Testimony of Thor Halvorssen to the Senate Committee on the Judiciary 7-26-2017 | Racketeer Influenced And Corrupt Organizations Act | Whistleblower
Testimony of Thor Halvorssen to the United States Senate Committee on the Judiciary
Chairman Grassley, Ranking Member Feinstein, and distinguished members
Thank you for the opportunity to provide testimony about Fusion GPS, its role in a multi-billion-dollar corruption case benefiting the Venezuelan regime, and how they violate theForeign Agents Registration Act (FARA).My name is Thor Halvorssen, and I am President and CEO of the New York-based HumanRights Foundation. HRF is a twelve-year-old international organization that focuses on the defense of civil and political rights in authoritarian countries. HRF’s founding members include Nobel Peace Laureate Elie Wiesel, Czech president Václav Havel, United Nations ambassador Armando Valladares, and chess champion Garry Kasparov, among other distinguished contributors to the promotion of human rights. In addition to my role at HRF, I am the founderand CEO of the Oslo Freedom Forum, the international gathering of individuals on the frontlines of the struggle against dictatorships across the world. Of particular relevance to this testimony, I am a longtime researcher and published writer on the intersection between corruption and human rights violations.In 2012 I began researching a Venezuelan corruption scandal that also involved U.S.banks, companies, and even U.S. courts. This story should have received extensive exposure on the front pages of America’s national newspapers. Fusion GPS, however, was hired to spike these stories. Even though it was clearly acting as a public relations counsel on behalf ofa foreign principal, Fusion GPS never registered under FARA and was able to engage in nefarious activities without public scrutiny.The Venezuelan government awarded twelve power plant contracts to Derwick Associates(Derwick), a Barbados company with no prior experience in procurement and construction.Derwick’s founders were Venezuelans in their twenties with no capital, no engineering background, and no relevant work experience. What they did have was a readiness to pay hundreds of millions of dollars in kickbacks and bribes to officials of the Chávez government.Derwick sourced the turbines for the power plants from a middleman who scoured salvage yards around the world, including in Tanzania, Qatar, and China. Some parts even came from power plants decommissioned decades ago in California and Mississippi. Derwick Overcharged the Venezuelan government for this second-hand equipment (far more than new equipment would have cost) and hired other companies to do the construction work. Theyskimmed and overbilled in excess of $2 billion.The Derwick principals, Leopoldo Betancourt-López, Pedro Trebbau-López, Francisco Convit-Guruceaga, Edgar Romero-Lazo, Domingo Guzman-López, and Francisco D’Agostino-Casado, all have homes in the United States. They laundered the bulk of the stolen funds through J.P. Morgan, and paid most of the kickbacks into Banca Privada d’Andorra, where they set up accounts for Venezuelan government officials in Chávez’s cabinet. These Andorran bank accounts subsequently became the focus of a Spanish law enforcement investigation. A public scandal ensued in Spain and in 2015 the bank was designated a“primary money laundering concern” by the U.S. Treasury's Financial Crimes Enforcement Network (FinCEN
The principals of Derwick continue to operate with impunity in Venezuela and in the U.S.under the auspices of the Maduro government. The Venezuelan state provides Derwick’s Security apparatus, and PDVSA, the Venezuelan state oil company, has since granted them significant oil and gas concessions. In the U.S. they are reportedly under investigation by the Department of Homeland Security (DHS), the U.S. Attorney for the Southern District of New York, the Treasury Department, the District Attorney of New York, and the Drug Enforcement Agency (DEA).Derwick has stolen more than ten times the amount involved in the infamous 2015 FIFAcorruption case and multiple times more than the tax theft