Corruption Issues

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As a result of it's large oil supply and revenues, political corruption has increased over time.

"Corruption in Venezuela, as in most countries of Latin America, is high by world standards. In the case of Venezuela, the discovery of oil in the early twentieth century has worsened political corruption, in a form of the resource curse.

Corruption is difficult to measure reliably, but one of the most respected measures is the Corruption Perceptions Index, produced annually by the Berlin-based NGO, Transparency International (TNI). Venezuela has been one of the most corrupt countries in TNI surveys since they started in 1995, ranking 38th out of 41 that year and performing similarly badly in following years (eg 158th out of 180 countries in 2008, the worst in Latin America except Haiti).

In Gallup Poll's 2006 Corruption Index, Venezuela ranks 31st out of 101 countries according to how widespread the population perceive corruption as being in the government and in business. The index lists Venezuela as the second least corrupt nation in Latin America, behind Chile.

According to some sources Venezuela's corruption includes widespread corruption in the police force.

In early 2009 President Hugo Chávez launched a new anti-corruption drive, having previously declared a "war against corruption" to little perceived effect. Early 2009 saw charges brought against a number of leading political figures, including Manuel Rosales (who fled to Peru), Raúl Baduel and Eduardo Manuitt. Nine ex-mayors were also charged.

Venezuela is a minor source country for opium poppy and coca but a major transit country for cocaine and heroin. Money laundering and judicial corruption are major concerns. In 2004 and early 2005, counternarcotics cooperation between the U.S. and Venezuela deteriorated significantly. In March 2005, the Venezuelan National Guard removed its highly experienced members from the U.S.-supported Prosecutor's Drug Task Force. In August 2005, the Government of Venezuela accused the U.S. Drug Enforcement Administration (DEA) of espionage and terminated cooperation with the DEA pending negotiation of a new cooperation agreement, which had gone unsigned as of October 2006. The United States has concluded that Venezuela demonstrably failed to meet its international counternarcotics obligations every year since 2005.

In June 2009, Venezuela was listed for the second year as a Tier 2 Watchlist status in the State Department's Trafficking in Persons Report. Tier 2 Watchlist status indicates that a country does not fully comply with the minimum standards for the elimination of trafficking; however, it is making significant efforts to do so.

Approximately 23,000 U.S. citizens living in Venezuela have registered with the U.S. Embassy, an estimated three-quarters of them residing in the Caracas area. An estimated 12,000 U.S. tourists visit Venezuela annually. About 500 U.S. companies are represented in the country.

Countries political systems that are corrupt tend to weaken their economic growth, because corruption acts as an informal tax on the economic system. Oil wealth breeds corruption, because oil revenues are plentiful and highly profitable. This leads citizens who work in less profitable areas of the economy to become disenfranchised by the easy money made from oil wealth. Corruption ensues as each citizen has incentives to grab their share of the new wealth."

Source:

http://en.wikipedia.org/wiki/Corruption_in_Venezuela
http://www.state.gov/r/pa/ei/bgn/35766.htm