Descifrado runs this tasty item on some of the problems involved. It's a nice case study of the way beautiful slogans transmogrify into ugly realities in the Chavez era:
The ghost of corruption haunts grassroots chavismo
President Chavez's order to fast-track the mechanisms to transfer money directly to "the community" for barrio projects has caused serious worries among those charged with implementing the policy. The officials in charge are starting to face serious difficulties implementing control mechanisms to make sure the money isn't stolen along the way. So called "social comptrollership" remains nothing but a campaign slogan. According to Miguel De Gregorio, an adviser to the program, unless a Social Comptrollership law is approved along with a Citizen Participation law, any step to turn funds over to the communities will take place without meaningful oversight.
As soon as Chavez ordered the creation of Community Councils empowered with administering state funds, pro-government mayors started appointing "their people" to the committees. There are some 3,600 Community Council chairmen already, and Defense Minister Garcia Carneiro has told the regional command centers of the National Guard to appoint still more, since his ministry will be charged with running the program. Since they have no legal status, the community councils could turn into a money pit for the Bs.2.2 trillion (US$1 billion) budgeted to be transferred to them in the coming days. These hurried transfers, under the banner of giving "power to the communities, may do nothing but strengthen a culture of corruption that is already growing like a fungus around officialdom.