By Jeremy Morgan
Latin American Herald Tribune staff
CARACAS -- President Hugo Chavez vowed that foreign financial accounts and other businesses held by owners of seven small banks that have been put under state control would also be investigated by the authorities, as his government siezed its eight bank since November 20.
Claiming that BaNorte Banco Comercial lacked sufficient liquidity, the government took control of the institution that reportedly has over 60,000 depositors.
Speaking at a ceremony where he handed over titles to new accounts at state-owned Banco de Venezuela, which is managing the financial aftermath of the upheaval in the Venezuelan banking system, Chavez defended his government's actions, saying the measures had been taken to "defend the interests of the people, of society."
It had not mattered to the government whether suspects belonged to his ruling United Socialist Party of Venezuela (PSUV), or whether or not they worked in the government, he added, ordering officials to "turn up the radar" and do their jobs "with more rigor" in detecting cases of corruption in which depositors' funds were "diverted" by owners of financial institutions.
Four private banks were taken over or "intervened" on instructions from Finance Minister Ali Rodriguez Araque on November 20. Since then, direct state control has also been imposed on four other banks, and the combined assets of all seven banks are estimated to have a book value of around BsF40 billion, or $19 billion at the official exchange rate of BsF2.15 to the dollar.
Three stockbroking houses have been raided by prosecutors accompanied by agents from the state security service, DISIP, as have the headquarters of two insurance companies, La Previsora and Premier. On each occassion, prosecutors were said to have taken away documents, the nature of which wasn't disclosed, and one of the brokerage houses, U21, is now officially under government control.
Prosecutors meanwhile began proceedings aimed at the physical takeover by the state of assets and property belonging to the owners of the last three banks to be intervened, Real, Central and Baninvest. Similar measures had earlier been taken at the first four banks intervened at Rodriguez Araque's behest, Canarias, Banpro, Confederado y Bolívar Banco.
Ten people have been arrested so far. Most of them are said to be in custody at the headquarters either of DISIP or the Military Intelligence Directive (DIM). Ricardo Fernandez Barrueco, who is said to own majority shareholdings in all of the first four banks intervened, his lawyer and his daughter were the first people to be arrested shortly after Rodriguez Araque issued the first takeover order.
The most notable detainee to date is Arne Chacon, a director at Banco Real, one of the seven banks at the center of the case. His brother, Jesse, a long-term close associate of the president, resigned last weekend as science and technology minister after a decade of holding top jobs in the government.
Attorney General Luisa Ortega Diaz announced Friday that a former president of the National Stock Exchange Commission, Antonio Marquez Sanchez, had also been arrested the previous evening in connection with the intervention of the banks. The government replaced him as head of the commission on December 7 with Tomás Eduardo Sánchez Mejías, who was on the board of liquidators appointed by Rodriguez Araque to oversee Banco Canarias.
The government has charged him with acting as an accomplice in the "unlawful appropriation of credits" and association to commit a crime. Prosecutors allege that Marquez approved the takeover of Banco Canarias even though the country's banking supervisor objected.
The search is on for another 28 individuals, several of whom are known to have left the country or to have already been outside Venezuela when warrants were issued for their arrest. Attorney General Luisa Ortega Diaz has declined to identify some of the people on her list of suspects, arguing that to do so might prompt them into fleeing the country.
Those detained so far include Arné Chacón Escamillo (brother of resigning Science Minister Jesse Chacon), Milagros Vivas Moncayo, Giuzel Mileira Avendaño, Luis Suárez Montenegro, Orlando Suárez Contramaestre, Miguel Vaz Medina, Ricardo Fernández, José Camacho Uzcátegui y Caribay Camacho de Castro.
In a separate development, Judge María Lourdes Afiuni Mora in Caracas was reported to have been arrested at the Palace of Justice in downtown Caracas by DISIP agents around noon on Thursday.
Another judge issued a warrant for her arrest under the terms of the Anti-Corruption Law after she had ruled on December 10 that business executive Eligio Cedeno, who had been jailed without trial or bail since February of 2007, should be freed from custody under a form of conditional liberty. Cedeno had been head of Bolivar Banco and Banco Canarias -- both of which were intervened by the government on November 20, but has been jailed without bail and/or trial for over two years prior to that intervention.
Ortega Diaz criticized Afiuni Mora's decision while at the same time denying that the "flight" of the executive was the result of negligence by prosecutors, one of whom is said to have been absent during a critical hearing at a court. DISIP descended on his home in La Florida, but apparently went away empty handed, having found neither him or anybody or anything else of interest there.
"It is important to place this attack on Judge Afiuni in context," noted lawyer Robert R. Amsterdam, international counsel for Mr. Cedeno. "In 2007, another judge who had issued a ruling that favored Cedeno was removed from the bench and one of her children narrowly escaped kidnapping shortly thereafter. She was subsequently granted political asylum in the United States. Earlier this year, one of the lead prosecutors in the Cedeno proceedings testified about the numerous irregularities in the case against Cedeno, in response to a federal subpoena in Miami. That prosecutor was later threatened with arrest in Venezuela and was forced to flee the country. In November, after an appellate panel in Caracas determined that Cedeno's pretrial detention had gone on too long, the judge who issued the opinion was removed from the court of appeals and demoted. It is, therefore, no surprise to us that Judge Afiuni would face severe reprisals for taking this principled stand. While we fear for her safety, we salute her courage."
Elsewhere on the takeover front, a rancher in Guarico state claimed that his estate had been taken over by National Guard troops and officials from the National Land Institute (INTI) after about 30 people had broken the gate. Chavez has for several years pursued a policy of seizing estates and other agricultural land that is deemed not be in productive use. The rancher said that his estate had been purchased by his father 90 years ago, and that he himself had been working the land there for the last 45 years.