Sidetur Takeover: Lawlessness and Disorder In Revolutionary Venezuela

October 31, 2012

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

15 Responses to “Sidetur Takeover: Lawlessness and Disorder In Revolutionary Venezuela”

  1. J Paramo Says:

    Excellent post haha. From now on a new era of bolivarian rule of law.

  2. Víctor Says:

    Miguel, you are wrong, Sivensa IS NOT controlled or majority owned by the family of the fomer candidate. SVS has over 1000 shareholers, and third parties own collectively over 50%. The fact that many of us have trusted and supported the founding group or leadership does not make us part of the family! By the way, I would be proud to have in my family people as honorable, humble, honest and respectful as Don Henrique.
    Please do your homework and you will be surprised.
    A shareholder of SVS.


  3. Well, the family has decided everything for many years, they control it with their friends, they run it. That is a fact, whether you add it up or not and gives you a % is irrelevant. They have controlled all important decisions in the company for bad or good for the last 20 years since I have been in this business. As for third parties, there is a lot of unknown people behind some of them. I stand by my statement and history proves me right: They control.


  4. And here is your proof:

    http://www.bnamericas.com/news/metals/Paper:_BBO_May_Launch_Hostile_Sivensa_Offer

    Sivensa directors have called the November 6 meeting to consider the company’s options after its proposed share offer ran into problems, including objections and legal difficulties. Sivensa’s plan was to make a public offer for least 50% of Consolidated Industrial Investment, a 100%-owned subsidiary of Sivensa which, in turns, owns 24.6% of Sivensa.

    That’s how you own yourself and control without control

  5. Me too Says:

    By the way, the workers have not been fired, the workers were just not allowed to return to their offices. To the best of my knowledge nobody has been given a written communication to formalizing the termination of the relationship. This is another violation of the nationalization decree (clause 9), plus a violation of the labor law.
    I have been investigating and people at the banks mentioned to me that the funds in the banks were transfered without a court order; banks seem to have followed the instructions of the minister, not even the superintendency of banks. Clause 1 of the nationalization decree excludes cash, receivables, inventotories and financial investments.

  6. Moctavio Says:

    Some workers were fired according to ad paid by Sidetur in El Nacional

  7. Isa Says:

    Really Victor, s company that was worth a billion dollars was almost brought down by this honorable people, even before Hugo came to power…

  8. Me too Says:

    My appologies, I forgot that you are always right.


  9. I dont know what you are referring to, but this press release by Sidetur makes it clear people were fired

    http://impresodigital.el-nacional.com/ediciones/zoom.asp?dia=30&mes=10&anio=2012&wImg=1000&hImg=821&imagen=20121030_naci1_11_501&tipo=0&se=

    And the company I worked for was once hired to do a take over of Sivensa, because they left a hole open in their “control” which you claiim does not exist. I am not always right, but I try to be careful with what I say in order not to be wrong.

  10. geronl Says:

    Actually producing a product is not even close to the priority of these government-owned “companies”.

  11. Javier Says:

    Sivensa even though it was “nationalized” a couple of years ago the smart part of Government let it be run by people that know how to produce, it’s owners. Now with Sidor having problems they had to have the total control of steel, steel rods ( cabillas ) and with the cement plants that they already control , now Government chooses what to build be it houses or infraestructure This sounds like socialism, no ? where, instead of a market mechanism a central bureau chooses what are the production priorities of the country with the limited resources at their disposal, which by the way have diminished since Chavez took office. This government has an invisible hand, don’t you think ?

    • Ronaldo Says:

      I guess the voter approved new palaces for Chavez and monuments to Chavez will take a disproportionate amount of steel and concrete. Thus, to be fair in a socialist sense it is best that Chavez allocate the scarce resources himself. The free market would contradict the goals of socialism and reward the people rather than the leaders.

  12. La Triste realidad Says:

    In this next step of the revolution the only businesses that will be left will be the small shopkeepers. Anyone with a decent sized enterprise will see it nationalized or bankrupted by the chavernment in the next couple of years. Think Libya under Kadhaffi. The only large companies or banks that will be left over will all end up being state owned or controlled by the Bolivarchs.


  13. [...] Sidetur Takeover: Lawlessness and Disorder In Revolutionary Venezuela [...]


  14. No way!I hope you enjoy your stay with us.Fasten your seat belt.Walking up and down the stairs would beat any exercise machine.They hurt.His cake is four times as big as mine.Just around the comer.I’m afraid that it’s not going to work outAren’t you concerned about it? You can kill two birds with one stone.


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