Two years ago, in November 2010, the Venezuelan Government issued a decree expropriating three of Sidetur’s steel processing plants. Sidetur is a steel company which predates Sidor, which makes steel products and processes steel since the 1940′s. Somehow, the company managed to hold off the take over of the three plants for two years, negotiating a price for the expropriation, as mandated by the Constitution, which says such expropriations can only be made after compensation.
And then On Monday of this week, the Minister for Industries took over:
-Sidetur’s six (not three) industrial plants.
-Sidetur’s fifteen scrap processing plants
-The company’s offices
-They company’s money, which was quickly transferred to the Complejo Siderurgico Nacional S.A., the Government’s steel company, including salaries, severance pay and operating funds.
Thus, these guys don’t even follow their own recent decrees, let alone that piece of paper called the Constitution, which they wrote at will. Even before they finish the negotiations, they do something different and violate the laws many times. One wonders if anyone is in charge, or if this was just another independent Chavez bureaucrat, with lots of initiative.
The case is complex. the company had bonds* in US$ that mature in 2016, but which have a clause that says that the holders can demand payment if there is a change in control and what happened this week, was definitely a change of control. The bond is only US$ 75 million, but the Ministry better come up with the money to pay for it, the same way he said today the Government would pay fair price for Sidetur. (Fair price calculated by him I imagine!)
Th sad part is that Sidetur is likely to go the way of Sidor or Tavsa, which barely produce, or don’t produce anything, by now after being in the Government’s hands for a couple of years. It is more than production, there is know how for example, the new “owners” started firing people the same day they arrived. There is years of experience and invaluable human resources that will likely emigrate. But don’t worry, the Government already changed Sidetur’s website to have the name of its company on it, I bet it will remain there even when the company ceases to operate or produce.
Maybe I was wrong, maybe it is justified that Venezuela pay twice what Bolivia pays for its bonds, this is revolutionary lawlessness and disorder at its best.
Do you really think that by next year Chavez will not have taken over the whole banking system and finance the Government’s deficit with the depositor’s money? I think they will do it. You may also wonder if the action has something to do with the fact that Sivensa, Sidetur’s owner, is majority owned and controlled by the family of one of the opposition candidates in the primaries? (Hint: The only female one).
Such are the ways of the random disordered revolution.
Makes you wonder: Who is next?
*I actually own some