Venezuelan authorities to hold seized Smurfit Kappa plant for three months


Smurfit Kappa has said it is no longer responsible for the plant. Photo: Bloomberg
Smurfit Kappa has said it is no longer responsible for the plant. Photo: Bloomberg

Smurfit Kappa has confirmed that the Venezuelan government has taken control of its factory in the country for 90 days, in a move that will increase fears that the facility could be nationalised entirely.

Two Smurfit Kappa employees in the country have been arrested and are still being held by Venezuelan authorities.

Confirmation that Venezuala’s increasingly authoritarian government will control the plant for three months comes a week after the government first occupied the factory and ordered the Irish company to cut prices.

Two Smurfit Kappa managers arrested late last week are understood to remain in custody.

The two local employees of the Irish firm were arrested for allegedly engaging in what were described by authorities as “crimes of speculation, boycott, extraction contraband, destabilising the economy, and corruption”.

Venezuela is sinking into an increasingly dire economic and currency crisis.

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

“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,” Smurfit Kappa said.

The company said it is making all possible efforts to secure the release of its detained employees. The Irish Independent understands that no Irish employees work at the factory.

Last week Venezuela’s government ordered the temporary occupation of Smurfit Kappa’s 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 10 company unions last week confirmed their support and desire to continue working with Smurfit Kappa.

(Additional reporting from Bloomberg)

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