Maduro Accuses Polar of Sabotaging Venezuela’s Economy

Venezuela President Nicolas Maduro accused billionaire Lorenzo Mendoza, the owner of the nation’s largest privately-held company, of exacerbating the worst shortages in at least four years and fueling inflation.

Empresas Polar SA, which produces everything from beer to rice, has cut output to make the economic situation worse, Maduro said last week, resuming a conflict with a company often rebuked by former leader Hugo Chavez. Maduro said today on state television that he will meet with Mendoza tomorrow.

Venezuela’s scarcity index, which measures the amount of goods that are out of stock in the market, rose to 21.3 percent last month, the highest since the central bank started tracking the measure in April 2009. As shortages mount, inflation has accelerated, reaching 29.4 percent last month from 18 percent in November last year.

“We have many signs that Polar has been cutting production and hiding products, pretending that nothing is happening, to create shortages of products such as pre-cooked corn flour,” Maduro said on May 11. Corn flour is used to make arepas, or patties, a breakfast staple in the South American nation.

Brazil is studying emergency food sales to Venezuela, Marco Aurelio Garcia, foreign policy adviser to President Dilma Rousseff, said May 9.

Mendoza Meetings

Maduro said he wanted to work with Polar to resolve the situation, while warning it to leave governing the country to him. He said Vice President Jorge Arreaza would meet with Mendoza today.

Polar said it would attend the meeting and that it is willing “to cooperate with the search for solutions that favor the Venezuelan people,” according to a statement posted on its Facebook page.

Mendoza said today in comments carried on the Globovision television network that Maduro’s accusations against the company are false.

“I presume that President Maduro is not well informed about the current situation,” Mendoza said. “We’re ready to meet and clear up any doubts or lack of information and work on solutions to solve the country’s problems.”

The company has increased production from last year even with electricity supply problems and conflicts with labor unions, Mendoza said. Venezuela’s government has asked the company to focus on keeping Caracas and supermarkets well supplied, which could be the reason shortages are occurring in other cities, he added.

Repeated Clashes

Chavez repeatedly clashed with Polar during his 14 years in power. In 2010, he threatened to nationalize the company, saying that it and Mendoza were waging a campaign to undermine his government. Mendoza and his family are worth about $4 billion according to Forbes magazine. Polar isn’t “indispensable,” Chavez said.

By the time Chavez died of an undisclosed type of cancer on March 5, his government had nationalized more than 1,000 companies or their assets.

Venezuela’s mounting economic problems come after Maduro won the April 14 presidential election by 1.49 percentage points, the narrowest margin in 45 years. Opposition leader Henrique Capriles Radonski is contesting the result in the Supreme Court, while the electoral council finishes an audit of the votes.

“It’s a war to create shortages of products, to launch uncontrollable inflation, to keep us from getting international and national credit for the country,” Maduro said today.

Dollar Shortages

After devaluing the bolivar 32 percent in February, the new government has limited the supply of dollars to importers, exacerbating shortages and pushing up the cost of available goods.

The authorities have only held one auction of foreign currency since introducing a new exchange system March 27.

The bolivar has declined about 33 percent on the black market this year, according to Dolar Today, a website that tracks the exchange rate on the Venezuelan border with Colombia. The currency currently trades at about 26 per dollar on the black market, compared with 6.3 on the Cadivi system reserved for importers of essential items, such as medicine.

“With a series of economic actions we are working on, and many of which are running, we’re going to have a good rise in the economy in terms of growth, control of inflation and supply of goods in the second half of the year, ” Maduro said today. “We’re treating it like a war plan.”

Venezuela’s benchmark dollar bond due in 2027 fell 0.56 cent to 95.19 cents on the dollar at 1:50 p.m. in Caracas. The yield rose 8 basis points to 9.88 percent.

Before it's here, it's on the Bloomberg Terminal.