in Russia that led to the murder of Sergei Magnitsky. However, there has been almost no media coverage about the Derwickcase, and law enforcement activity probing Derwick has ground to a halt. One of the key reasons for this is the paid effort of Fusion GPS.In 2014 Fusion GPS began working on behalf of Derwick to ensure that the evidence of their crimes and the narrative of their spectacular thievery would never appear in the media.The media was a significant threat to Derwick because, even though law enforcement already had Derwick on its radar, prominent media exposure would surely accelerate a prosecution.Fusion GPS cofounders Glenn Simpson and Peter Fritsch knew as much, having worked at the
Wall Street Journal
for a combined tenure of over two decades. During their time there,they published articles that preceded criminal investigations, indictments, and arrests.Fusion GPS understands how the media operates, how to kill a story, how to manufacture enough doubt to throw off a journalistic investigation, and what it takes for an editor to disqualify a journalist from pursuing a story. Working alongside their colleague Tom Catan,their objective at Fusion GPS was to ensure that the whistleblowers in the Derwick case would suffer great injury to their credibility and reputation. Fusion GPS devised smear campaigns,prepared dossiers containing false information, carefully placed slanderous news items, and possibly even staged a break-in at the home of one of the key whistleblowers. I know firsthand the breadth and intensity of their activities because I personally experienced the wrath of Fusion GPS.In late 2013 the
Wall Street Journal
assigned its Latin America correspondent, José deCórdoba, to investigate the alleged crimes of Derwick Associates. After several months ofinvestigation, Mr. De Córdoba’s work on Derwick had produced such a compelling story that itwas scheduled to run on the front page. I was one of the main sources in that article.Before the story was to appear, Mr. De Córdoba was invited to visit Venezuela and meetwith the Derwick principals. Mr. De Córdoba traveled to Caracas in July of 2014, where he wasgreeted at the Derwick offices by Fusion GPS’s Peter Fritsch. As the former Latin AmericanBureau Chief at the
Journal,
Mr. Fritsch is, of course, Mr. De Córdoba’s former supervisor. Mr.De Córdoba described this blatant intimidation tactic as something that made him feeluncomfortable.Mr. Fritsch sent Mr. De Cordoba a dossier containing false and derogatory informationabout me and about the other whistleblowers who have drawn attention to Derwick. Mr.Fritsch also told Mr. De Córdoba that the whistleblowers were part of a paid defamationcampaign against these successful, honest Venezuelan businessmen. Ironically, in this tale,
unts here, and direct Fusion GPS from the U.S., the judge found that their contacts withthe U.S. were not sufficient to subject them to the court’s jurisdiction. Beyond Derwick Associates’ qualifying as a criminal enterprise,prominent attorneys who specialize in the RICOlaw have suggested to me that Fusion GPS’s principals are operating a criminal enterprise thatviolates the RICO Act by retaliating against whistleblowers who have contacted lawenforcement.
Beyond the conduct on behalf of their clients to vilify and discredit any whistleblowers,Fusion GPS has failed to register under the Foreign Agents Registration Act (FARA). Derwick Associates’ principals have been discussed at the U.S. State D
Mr. Fritsch reversed the roles of his organization and the opposition that had sprouted up against Derwick. Fusion GPS was responsible for the defamation campaign, and the targets of its campaign were a group of honest people attempting to expose the corruption of the Chávezregime and its cronies at Derwick. Mr. De Córdoba informed me that the information in the file about me was not credible. After his return to the U.S., Mr. De Córdoba’s supervisors at theJournal received multiple threat letters from attorney Adam Kaufmann of the New York law firm Lewis Baach. Mr.Kaufmann has a relationship with the principals of Fusion GPS that stretches back twenty years.
