April 28, 2010 / 3:42 PM / 10 years ago

UPDATE 2-Venezuela takes over brewer's land, sugar mills

* Chavez tells Polar owner to accept takeover calmly

* Venezuela’s biggest employer fought the land seizure

* Sugar businesses also expropriated for “irregularities” (Adds Wall Street reaction, bolivar price)

By Andrew Cawthorne

CARACAS, April 28 (Reuters) - President Hugo Chavez has decreed the seizure of land from Venezuela’s leading beer and food company and the takeover of three sugar mills in the latest government moves against private industry.

Chavez, who signed the decrees late on Tuesday, told Empresas Polar owner Lorenzo Mendoza his objections to the takeover of five plots of land in Barquisimetro city were unjustified.

“Don’t provoke me, Mendoza, stay calm,” Chavez said at a late-night cabinet meeting shown on live TV.

The socialist leader, who has built his political career on saying he will smash Venezuela’s capitalist elite and redistribute wealth to the poor, had previously said Polar’s prime land in Barquisimetro was needed for low-cost housing.

“Don’t get angry Mendoza. You know I’m right,” he added.

In his 11-year rule, Chavez has nationalized large swaths of the Venezuelan economy, and increased the state’s role in food production and distribution. But the expropriation of Polar’s land appeared to be more of a specifically targeted measure than a precursor to nationalizing the company.

Chavez has a long, antagonistic relationship with Polar and has warned he is prepared to take over its operations if production is inadequate. [ID:nN25254673]

The president’s relentless pressure on the private sector is contributing to capital flight, with the price of dollars soaring in recent months partly because investors are looking to park money overseas.

Venezuela’s bolivar currency plunged to a new low of 7.65 against the dollar on Wednesday, with Goldman Sachs blaming the slump on Chavez’s move against Polar. [ID:nN28189650]

“News that through a capricious decision the government moved to nationalize assets ... seems to have unsettled the market,” said Alberto Ramos, an analyst at the bank.

Chavez also signed decrees ordering the temporary takeover of two sugar mills in western Venezuela. “They were neglected and in an awful state, the workers badly paid and exploited,” Chavez said of the San Elena and Santa Clara mills.

State media said sugar was being hoarded unjustifiably at both mills, among other “irregularities.” The government’s official gazette said a third mill, known as CAZTA, was being taken over on a permanent basis because of under-production.

Venezuela’s 15 sugar mills only meet about three-quarters of national demand, with some 700,000 tonnes of imports needed this year, according to the U.S. Department of Agriculture.


Polar is famous for making the South American nation’s top-selling beer and a brand of flour used for arepas, the grilled corn dough patty that is Venezuela’s staple food.

It also distributes Pepsi-Cola PEP.N in Venezuela.

Polar is Venezuela’s biggest private employer and owns 30 factories. Its products are distributed in 150,000 stores.

Polar last month said the proposed takeover of its land was “an arbitrary, unnecessary and unfair measure” and that it planned to take legal action to prevent it.

It said the beer and Pepsi-Cola warehouses on the site generated more than 3,200 jobs directly and indirectly, and offered alternative land in the area for the government to buy and on which it could build houses.

Polar said that proposal, on empty land, would be cheaper for the government than the $37 million indemnification it estimates it should receive for the five plots the state has designated for expropriation.

Pro-opposition private industry group Fedecamaras slammed the measure against Polar, saying workers and consumers would be prejudiced. The group’s president, Noel Alvarez, urged private businessmen to fight takeovers in national and international tribunals.

“The government is radicalizing, therefore businessmen should radicalize also to defend private property,” he told private TV station Globovision.

Venezuela’s nationalization program has accelerated in the years since Chavez came to power in 1999.

Critics say he is turning Venezuela into a Cuban-style dictatorship, while supporters applaud the measures as reversing decades of exploitation by a rich elite. (Editing by Frank Jack Daniel, David Zimmerman and Steve Orlofsky)

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