CARACAS, (Reuters) – A senior minister and close confidant of Venezuelan President Hugo Chavez resigned yesterday in a growing banking scandal that has triggered a purge of businessmen with ties to the government.
In a move likely to win him support, Chavez said he had accepted the resignation of Science and Technology Minister Jesse Chacon, whose brother was arrested on Saturday following the closure of the bank he headed.
“I’m really sorry he’s the brother of a minister, but we are demonstrating that there are no untouchables here,” Chavez said on a talk show he dedicated to the risks of corruption.
Venezuela last week closed the seven small banks for regulatory breaches including capitalization problems and unexplained funds. Investors dumped Venezuela bonds and its bolivar currency as Chavez threatened to nationalize the financial system.
Markets recovered on Friday after Chavez stepped back from nationalization threats and made overtures to the owners of the oil exporting nation’s top private banks.
Chavez yesterday accused his critics of trying to spark a bank run. He said he had no plans to nationalize big, healthy banks, but would not hesitate to do so if they broke the law or entered into problems.
“What I have said is that he who slips up, loses. Banker, I don’t care if you are the biggest … any bank that does something like that and steps outside the law will be immediately taken over.”
A retired military officer like the president, Chacon took part in a 1992 coup that sought to bring Chavez to power and both men were jailed for their actions. He has held numerous posts under Chavez. His brother Arne Chacon was also a soldier who took part in the coup, but Chavez said he barely knew him.
Eight bankers are now in custody. Pedro Torres, a banker from the same group, fled to Miami, Chavez said.
He said the government had seized businesses belonging to Torres and Arne Chacon, including insurance and food firms.
Those detained include a businessman who made more than one billion dollars partly by selling corn to government markets.
Most analysts agree that Chavez is unlikely to risk instability through a widespread nationalization of the country’s best-capitalized and profitable banks.
The rise of a new mega-rich elite during his decade in office has been a liability for Chavez, who wants to build a socialist society in Venezuela and took office in 1999 promising to end corruption.
The arrest of executives widely considered to be corrupt is likely to be popular with Chavez’s supporters before legislative elections in September.
More detentions are expected because authorities have issued 27 warrants including nine requests to Interpol for international arrests.
Chavez told supporters to smoke out corrupt members of his socialist party.