The perfect finishing touch on Venepal
By Veneconomy
21.01.05 | The presidential decree authorizing the acquisition of the assets of Venepal, its affiliates and associate companies signed on January 19 is just one more in a series of violations of the right to private property perpetrated by this government. This measure will have major repercussions for the climate of private investment in Venezuela.
A year and a half ago, when Venepal was declared in a state of arrears, the company paid its more than 1,000 workers and employees their severance benefits, as required by law. This was the first step in winding up the company in an orderly fashion. However, in July 2003, the company was invaded by some 300 government sympathizers in a maneuver led by the government coalition deputy iris Valero, National Guard General Felipe Acosta Carles, and “trade union leader” Edgar Peńa. This invasion prevented the planned winding up of the company from going ahead, with the result that its creditors were left in limbo.
A year and a half later, on December 2, 2004, Venepal was declared bankrupt by the Ninth Civil and Mercantile-Banking Court of the First Instance. It was hoped that, following this decision, the court would be able to resume the winding up of the company.
That hope was dashed on January 13, when the National Assembly declared “the putting into operation, use and utilization of the movable and real property” belonging to this company, its affiliates and/or associate companies to be of “public use and social interest.” This enabled President Chávez , without losing a minute, to give a spectacular close to the affair with the signing of the vague decree of January 19.
This decree does not make it clear whether the decision is an expropriation or a confiscation. In any event, if the amount set for paying creditors and shareholders is below the true value of the assets, this would be arbitrarily and unnecessarily detrimental to their interests.
Moreover, it establishes that the State is acquiring Venepal’s assets with the intention of subsequently implementing a process of co-management as a step towards “recovering the industrial fabric.” The measure does not guarantee the efficient, competitive management of the complex paper business, which means that it could become yet another drain on resources for the government.
So, a pernicious precedent has been set for the country’s severely undermined legal security and already diminished private investment.
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