President Trump’s 32nd Equity Stake Takes the Ownership Spree to Venezuela

Tad DeHaven

For more than a year, Cato scholars have warned that the Trump administration is turning the federal government into a shareholder in favored companies. Its new oil agreement with Venezuela adds the 32nd entry to Uncle Sam’s rapidly expanding portfolio: a 35 percent stake in the parent of North American Blue Energy Partners (NABEP), a privately held oil producer controlled by politically connected Venezuelan businessman Alejandro Betancourt. The deal offers the clearest example yet of government by opaque dealmaking and press releases.

The updated table below shows how quickly Washington’s portfolio has grown:

Methodology note: The table excludes Development Finance Corporation (DFC) transactions because Congress expressly authorized DFC to make minority equity investments in the 2018 BUILD Act, years before the second Trump administration. The US Steel golden share is included because it grants the federal government firm-specific veto rights despite carrying no conventional economic interest.

According to the White House, Venezuelan authorities gave NABEP 100-year concessions to 17 oil fields containing an estimated 65 billion barrels. The Pentagon’s Office of Strategic Capital (OSC) gets the 35 percent stake, while the State Department has the right to buy 20 percent of production at cost and first crack at the remaining 80 percent. The agreement also requires US citizens to hold a majority of board seats and gives Washington veto power over every appointment.

The stake has been described as “passive,” while the White House says it will cost taxpayers nothing. That description is hard to square with Washington’s control over NABEP’s board and an account through which its payments to Venezuela’s state oil company will flow. The public still hasn’t seen the signed US-NABEP agreement or the field contracts. The administration hasn’t disclosed NABEP’s other owners and investors, how “at cost” will be calculated, what taxpayers would receive or risk, or how the government can exit. Nor has it explained why NABEP was selected without a competitive process. Venezuela’s ruling-party-dominated National Assembly has since backed the deal, but without the concession documents, the public still can’t determine whether the 100-year terms comply with Venezuelan law. The announcement promises up to $100 billion in investment and says the government’s stake could be worth hundreds of billions of dollars. No firm commitments supporting that $100 billion figure have surfaced, and the administration hasn’t explained its valuation. 

Collectively, the administration’s claims add up to Press Release Economics on an imperial scale.

The opacity extends to the deal’s legal foundation. The administration hasn’t made a formal case for an executive branch power to acquire shares, and no statute expressly authorizes the Pentagon to do so. The OSC statute provides for loans and loan guarantees supporting specified technologies, but it says nothing about direct equity, and oil isn’t among its covered categories. Pentagon spokesman Sean Parnell initially said that OSC “does not take equity stakes in private companies.” Days later, a White House official claimed that Congress had granted the OSC that authority, yet it identified no provision. Semafor reports that Congress previously rejected Pentagon requests for that power. The contradiction suggests the administration is improvising and counting on a subservient Republican Congress to continue looking the other way.

The choice of Betancourt makes that opacity more troubling. In Venezuela, he is known as a “Bolichico,” one of the politically connected businessmen who grew rich under Hugo Chávez. His firm, Derwick Associates, won no-bid power-plant contracts after a drought crippled the country’s electricity system. Watchdog and parliamentary investigations later alleged that Derwick inflated parts prices by more than double. No charges resulted, and Derwick denied wrongdoing. But opposition figures view Betancourt as part of Venezuela’s corruption and infrastructure collapse, while residents still endure recurring blackouts.

Betancourt also reportedly remains under a Swiss money laundering investigation, although he has never been charged and, again, denies wrongdoing. The Washington Post reported that senior Trump officials pressed Swiss authorities to resolve the matter without criminal charges and lift his travel restrictions. The Justice Department hasn’t acted on a Swiss request for his arrest, even as he entered the US for meetings with the administration. Semafor later reported that a White House official acknowledged the administration had intervened in the investigation so the NABEP agreement could be completed. It sure looks like the administration chose a questionable character and then used federal power to clear legal obstacles from his path.

Betancourt’s selection fits a broader pattern of cronyism concerns across the administration’s ownership portfolio. Vulcan Elements secured a proposed $50 million Commerce Department award carrying a government equity stake and a $620 million conditional Pentagon loan commitment about three months after 1789 Capital, where Donald Trump Jr. is a partner, invested in the company. ProPublica later reported that White House adviser Peter Navarro, a friend of Trump Jr., initiated the loan request and that Vulcan was the only deal among dozens under consideration to originate with a top presidential aide. PsiQuantum, another 1789 Capital investment, was subsequently offered $100 million in federal funding in exchange for a minority government stake. The administration also offered USA Rare Earth a $1.6 billion financing package in exchange for an equity stake while making the deal partly dependent on a $1.5 billion capital raise led by Cantor Fitzgerald, Commerce Secretary Howard Lutnick’s former firm, which his sons now run. The administration may insist these ties are incidental, but its failure to disclose how recipients are selected leaves it without the benefit of the doubt.

Venezuelan opposition lawmaker Henrique Capriles cited the “opacity and corruption” of the Rodríguez government in questioning the oil agreement. He was describing Caracas, but Washington is inviting the same suspicion by hiding the terms while favoring one company and helping its owner with a foreign investigation. 

My colleague Ian Vásquez has already cataloged the deal’s broader defects. As he writes, it is “a gift to socialists all over the world who can now point to it with some credibility as an example of an imperial resource grab.” Yes, and the 32-company portfolio reveals the danger at home as the Trump administration normalizes public ownership through opaque, improvised deals. Congress should force disclosure of the agreement and stop this corporate portfolio before entry No. 33 arrives.