General Motors Suing after Plant Seized by Venezuelan Government

CARACAS, Venezuela, Monday April 24, 2017 – General Motors has denounced Venezuela’s seizure of its plant in the socialist Caribbean country as an “illegal judicial seizure of its assets” and vowed to sue.

The company said in a statement last week that vehicles and other assets had been taken from its facilities. The Detroit-based firm did not provide details about how the seizure unfolded, however.

GM, the world’s third largest automaker, said it would “vigorously take all legal actions, within and outside of Venezuela, to defend its rights.”

But according to Peter Quinter, Miami-based chairman of law firm Gray Robinson’s Customs and International Trade Law Group, GM’s legal recourse against the Venezuelan government is likely limited.

“They can go to the courts here in the United States and try to seek action. But that really is not going to be effective unless the Venezuelan government has some assets here that could be seized as compensation,” Quinter said. “I don’t see that happening.”

Amid turmoil marked by massive public protests, runaway inflation, and grave shortages of food and medicines, the government seizure put an abrupt end to GM’s operations, a fate that other companies have already faced.

“GM is not the first and they’re not going to be the last because the government of Venezuela is desperate for any assets they can take,” said Quinter. “It really is a vicious cycle they’re in.”

Caracas has previously seized assets belonging to US companies, including those of cleaning products maker Clorox in 2014, glassmaker Owens-Illinois in 2010, and nationalized a rice mill operated by Cargill.

The Venezuelan government’s assault on General Motors nevertheless suggests that the country is getting bolder as its economic circumstances deteriorate.

President Nicolas Maduro’s relations with the US have been tense in recent years, with claims that Washington is aiding the Venezuelan opposition in destabilising the country.

The mistrust is mutual, with US Secretary of State Rex Tillerson telling reporters Wednesday – before the GM seizure was made public: “We are concerned that the government of Maduro is violating its own constitution and is not allowing the opposition to have their voices heard, nor allowing them to organize in a way that expresses the views of the Venezuelan people.”

General Motors Venezolana, a GM subsidiary, was established in 1948 and employs about 2,700 workers and has 79 dealers in the country.

The beleaguered Venezuelan economy has reportedly dragged down the auto industry for several years, as tanking sales and abysmal currency exchange rates have undermined earnings.

The seizure of the General Motors factory marks a step in the country’s economic crisis that is thought to heighten risks to the remaining operations of other US and multinational companies there.

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