Petrocaribe is the name given to a series of deals made by the Venezuelan oil company Petróleos de Venezuela, S.A. (PDVSA) with various Caribbean countries. In those deals, PDVSA would allow deferred payments on oil shipments that the countries, and the accrued savings could then be used towards social welfare programs.
In Haiti, deferring payments for oil imports was estimated to earn the country approximately $100 million USD a year.
But since the Haitian deal was finalized in 2008, it has been enveloped in scandal with accusations of misappropriation of investments, potentially driving the current riots and social unrest that have plagued the island nation.
A 2011 article by the publication The Nation based on U.S. embassy cables released by Wikileaks accused U.S. oil companies of trying to stifle the deal because it would use Venezuelan oil to fund social programs.
But other documents released by Wikileaks’s Global Intelligence Files (GIF) show that Exxon and Chevron, operating as Esso and Texaco in Haiti respectively, were skeptical because of various other reasons. And while much attention is given to potential embezzlement surrounding Petrocaribe, fuel subsidies remain a larger burden on the Haitian economy and are also the source of unrest.
In an October 2006 cable, the oil companies argue that “…if the [Government of Haiti] understood what it took to supply petroleum to Haiti, it would know better than to disrupt the process and that if the [Government of Haiti] had any technical expertise it would not need to ask for the participation of the oil companies.”
While Exxon and Chevron complained about buying oil in the Petrocaribe deal from a sole provider, it wasn’t because the sole provider was Venezuela.
An aid in President Réné Préval’s office, Michael LeCorps, did state in one cable in January of 2007 that one of the four oil companies operating in Haiti (Esso, Texaco, Total, and Dynasa, a Haitian company) refused to negotiate at one point because they only wanted to import their own oil.
But in a separate report on, LeCorps also contradicted that by noting that “[Exxon and Chevron] already purchase 99.9 percent of their oil from Venezuela's state oil company (PDVSA), the same vendor that the [Government of Haiti] will use.”
The problem was the sole provider being the Haitian government as middleman. In the agreement, PDVSA would sell to the government of Haiti, which will then sell to private oil traders.
In that same report, Eustache St. Lott, Area Manager for Esso in Haiti, is paraphrased saying that purchasing oil solely from the [Government of Haiti], rather than another entity, “is not in Esso's best interest given Haiti's unpredictable security situation and past instability.”
The reports also note that then-President Preval as well as Chevron and Exxon were publicly silent on Petrocaribe and did not want to be seen as supporting the deal.
The embassy cables detail how LeCorps believed Haiti and Venezuela wanted the Petrocaribe funds to be handled by a national company, but without one in place the role was given to LeCorps who created the Office of Monetization of Development Aid Programs (BMPAD) to handle it.
A 2017 report produced by the Haitian Senate looked into corruption allegations surrounding infrastructure projects created by the Petrocaribe funds. The report found widespread malfeasance with excessive overbilling, accounting irregularities, ineligible contractors, as well as a contract signed by someone already deceased.
LeCorps was one of many specified in the report for “forfeiture, misappropriation and misappropriation or dissipation of public funds.”
During the Senate’s anti-corruption commission, LeCorps was brought to the stand to explain contracts between the Haitian government and ESD Engineering, a company LeCorps worked for earning $888,000/month USD, according to a story in the Haitian Observer.
LeCorps also testified that the BMPAD office had no oversight of the infrastructure contracts handed out by the agency and all payments were done transparently.
Besides the misuse of Petrocaribe funds, the International Monetary Fund (IMF) encouraged the Haitian government to reduce retail fuel subsidies to ease the burden on the government’s finances in 2017.
The possibility of higher gas prices from the report may have sparked some of the rioting that has engulfed the country over the last year, but the IMF still supported removing the subsidies in July of 2018.
A 2017 World Bank study noted that fuel subsidies were over 2 percent of GDP, more than health care, and largely benefit the top 20 percent of Haitians. A 2015 IMF report listed Haiti as having some of the highest fuel subsidies for a Latin-Caribbean country that is a non-producer of oil.