Tuesday, December 1, 2009

Caracas Shuts Banks, Sealing Insider's Fall

Venezuela said Monday it will liquidate two banks owned by businessman Ricardo Fernandez and temporarily shut two others, intensifying a showdown between President Hugo Chávez and a billionaire long considered a close ally, according to WSJ.

Fernandez, who made an estimated $1.6 billion largely through government contracts, was seen by many Venezuelans as the epitome of the crony capitalism that has flourished under Chávez.

Fernandez, 44, turned himself in to Venezuela's secret police on Nov. 20, hours after the government took over the management of four failing banks that he and a group of investors had bought over the course of the past year. He faces up to 10 years in prison on charges of illegally using depositors' money, self lending and criminal association.

It is unclear why the government moved against him, most likely, though, a battle over the spoils.

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