Venezuela Seizes Assets of Bankers Charged with Fraud

After national investigators announced that several banking executives are suspected to have fled the country to avoid fraud charges, Venezuelan President Hugo Chavez ordered the seizure of the bankers’ financial and non-financial assets.
Carlos Osorio on Venezuelan state television (VTV)

Mérida, December 12th 2009 ( – After national investigators announced that several banking executives are suspected to have fled the country to avoid fraud charges, Venezuelan President Hugo Chavez ordered the seizure of the bankers’ financial and non-financial assets.

On Thursday, a prominent banker named Eligio Cedeño was scheduled to appear in court, where he is charged with stealing millions from the state foreign currency agency, CADIVI. Cedeño is the former president of the Canarias and Bolivar banks, which are among the eight banks in which the government intervened over the past two weeks in a crack down on banking fraud.

However, a district judge granted Cedeño conditional freedom from police custody, and Cedeño never attended his hearing. Police now suspect he has fled the country; he is the fourth banker suspected of doing so since public prosecutors issued arrest warrants for ten bankers and prohibited nineteen others from leaving the country last week.

Meanwhile, police arrested the judge who freed Cedeño from police custody, alleging that she broke laws governing court procedures and judges’ contact with suspects during trials.

Asset Seizures

In public announcements on Thursday, President Chavez ordered authorities to seize the assets of several bank owners who are charged with fraud.

“The battle that we are waging against these bankers who sabotaged and robbed many people is advancing rapidly,” Chavez declared.

“In this moment, I have ordered the takeover of tuna, fish, corn processing, and rice companies, as well as [the bankers’] estates and cattle… this will become wealth for the people,” Chavez continued. The state also seized “more than 700 trucks from a transportation company” that will now be “at the service of social production and socialism,” said Chavez.

Many of these companies currently provide services to the government’s subsidized food markets, and many are owned by Ricardo Fernandez, the principal stockholder in four of the banks that are under investigation. The Trade Ministry already intervened in the administration of Fernandez’s companies last week in order to prevent their collapse as a result of their owner’s arrest.

“We are confronting these problems in a coordinated manner with the whole state, and we are recuperating companies that were forming a kind of network,” said Chavez. “We cannot wait until tomorrow. At the first sign, [we must take] immediate action and inexorable application of the established laws and procedures.”

Attorney General Luisa Ortega filed requests for the seizure of the bankers’ assets, and said public prosecutors will soon request that the bankers’ assets abroad be frozen as well. She also emphasized that the current intervention in the banking sector does not signify a financial crisis, but “a specific case in which the owners of banks allegedly committed crimes envisaged in the banking laws.”

Battle against Corruption

Chavez’s announcements on Thursday left no doubt that the government is waging a full-scale battle against corruption in the financial sector.

The state is cracking down on corruption, among the opposition sectors and supporters of Chavez. On Thursday, President Chavez appointed a new minister for science and technology, Ricardo Menendez. Menendez replaced Chavez’s long-time ally, Jesse Chacon, who resigned last week after his brother, Arne Chacon, was arrested on charges of banking fraud.

“The traitors have many forms of connecting with each other, and we have to unmask them. There are many forms of committing treason against the revolution,” said Chavez. “To sell one’s values is treason against the revolution. To steal even one bolivar, to not work, to be lazy, is treason. To be selfish is treason, to neglect volunteer social work is treason,” said the president.

Out of the eight banks that came under investigation in the last two weeks, two of them, Confederado and Bolivar, were nationalized; and two others, Canarias and Provivienda, were liquidated. Two others, Central Banco Universal and Banco Real, will be incorporated into the state-owned bank Banfoandes along with the nationalized banks, according to Chavez’s announcements on Thursday.  

The government transferred the deposits of the liquidated banks to the state-owned Bank of Venezuela, and depositors have the choice of withdrawing or transferring their money, or opening an account in the Bank of Venezuela. So far, the approximately 30,000 depositors have been processed, according to the government.

The president also ordered an increase in the amount of deposit insurance offered by the government from 10,000 bolivars per depositor to 30,000 bolivars per depositor. This will require banks to increase their monthly contribution to the insurance fund from .5% to 1.5% of total deposits, said the president.

The National Assembly is scheduled to renew its debate on reforms to Venezuela’s banking laws next week.