivered letter and b) the non existent threat to Williams.
love the ps to the Consulate 😀
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