COMMENT: Chavez said the government had received a demand from Vestey that it be paid in US dollars for the previous seizure of tens of thousands of acres, yet the Chavez government insists that the compensation be made in the local currency, the bolivar.
As most of our readers know, it is extremely difficult for foreign companies operating in Venezuela to repatriate profits and other income in bolivars due to foreign currency controls in the South American country.
Unfortunately, Vestey should have relocated its subsidiary to another nearby country after Chavez seized power, for in 2005, Chavez began expropriating farm and ranch land, with the government employing a 2001 law allowing it to seize lands deemed idle or not adequately used. The government has also seized some ranches for which it alleges the owners didn't hold legal title.
Considering that Hugo Chavez' presidency (1999-present) has converted Venezuela from one of the most democratic and successful economies in the Americas into an autocratic state that is crippled by dysfunction and ruled by a socialist who has forgotten Venezuela's previous stature in the region, the expropriation of land is a direct result of Chavez' failed economic policies to feed his people. Consequently, food must be exported from such countries as Brazil and Argentina.
Other foreign companies operating in Venezuela who have large farmland and ranch holdings would be well served to learn from the plight of the Vestey Group.