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Venezuela's Supreme Tribunal decision on CANTV: "utterly absurd"

By Veneconomy

01.08.05 | On Tuesday, July 26, the Social Chamber of the Supreme Tribunal of Justice ordered CANTV to upgrade the pensions of 7,600 of its pensioners and their surviving family members. This is a legal aberration that would not be allowed in any country in the world where the law and good sense reign. This is a tremendous financial blow for CANTV. Preliminary estimates put the amount involved at around Bs.700 billion, equivalent to 10% of its net worth.

What happened was that, thanks to an opinion by Justice Luis Franceschi Gutiérrez, the lawsuit filed against the telephone company in 1997 by the president of The National Federation of CANTV Retirees and Pensioners, Jaime Albella, on behalf of 7,600 former employees was allowed. Moreover, the sentence also rules that the adjustment should also take account of salary increases awarded under collective employment contracts after the date on which the lawsuit was filed, “on the same terms as those agreed to for active employees.” And as though that were not enough, it forces the company to index the pensions to future salary increases and improvements in benefits granted active employees and also to pay the adjustment as ordered taking into account inflation and devaluations in Venezuela since 1999.

The lawsuit that has just been allowed by the Supreme Tribunal of Justice was rejected in November 2004 by that same court. Later, in January 2005, the Constitutional Chamber voided that decision and issued new guidelines for reconsidering the case, which have been ignored with this new decision, thus rendering it void.

The sentence is based on Article 80 of the 1999 Constitution, which is an aberration twice over. First, because it applies the Constitution retroactively; and second, because Article 80 of the Constitution of the Bolivarian Republic of Venezuela says absolutely nothing about reformulating old age pensions. On the one hand, in referring to pensions, this article only establishes that “pensions granted under the social security system may not be less than the minimum urban wage.” On the other, from the way the entire article is drafted, it is understood that responsibility for pensioners falls to the State not to the companies.

This sentence is the third blow that CANTV has received this year, the others being the apparently arbitrary rejection of the proposed acquisition of Digitel and Conatel’s refusal to authorize an increase in telephone charges, which have been frozen since February 2003.

This only leads one to question the true intentions behind this sentence. Retaliation? A means of exercising control? Or another stage in a diabolical plan to once again nationalize the telephone company?

Regardless of what has moved the TSJ to take this decision, the true damage is that another terrible precedent has been set for any company operating in Venezuela. Once again, it has been demonstrated that the rule of law does not exist in this country.

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