Dutch take Venezuela to court over Fama de America coffee compensation

[naaman fletcher]

Headline News Editor Patrick J. O'Donoghue reports: The Dutch Longreef Investment Group is suing the Venezuelan government for failing to compensate assets nationalized in 2009.

The Group was shareholder in the Venezuelan Fama de America Coffee company.

The complaint has been lodged at the International Center for Settlement of Investment Disputes based in Washington.

A report in El Nacional broadsheet said the investment group seeks to enforce payment for tangible and non-tangible assets.

In April 2009, the government announced that it would only pay 10% of what the coffee company said it was worth.

Longreef claims that the Venezuelan government has violated the expropriation law by refusing to recognize the findings of a valuation committee.

It is not clear from the news piece whether the committee was set up by Fama de America shareholders or the conclusion of a government evaluation team.

The demand is the second in the last few months during which the Mexican Cemex company lodged a compensation case at the Center.

http://www.vheadline.com/readnews.asp?id=100349

So much for the "Chavez always pays" claim that is made here frequently.

[social_critic]

1. Chavez sometimes pays - what he wants

The record shows the Venezuelan government pays, sometimes. And when it pays it pays what it wants, unless a foreign government leans on Venezuela.

This of course is what cuts off foreign investment in Venezuela. Did you notice Repsol and ENI announced a huge gas discovery a while back, and nothing has been done to develop the find? Even though Venezuela imports gas from Colombia? The two companies find themselves unable to invest as long as the government is behaving as it is and fails to provide the guarantees against nationalization they would need.

The lack of investment is of course one of the reasons why the Venezuelan economy is in frank decay - in the end, the country will be poor and its middle class will flee. Another Uganda.

[naaman fletcher]

2. Uganda

Is actually doing pretty well right now. I was there a few months ago. might be there next week.

[social_critic]

3. Uganda isn't what it used to be

You are falling in a trap, my friend. The key is not to compare Uganda to the Uganda when Idi Amin's rule ended, to today's Uganda. We know he destroyed it. The best comparison is to compare Uganda BEFORE Idi Amin to what it COULD have been if it had just had average economic growth over the intervening period. Today's Uganda isn't half of what it could have been. And this happened because they had the mother of brain drains.

Venezuela is headed in the same direction - they have already had a hard blow with many thousands of professionals leaving. It's going to get worse, they'll flee in larger numbers until the regime closes the exit gates. They are already doing it.

For example, they make it hard to get a passport (although they can be bought off), and they are blocking a professional's ability to get university titles stamped at the foreign ministry so they can be accepted elsewhere. Eventually, they'll block the exists - like they did in Cuba.