Chavez threatens to nationalise banks

President Hugo Chavez has threatened to nationalise Venezuelan banks that broke regulations.

The president said he would do whatever was necessary to prevent irregularities amid a scandal that had already prompted his government to take over management of four banks.

“I warn the country’s private bankers: I’ll take away any bank from anyone who slips up,” Mr Chavez said during his weekly television and radio programme.

“Do you want me to nationalise the banks?” he said, adding that he would have “no problem” ordering state takeovers.

The government took over management of four small banks on November 20, citing various irregularities.

The four institutions – Canarias, Confederado, Bolivar and BanPro – account for 5.7% of Venezuela’s banking sector.

They were purchased in September and October by a group of investors headed by Ricardo Fernandez, who is involved in the food industry and sells products to a network of state-run subsidised markets known as Mercal.

Mr Fernandez and his lawyer, Jose Camacho, have been arrested on charges of misappropriating deposits and providing loans to other businesses in which they were investors.

Since taking office more than a decade ago, Mr Chavez has ordered the nationalisation of major players in steel, electricity and oil sectors. His government has also seized control of dozens of other private businesses, including coffee processing plants, sugarcane mills and cattle ranches.

Mr Fernandez’s connections with state-run businesses have prompted Chavez opponents to seize on the scandal as evidence that Venezuela’s socialist leader has failed to crack down on corruption and cronyism involving top-ranking government officials and their private-sector associates.

“The president is attacking not corruption but rather one of the criminal organisations that is operating within the government,” Delsa Solorzano, an opposition politician, said.

“This scandal is linked to internal conflicts surrounding the president involving groups that manage state resources.”

Mr Chavez did not directly address such criticism, but he said some Venezuelans who claimed to support his “Bolivarian Revolution” – a political movement named after 19th-century independence hero Simon Bolivar – betrayed its left-wing ideals and embraced capitalism.

“There are people from the proletariat in this struggle that end up siding with the devil,” he said.

The state-run banking agency has appointed officials to oversee operations of the four banks. The National Banking Council, a private banking association, has voiced its support for the government takeover, saying the initiative is aimed at protecting depositors.

A Venezuelan court has barred 16 executives linked to those banks from leaving the country while prosecutors investigate.

But Mr Chavez said he would like to see them arrested because they might flee.

“They have planes and private airports; they leave,” he said. “I spoke with the prosecutor and I told her whoever must go to prison, must go to prison.”

Mr Chavez, a former paratrooper, also announced that he ordered attorney general Luisa Ortega to investigate a state-run bank, Banco de Fomento Regional Los Andes, because its board of directors raised suspicions within the government by “putting a huge amount of resources in private banks”.

“That’s an administrative irregularity, and it must be combated,” he said. “We cannot continue to allow a group of officials to continue playing with people’s money.”

Polls consistently say Venezuelans point to corruption within public administration as one of the nation’s most pressing problems.

Venezuela was seen as Latin America’s second most corruption-prone country, behind poverty-stricken Haiti, according to the Berlin-based Transparency International’s Corruption Perceptions Index released this month.