for a combined tenure of over two decades. During their time there,they published articles that preceded criminal investigations, indictments, and arrests.Fusion GPS understands how the media operates, how to kill a story, how to manufacture enough doubt to throw off a journalistic investigation, and what it takes for an editor to disqualify a journalist from pursuing a story. Working alongside their colleague Tom Catan,their objective at Fusion GPS was to ensure that the whistleblowers in the Derwick case would suffer great injury to their credibility and reputation. Fusion GPS devised smear campaigns,prepared dossiers containing false information, carefully placed slanderous news items, and possibly even staged a break-in at the home of one of the key whistleblowers. I know firsthand the breadth and intensity of their activities because I personally experienced the wrath of Fusion GPS.In late 2013 the
Wall Street Journal
assigned its Latin America correspondent, José deCórdoba, to investigate the alleged crimes of Derwick Associates. After several months ofinvestigation, Mr. De Córdoba’s work on Derwick had produced such a compelling story that itwas scheduled to run on the front page. I was one of the main sources in that article.Before the story was to appear, Mr. De Córdoba was invited to visit Venezuela and meetwith the Derwick principals. Mr. De Córdoba traveled to Caracas in July of 2014, where he wasgreeted at the Derwick offices by Fusion GPS’s Peter Fritsch. As the former Latin AmericanBureau Chief at the
Journal,
Mr. Fritsch is, of course, Mr. De Córdoba’s former supervisor. Mr.De Córdoba described this blatant intimidation tactic as something that made him feeluncomfortable.Mr. Fritsch sent Mr. De Cordoba a dossier containing false and derogatory informationabout me and about the other whistleblowers who have drawn attention to Derwick. Mr.Fritsch also told Mr. De Córdoba that the whistleblowers were part of a paid defamationcampaign against these successful, honest Venezuelan businessmen. Ironically, in this tale,
unts here, and direct Fusion GPS from the U.S., the judge found that their contacts withthe U.S. were not sufficient to subject them to the court’s jurisdiction. Beyond Derwick Associates’ qualifying as a criminal enterprise,prominent attorneys who specialize in the RICOlaw have suggested to me that Fusion GPS’s principals are operating a criminal enterprise thatviolates the RICO Act by retaliating against whistleblowers who have contacted lawenforcement.
Beyond the conduct on behalf of their clients to vilify and discredit any whistleblowers,Fusion GPS has failed to register under the Foreign Agents Registration Act (FARA). Derwick Associates’ principals have been discussed at the U.S. State D
Mr. Fritsch reversed the roles of his organization and the opposition that had sprouted up against Derwick. Fusion GPS was responsible for the defamation campaign, and the targets of its campaign were a group of honest people attempting to expose the corruption of the Chávezregime and its cronies at Derwick. Mr. De Córdoba informed me that the information in the file about me was not credible. After his return to the U.S., Mr. De Córdoba’s supervisors at theJournal received multiple threat letters from attorney Adam Kaufmann of the New York law firm Lewis Baach. Mr.Kaufmann has a relationship with the principals of Fusion GPS that stretches back twenty years.
Mr. Kaufmann is the lawyer Derwick hired to pay Fusion GPS’s fees and to ensure that Fusion GPS’s paperwork, including all bills, would be covered by attorney-client privilege. The Wall Street Journal never published the story about Derwick’s crimes. Fusion GPS was not done yet. Multiple stories at various media outlets were also spiked prior to publication,including in prominent publications such as Bloomberg News andThe Economist in London. Although shielding their clients from investigative reporting was an important part of Fusion GPs campaign, it was by no means the only thing they did for Chávez’s cronies. Alek Boyd,a prolific investigative journalist based in London who had published extensively aboutDerwick’s corruption, was targeted with false accusations of being a notorious pedophile, convicted drug trafficker, a car thief, and an extortionist. Rather than backing down after these items appeared about him online, Mr. Boyd increased his scrutiny of Derwick.
Weeks later, inan unsolved crime, three men broke into Mr. Boyd’s home, stole his computer equipment, and placed photographs of his daughters, taken with a telephoto lens, into the pockets of his raincoat. Mr. Boyd subsequently received a hand-written anonymous letter threatening his daughters with rape.Several months later, Messrs. Simpson and Fritsch continued with their scorched earth methods when they contacted an out-of-work beltway journalist, Kenneth Silverstein, and provided him with a similar file they provided Mr. De Córdoba. Mr. Silverstein proceeded to write vituperative blog posts and more than a dozen social media posts falsely claiming that I Suffer from a heroin addiction, that I was sent to a drug rehabilitation center in Tennessee, and that Peter Thiel is a former romantic partner who paid for my supposed rehab. Repeating the identical accusation made against Mr. Boyd and against other whistleblowers, Silverstein Falsely accused me of pedophilia; he also wrote that I misused donations made to the Human Rights Foundation, and that I attend work events while high on drugs.
