Business life: My finance news blog

CARACAS–A senior minister and close confidant of Venezuelan President Hugo Chavez resigned Sunday 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 Saturday following the closure of the bank he headed.

"Yesterday Jesse Chacon asked if the best thing for the government would be that he offered his resignation and I said I believe so. He will have to leave the government," Chavez said in his weekly television show where other ministers were among the audience.

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.

Police have also arrested Giuzel Mileira, the director of the Banco Real, bringing to eight the number of bankers in custody.

Another banker with government ties fled to Miami, Chavez said.

Those detained include a businessman who made more than one billion dollars partly by selling corn to government-subsidized supermarkets.

Venezuela last week closed the seven small banks for regulatory breaches including capitalization problems and unexplained funds, causing market turmoil as Chavez threatened to nationalize the financial system.

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.

Reuters News Agency

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