VHeadline editor & publisher Roy S. Carson writes: More than 300 small- to medium industries in Venezuela's southeastern State of Bolivar are in crisis on claims that the state-owned industrial conglomerate, the Venezuelan Guayana Corporation (CVG) has defaulted on more than Bs.F 300 million (US$140 million) owed by its plethora of subsidiaries for out-sourced services and supply. Business interests affiliated to the Caroni Chamber of Commerce & Industry (Camcaroni) have issued a statement voicing their concern that the CVG's insolvency is contributing to a general deterioration of third party assets, a chronic lack of cash flow, limitations on financing by commercial banks and follow-on insolvency with small industries unable to meet their payment obligations not only to their financial institutions but also to the Venezuelan State in terms of taxes and labor/welfare contributions.
The CVG insolvency has affected companies in all economic sectors, but most especially in the aluminum industry where payments have been halted by the CVG and its subsidiary companies to suppliers with warnings from various labor unions that they share Camcaroni's concern that the region is at the cusp of a financial meltdown.
Camcaroni estimates CVG and subsidiary debts to be in the order of at least Bs.F 300 million with each subsidiary having defaulted on an average of Bs.F 600,000 ($280,000) in payments ... some of which have remained unpaid for more than a year, largely affecting small- to medium industries, many of whom have had to default on state taxes, social insurance and other payments.
Camcaroni 1st vice president Gomez says that despite a raft of complaints expressing concern over the amount of outstanding debts and high level defaults on bills already in arrears of 120 to 180 days the total amount has grown to more than Bs.F 300,000,000 ... "the situation is compounded by the fact that our affiliates are committed to the future and sustainability of the CVG and it is impractical for them to honor their own obligations in the form of banks-loans, letters of credit, financing, with the Venezuelan State - IVSS/Social Insurance, IRS/Seniat, Inces/education/training, municipality taxes, employee benefits and their own suppliers and customers. They are suffering from de-capitalization of their assets and lack of cash flow, which prevent them from meeting contractual obligations they have assumed under contracts signed with the CVG subsidiaries and the parent CVG itself."
In an article published in today's (Friday) issue of Nueva Prensa de Guayana, Camcaroni stresses the need to activate mechanisms to address the situation immediately, because revenues are at stake and five thousand direct jobs, which could lead to a collapse and paralysis of the economy of Guayana. Seeking to avoid this outcome, the organization has sent letters to the CVG president & CEO (Rodolfo Sanz) asking him to honor the CVG's commitments to suppliers of goods and services as soon as possible "it being understood that institutional peace and harmony, maintaining jobs that generate higher quality of life for the Guyanese can only ensured by correcting this problem. "
Small and medium-sized industries in Guayana must comply with a series of requirements, solvency (among other administrative aspects which are being violated) on penalty to establish contracts with the CVG and its subsidiaries. Camcaroni executive committee member Miriam Wilson says that while the small businesses are being punished for breaches of their obligations, the CVG gets away with blue murder ... "as suppliers we are penalized for failure to comply, but have no means to punish the CVG for their failure to comply with payments."
Roy S. Carson
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