None of these dreadful accusations have any basis in fact. Fusion GPS arranged for these things to be published and disseminated widely in order to punish me for being one of the main whistleblowers in theDerwick case, by striking at my credibility as a human rights advocate. Although Silverstein isan unrepentant public supporter of Hugo Chávez and Venezuela’s dictatorship, evidence also suggests that Fritsch paid Silverstein and that this isn’t their first collaboration. As stated, beyond Mr. Boyd and myself there are a handful of other journalists and private citizens involved in whistleblowing the Derwick criminal case that have also been the subject of Fusion GPS’s smear tactics. Former U.S. Ambassador to Venezuela Otto Reich was so fiercely targeted for defamation that he filed a federal Racketeer Influenced and Corrupt Organizations Act (RICO) lawsuit against Derwick in New York. This lawsuit was recently dismissed on jurisdictional grounds. Even though the Derwick defendants have traveled more than one hundred times to the U.S., own homes in Miami and New York, possess bank
accoepartment, the U.S. Congress,and the White House as deserving of individual sanctions and the imposition of a visa ban.Fusion GPS has undoubtedly attempted to influence policy on their behalf. Moreover, Derwick Associates’ principals are indistinguishable from Venezuela’s government in their use and abuse of the Venezuelan security apparatus, domestic military bases, and restricted airports;their access to senior government officials, including President Nicolás Maduro and his family;and their ability to escape prosecution in Venezuela for their multiple crimes.
accoepartment, the U.S. Congress,and the White House as deserving of individual sanctions and the imposition of a visa ban.Fusion GPS has undoubtedly attempted to influence policy on their behalf. Moreover, Derwick Associates’ principals are indistinguishable from Venezuela’s government in their use and abuse of the Venezuelan security apparatus, domestic military bases, and restricted airports;their access to senior government officials, including President Nicolás Maduro and his family;and their ability to escape prosecution in Venezuela for their multiple crimes.
Distinguished members:
Any act of corruption in conjunction with a dictatorial government is by necessity an action that empowers that government and enables it to continue to flout democratic accountability and violate human rights with impunity. It is an action that entrenches the dictatorship.Corrupt government officials in dictatorships would be powerless if they didn’t have cronies in the business world, and these cronies, in turn, would be useless allies without enablers like Fusion GPS, who are eager to whitewash and profit from their crimes. Further, I would point out that those of us who have chosen to expose these abuses of power are not the only victims here. Consider that none of the power plants built by Derwick are operating properly,leading to enormous human cost: blackouts are a daily occurrence across Venezuela;hospitals without electricity rely on flashlights and cellphones to light their operating rooms;public housing facilities in high-rises require elderly tenants to climb multiple staircases because the elevators have no power; food (already a scarce resource in Venezuela) rots in millions of homes because refrigerators don’t run; thousands of traffic accidents plague streets and highways that don’t have lighting. Just imagine what hell it must be to live in a country where for several hours a day, every day, the rural population suffers rolling blackouts.Fusion GPS isn’t an “opposition research” or a crisis communications company. Fusion GPS is a group of highly paid smear experts who function as an accessory to the crimes committed by Derwick Associates. As such, they are in part responsible for the ongoing injustice and suffering brought about by Derwick’s actions in Venezuela. I urge you to probe into Fusion GPS’s Venezuelan activities and especially into their willingness to pay journalists in exchange for the publication of baseless smears.Thank you for this opportunity to submit testimony to the Committee.July 26, 2017
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