Ecuador seizes 195 properties

Miami Herald:

Ecuadorean authorities took over three television stations, a sugar mill and dozens of other companies belonging to one of the country's most powerful business groups early Tuesday, calling it a move that should have been taken a decade ago to settle debts from a banking collapse.

Former Ecuadorean banker and now Coral Gables resident, Roberto Isaías, called the predawn takeover of companies and other assets belonging to Grupo Isaías ``completely illegal.''

Isaías, along with his brother William, are considered fugitives by Ecuadoran officials for their alleged role in the collapse of Filanbanco in December 1998.

Both reside in waterfront homes in the upscale Cocoplum neighborhood. Earlier this year President Rafael Correa renewed efforts to extradite them.

A statement from Grupo Isaías called the government's seizure of the group's 195 properties an ``unprecedented abuse of power.''

Accompanied by police, the Deposit Guarantee Agency -- akin to the Federal Deposit Insurance Corp. -- took over TC-Televisión, Gamavisión, Cablevisión, La Troncal sugar mill, as well as insurance, construction and trade companies and aircraft and yachts belonging to Grupo Isaías, saying it was to pay for pending debts.

The 195 properties are now owned by former Filanbanco and Grupo Isaías shareholders and executives who claim to have no relationship with the Isaías brothers in South Florida.

At TC-Televisión, some stunned employees wept, while others shouted at police.

The controversial move immediately sparked a political tempest. Economy Minister Fausto Ortiz resigned in protest shortly after a meeting with President Rafael Correa in which the decision to seize the companies was made. Wilma Salgado, a lawmaker and once an executive at the Deposit Guarantee Agency, immediately took his place.

The Deposit Guarantee Agency has long sought to recover $661 million of government funds used to try to rescue Filanbanco, the Isaías' former bank. Roberto and William Isaías were the largest shareholders of the now-defunct bank, which was part of Grupo Isaías, one of the largest conglomerates in Ecuador.

The agency argued that the attachment of all the assets linked to Grupo Isaías was a legal measure to collect debt. ''With this measure, which should have been taken 10 years ago, hope is rekindled for the hundreds of citizens who never received their money after the failure of Filanbanco,'' said a statement on the presidential website.

The 1998-2000 failure of a series of banks, from Filanbanco to Banco Popular del Ecuador, cost the country $2 billion and opened political fault lines that still divide Ecuador today.

...

It is not clear from the story how the shareholders of these companies are responsible for the debts of the two men who are in Florida. What is clear is that government ownership will make these companies less productive and less profitable. As owner the government will also loses the taxes paid by these companies. It is just a bad deal for everyone.

Correa has a socialist bent that appears to be warping his judgment. Trying to revive socialism from the ash heap of history will be very costly for Ecuador and make everyone poorer.

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