Venezuelan Government takes control of Smurfit factory for three months

Venezuela President Nicolas Maduro. Photo: Carlos Becerra
Venezuela President Nicolas Maduro. Photo: Carlos Becerra

Smurfit Kappa has confirmed that the Venezuelan Government has taken control of its factory in the country for 90 days, in a move has raised fears that the facility could be nationalised, or Smurfit ordered out of the country.

The confirmation from Smurfit comes a week after the government occupied a factory and ordered the Irish company to cut prices.

In addition, the government of Venezuela late last week arrested two Smurfit Kappa managers.

The two arrested, who are understood to be local Venezuelan employees of the Irish firm, were arrested for allegedly engaging in what were described by authorities of the leftist and increasingly authoritarian regime as “crimes of speculation, boycott, extraction contraband, destabilising the economy, and corruption”.

In a statement today Smurfit Kappa said that as a result of the Government action, it was “impossible” for the business to manage its affairs in a way that complies with is normal business standards.

“Consequently, as of 28 August 2018, Smurfit Kappa is not responsible for the use of its installations, machinery and equipment, its employees’ safety, that of its surrounding communities, any environmental impact, or the quality of the paper and packaging manufactured in the operations.”

The company went on to say that it was making all possible efforts to secure the release of its two detained employees.

The Irish Independent understands that no Irish employees work at the factory.

Last week Venezuela’s government ordered the temporary occupation of a Smurfit Kappa carton production unit in Carabobo state for alleged abuse of a dominant position.

Smurfit Kappa told the market last Thursday that it “entirely refutes” the allegations made against it.

“The group has operated in Venezuela since 1986 to the highest business and ethical standards,” Smurfit Kappa said, adding that the Venezuelan subsidiary of which the factory is part represented less than 1pc of its earnings before interest, tax, depreciation and amortisation in the first half of 2018.

Nine of the ten company unions last week confirmed their support and desire to continue working with Smurfit Kappa.

(Additional reporting from Bloomberg)

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