Business World

Tuesday 25 April 2017

Chavez pushes for seizure of all Smurfit Kappa land

Ailing Venezuelan President Hugo Chavez. Photo: Getty Images
Ailing Venezuelan President Hugo Chavez. Photo: Getty Images
John Mulligan

John Mulligan

AILING Venezuelan President Hugo Chavez has told his agriculture minister to begin seizing swathes of Smurfit Kappa's remaining land in the country after taking control of a chunk of the Irish company's property there in 2009.

Mr Chavez, who is undergoing treatment for cancer, issued the proclamation from his sickbed, ordering minister Juan Carlos Loyo to "take the last square metre of land from Smurfit" in one of the regions in which the company operates.

Smurfit Kappa, which is Europe's biggest maker of cardboard boxes, owns approximately 12,000 hectares of land in the south American country and it counts as one of the company's smallest markets, generating about 4pc of its €6.67bn in revenues last year in the country.

Mr Chavez has pushed for the company's land in Venezuela's Portuguesa region to be seized so that it can be used for the production of vegetables.

"We need to remove Smurfit from every square metre in Portuguesa," Mr Chavez told Mr Loyo in an interview that was broadcast on Venezuelan state television. "How long will they damage the land with those trees that dry out our rivers? We're going to act faster -- that's an order I'm giving."

The government took 1,500 hectares of land from Smurfit Kappa in 2009, although the Irish company was entitled to compensation.

Smurfit Kappa declined to comment yesterday on the latest pronouncement from Mr Chavez, but its war of attrition with the government has been ongoing for well over two years.

Forestry

Smurfit Kappa chief executive Gary McGann has previously said that the company believes most of the land it owns in Venezuela is more suited to forestry rather than for growing foodstuffs. He added that the company is a significant employer in the country.

Releasing its second quarter results last month, Smurfit Kappa said that in July Venezuelan authorities have issued precautionary measures over 7,253 hectares of the group's forestry land, with a view to acquiring it and converting its use to food production and related activities. It stated that management was engaged in discussions with the authorities.

Mr Chavez has a led a determined campaign to nationalise many privately-owned assets in the country, which has been plagued by hyperinflation that the president attempted to curb this summer with further price controls. Mr Chavez is also perceived to have squandered the nation's vast oil wealth during the boom in commodity prices in the past number of years.

Smurfit Kappa shares closed down 0.67pc yesterday at €5.48.

Irish Independent

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