Smurfit Kappa secures union backing in Venezuela amid arrest reports

Smurfit Kappa has secured the backing of number of Venezuelan unions as authorities in the South American country tightened the screws on the cardboard box-maker's local operations.

Nine unions signed a public declaration late on Thursday saying Smurfit Kappa Carton de Venezuela (SKCV) "has always been a company that abides the law and complies with labour and health and safety regulations".

The move came as Reuters reported that two managers of Smurfit Kappa’s Venezuelan unit had been arrested, two days after the government temporarily took control of the business.

State price control agency Sundde has alleged that the people had been charged with speculation, boycotting, destabilising the economy, and smuggling – at a time when the country is battling hyperinflation.

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Smurfit Kappa declined to comment on the report. The Dublin-based group said on Wednesday that it “entirely refutes” a series of allegations that had been made against it by the Venezuelan government.

Local reports said earlier this week that the Caracas government had seized SKCV for up to three months, amid complaints about prices that the company was charging for its packaging products in an alleged abuse of its dominant market position.

Smurfit Kappa, which employs about 1,900 people in Venezuela, counts among a dwindling number of multinational companies in the country as its economy has contracted by more than a third in the past five years and inflation is predicted by the International Monetary Fund to hit a million per cent in 2018.

Kellogs, General Motors and Kleenex tissues maker Kimberly-Clark count among a slew of overseas companies that have either abandoned assets in Venezuela or sold them off cheaply in recent times, rather than continue to do business in the country.

Venezuela accounted for less than 1 per cent of the group’s €724 million of earnings before interest, tax, depreciation and amortisation (ebitda) in the first half, down from 2 per cent for the corresponding period last year. The value of its Venezuelan assets fell to €57 million in June from €128 million in December.

“We ratify our utmost support and willingness to continue working and producing with Smurfit Kappa Carton de Venezuela in order to keep on promoting productivity and wellbeing in our country,” the nine unions said in their joint statement.