VENEZUELA: Terror and Takeover

Just why they singled out William F. Niehous, general manager of Owens-Illinois’ Venezuelan operation, is unclear. But on the evening of Feb. 27, seven armed guerrillas broke into the American glass-company executive’s home in an affluent suburb of Caracas. While his wife and a maid watched helplessly, Niehous, 44, was injected with a soporific and carried into the night. At first it was expected that the ultra-leftist terrorists, like the majority of their counterparts in Uruguay and Argentina, would simply demand that a huge ransom be paid by the company’s big (1975 sales: $2.2 billion) Ohio-based U.S. parent. Instead, the Niehous case brought a new dimension to the political kidnapings that have been plaguing businessmen, particularly in Latin America. Indeed, it led last week to a startlingly abrupt—and arbitrary—government takeover of Owens-Illinois’ three glassmaking factories in Venezuela.

The terrorists identified themselves as part of a little-known leftist movement named the Argimiro Gabaldon Revolutionary Command. Instead of asking for a cash ransom, they demanded that Owens-Illinois 1) pay each of its 1,600 Venezuelan employees $116 as compensation for its “exploitation”; 2) distribute 18,000 packages of food to needy families; and 3) buy space in Venezuelan and foreign newspapers for a lengthy manifesto, written by the extremists, denouncing the company and the Caracas government. Otherwise, they implied, Niehous would be killed.

In complying with the third point, the company ran into trouble. The difficulty was a longstanding policy—apparently set by Venezuela’s tough President Carlos Andres (“Cap”) Perez—of not allowing guerrilla propaganda of any kind to appear in the local press. No Venezuelan newspaper would print the manifesto; even so, Owens-Illinois decided to ignore official warnings and run the manifesto in three renowned foreign dailies—the New York Times, the Times of London and Paris’ Le Monde.

No matter where it appeared, the document was hardly compelling reading. A wordy piece of revolutionary rhetoric, the manifesto excoriated Owens-Illinois as “one of the many multinationals that plunder the country” and called for Venezuelans to “strengthen their fight for socialism.” Nonetheless, the episode apparently enraged the Perez regime. After a Cabinet meeting, the Information Minister announced that the government had “decided to acquire the stock”—meaning expropriation—of the Owens-Illinois subsidiary because it had “offended the dignity of the country and promoted the subversion of our constitutional order.”

The seizure was hasty and seemed plainly punitive. It was thus unlike the country’s planned takeovers last year of foreign iron-ore operations and the oilproducing subsidiaries of Exxon, Royal Dutch/Shell, as well as other foreign firms—key ingredients in Cap Perez’s plan to make his country an economic powerhouse. Nor were the full implications of the Owens-Illinois case clear. Some Venezuelan businessmen complained that the expropriation was a “terrible overreaction” and worried that it might frighten off foreign investors. U.S. State Department officials, while expressing “concern” about the case, felt that Owens-Illinois had simply “gambled and lost” in a calculated risk that the Perez government would go easy on it. Company executives convened in Caracas to try to get the government to reconsider. As for William Niehous, at week’s end he remained a captive—if indeed he was still alive.