General Motors Immediately Ragequits Venezuela

General Motors just announced it will halt operations in Venezuela after its plant was unlawfully seized.

Last night authorities of the hard left nation marched on General Motors Venezolana, seizing the company’s plant and other assets in the industrial city of Valencia–an odd move from Venezuelan President, Nicolas Maduro, considering he claimed to want peace with the White House’s new tenant.

The last three weeks have seen the small South American nation rocked by turmoil. First, the ruling United Socialist Party attempted to dissolve the Venezuelan Parliament and transfer all legislative powers to itself; then it banned the opposition leader from politics for 15 years; before the nation’s police forces began clashing with protestors.

According to Bloomberg, the nationalization took place while the biggest show of protest against the Maduro government in months raged in Caracas. The Venezuelan auto industry is in a free fall, sales in March were down 92 percent down, as the currency crisis pushes new car prices beyond the means of almost everyone.

Not that anyone can really afford anything, as hyperinflation has gutted the Venezuelan currency of all value, which has consequently launched the price of consumer goods into orbit.

As other multinationals have discovered under President Maduro’s rule, the government can and will take drastic action against foreign businesses if there’s potential for perceived PR wins; the government seized Kimberly-Clark assets allegedly at the request of employees when the company pulled out last year after growing tired of battling the perpetually horrific Venezuelan economy.

GM hasn’t actually produced anything in Venezuela since 2015, the company’s ability to import parts choked off thanks to the government’s refusal to convert the Venezuelan bolivar, turning GMV’s bank account into a literal pile of Monopoly money.

GM called the seizure a “total disregard” of its legal rights and said it “strongly rejects the arbitrary measures taken by the authorities and will vigorously take all legal actions, within and outside of Venezuela, to defend its rights.”

But GM better get in line as Venezuela already faces approximately 20 arbitration cases over nationalizations; just ask Exxon about the $1.4 billion in damages owed to it by Venezuela that the World Bank recently annulled.

El Carabobeno reports the plant was embargoed by the Third Court of First Instance in Civil, Mercantile and Transit of the Circumscription of the Zulia state as part of a lawsuit filed against GMV 17 years ago.

A Chevrolet dealer group from the city of Maracaibo filed the suit in 2000 after GMV nullified contracts due to poor performance. The court ruled GMV’s reasons for termination lacked substance and ordered it to pay $4.8 billion in damages.

GMV said the amount charged “exceeds all logic” and render’s “the company’s activities unfeasible on a permanent basis.” So the court took the plant as payment, which the company has rightly called “absurd, outside the legal logic and due process.”

After operating in the South American nation for close to 70 years, the company said the seizure causes irreparable damage to the company, its 2,678 workers, its 79 dealers and to its suppliers–GMV accounts for nearly 60% of the auto parts industry in Venezuela.

Despite the turmoil, GM does plan to pay out “separation benefits arising from the termination of the employment relationships due to causes beyond the parties’ control,” according to Venezuelan law.

Operations in Venezuela have been a perpetual drag on Detroit, as currency devaluation and asset impairment has cost it in excess of $1 billion since 2014. GMV has been the local leader for more than 30 years, and the company certainly isn’t averse to returning once it gets its stuff back.

In the meantime, GM dealers will continue to provide service and parts for its customers to the best of its abilities.