Chavez orders takeover of Venezuelan steel maker

AP News
Posted: Oct 31, 2010 8:35 PM
Chavez orders takeover of Venezuelan steel maker

President Hugo Chavez ordered the expropriation of Venezuela's largest privately owned steel producer Sunday, the latest in a series of takeovers that has raised concerns among business leaders.

The president said the seizure of Siderurgica del Turbio SA, or Sidetur, is part of his strategy to transform Venezuela into a socialist state.

"I'm announcing the expropriation of Sidetur," Chavez said during his weekly television and radio program, "Hello, President."

He ordered soldiers to guard the company's seven plants and urged employees to cooperate with officials rather than protest the takeover.

Sidetur, a subsidiary of Siderurgica de Venezuela SA, or Sivensa, produces 40 percent of the rebar used for construction in the country.

Founded in 1948, it produces 835,000 metric tons of steel a year, including beams, angles and flats that are sold domestically and exported to nations in Latin America, Africa, Asia and Europe.

Telephone calls to Sidetur's offices in Caracas went unanswered late Sunday.

Chavez has expropriated dozens of privately owned companies since he took office in 1999.

Last week, he ordered the takeover of the Venezuelan subsidiary of U.S.-based glass container manufacturer Owens-Illinois Inc. Earlier this month, he announced plans to expropriate Agroislena CA, a leading farm supply business.

Business leaders say the seizures are scaring off investors and could keep Venezuela from emerging from a lingering recession that began last year.

"The only investment here is for maintenance: Businessmen investing so their businesses stay afloat, not for expansion," said Jose Guerra, a former Central Bank official who now teaches economics at the Central University of Venezuela in Caracas.

Venezuela's gross domestic product shrank 3.5 percent in the first half of this year after contracting 3.3 percent for all of 2009.

Chavez has said the government will pay fair compensation for the businesses.

Earlier in the day before Chavez's announcement, opposition politician Julio Borges said expropriations are hurting jobs and accused Chavez of steering Venezuela toward Cuba-style communism.

"We urge the government to stop this expropriation policy," Borges said. "The government is now attacking the large businesses because later it will be easier for him to attack the small- and medium-size businesses."