Venezuelan steel maker to challenge state takeover

AP News
Posted: Nov 01, 2010 6:26 PM
Venezuelan steel maker to challenge state takeover

Venezuela's largest privately owned steel producer vowed Monday to challenge President Hugo Chavez's order to expropriate its assets even as soldiers arrived to oversee the takeover.

Sidetur's board of directors issued a statement promising legal action to protect its "employees, clients, suppliers and shareholders."

Chavez ordered the expropriation of Sidetur on Sunday, saying it is part of his strategy to transform Venezuela into a socialist state. He accused the company of selling products such as rebar at inflated prices on the domestic market, though Sidetur said its prices have been frozen since 2006 despite rampant inflation in the overall economy.

The company statement said that under Venezuelan law, only a judge can order the takeover of a company, and only after payment of an assessed price for the assets.

Sidetur _ Siderurgica del Turbio SA _ also exports products to Latin America, Africa, Asia and Europe.

The company said it sold 350,000 metric tons of steel products in the domestic market last year and is "committed to the development of the country." It suggested that the takeover could damage the government's own infrastructure and construction plans.

Sidetur also said its 1,857 workers "will be affected, along with their families, by the expropriation measure." The company is a subsidiary of Siderurgica de Venezuela SA.

Chavez ordered the National Guard to safeguard the company's plants as his government proceeds with the expropriation and urged employees to cooperate rather than oppose the takeover.

Soldiers were posted Monday at the entrance to a storage facility in Caracas where Sidetur stockpiles scrap metal. Dozens of workers protested outside, holding up a banner that read, "Expropriation equals more unemployment." A smaller group of Chavez backers demonstrated nearby to support the takeover.

Chavez has ordered the expropriation of dozens of privately owned companies. Last week he ordered the takeover of U.S.-based glass container manufacturer Owens-Illinois Inc.'s subsidiary in Venezuela, and earlier in October, he announced plans to expropriate Agroislena CA, a leading farm supply business.

Chavez says the government will pay a fair price for the expropriated companies.

The president of state-owned steel maker Sidor, Carlos de Olivera, said the probable acquisition of Sidetur, which produces about 40 percent of the rebar consumed nationwide, would give the state control over 87 percent of the domestic market.

Olivera said the seizure is necessary to provide the government with sufficient low-priced raw materials for the construction of infrastructure and houses.

Chavez also ordered the expropriation Sunday of six residential complexes and what he called "the temporary occupation" of eight gated communities in Caracas and other cities. The president says that will allow the consumer protection agency to investigate complaints that construction companies are illegally charging buyers high interest on unfinished apartments, even though the buyers settled on a price years ago and made downpayments.

At Mirvila, a complex in the Caracas suburb of Guarenas, some apartment owners said they feared National Guard troops might soon be posted near their homes.

Other worried the measure could encourage pro-Chavez squatters to invade several buildings still under construction.

"I'm worried about the squatters," said 74-year-old Judy Sanchez, who has been living in Mirvila for more than a year with her daughter.

Sanchez joined hundreds of mostly middle-class neighbors for a meeting to discuss security measures aimed at keeping squatters out, such as organizing around-the-clock surveillance teams and putting a siren at the entrance to be sounded in case of emergency.