-----
Original Message -----
From: Oliver L. Campbell
To:Editor Petroleumworld
Sent: Saturday, January 20, 2007 9:11 AM
Subject: Compensation
The
Editor Petroleumworld
The
article
“VenEconomy: Coup de Grâce”
brings to light possible problems that could arise with the compensation
payable to shareholders of La Electricidad de Caracas (EDC) and
CANTV. May I add some further comments?
To
apply the Capital Market Law is most certainly a good option,
and there is no doubt all investors should be paid the same price
for their shares.
However,
there is another possibility and that is the one I mentioned in
my article “Privatización
o Nacionalización” of recent date--to
apply the concepts generally accepted in Bilateral Investment
Agreements. Venezuela has subscribed to 15 of these with different
countries under very similar terms.
The
“Agreement for the reciprocal promotion and protection of
investments” between Argentina and Venezuela dated 16 November
1993, under Article 6 (2), provides for:
"Prompt,
adequate and effective compensation" The amount compensated
“shall amount to the market value of the investment immediately
before the date of expropriation or, in the case of being higher,
before the impending expropriation became publicly known.”
It will also include “interests at a normal commercial rate
until the time of payment” which should be made “without
delay and be effectively realizable and freely transferable”.
(The highlighting is mine).
This
is quite clear about the price, liquidity and transferability.
However, it does not cover whether investors receive their compensation
at the official or parallel exchange rates. Surely equity demands
that the official rate be applied.
Venezuela
has a reputation for fair treatment and anything other than that
will surely deter further inward investment in the future.
Oliver
L Campbell
20.01.07
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