On Aug. 16th, Florida’s Cabinet unanimously approved economic sanctions on Venezuela, just one month after Gov. Rick Scott proclaimed that he would propose a resolution preventing organizations that do business with the Maduro regime to do business with the state of Florida.
Immediately after these declarations, a significant number of business owners and companies in Florida contacted me in order to better understand Gov. Scott’s statement — and how the intent of it, if not the scope, might affect them.
On the one hand, some of my clients, who currently hold multinational executive or manager visas, work for U.S. companies in Florida that do business with Venezuela on a regular basis. These Florida companies are required to maintain a corporate relationship with a foreign company in order for their foreign employees to maintain their immigration status in the United States.
On the other hand, I currently serve as the president of the Venezuelan American Chamber of Commerce of the United States (the “Venezuelan Chamber”), and some of our members reached out to see whether we had any input as to the extent of Gov. Scott’s declarations.
On July 19th, the Venezuelan Chamber sent out a survey to its members to analyze the potential impact of economic sanctions on Venezuela in the state of Florida. The results of the survey confirmed what I had initially suspected: Over 50 percent of Venezuelan business owners established in Florida do business with Venezuela — and, increasingly, the Venezuelan government owns most of the businesses there.
The economy of Venezuela is largely based on the petroleum sector and manufacturing. In August 1971, a law was passed that nationalized the country’s natural gas industry. Today, Petróleos de Venezuela S.A. (PDVSA) controls activity involving oil and natural gas in Venezuela. Revenue from petroleum exports accounts for more than 50 percent of the country’s GDP and roughly 95 percent of total exports. Further, the government has established a variety of state-owned companies and nationalized many private entities in sectors such as oil and gas, cement, transportation, mining, banking, metallurgy, and telecommunications.
As a result of the expropriation of many private companies in Venezuela, U.S. businesses have been forced to do business with state-owned companies in Venezuela. However, that does not mean that these businesses support the Maduro regime.
The Venezuelan Chamber survey showed that 49 percent of participants do business on a regular basis with private companies in Venezuela; 59 percent expected to continue to do business on that basis; 3 percent do business with government entities; 14 percent expected to do business in the future with government entities; 5 percent do business with state-owned companies in Venezuela; and 21 percent expected to do business in the future with state-owned companies in Venezuela.
The resolution approved by the Florida Cabinet is relatively narrow in scope. Gov. Scott’s proposal was approved by the Florida State Board of Administration (SBA), the agency that invests, manages and safeguards the $150 billion worth of assets of the Florida Retirement System Trust Fund as well as the assets of a variety of other funds. The approved resolution is specific to the SBA, and it prohibits said agency from doing business with Venezuela in the following ways:
▪ Investing in any securities issued by the government of Venezuela.
▪ Investing in any company that is majority owned by the government of Venezuela.
▪ Participating in any vote or resolution that advocates or supports the Maduro regime.
Doing business with any financial institution or U.S. company that directly, or through a subsidiary, and in violation of federal law, makes any loan, extends credit of any kind or character, advances funds in any manner, or purchases or trades any goods or services in or with the government of Venezuela.
Specifically, the action applies to state investment managers, not to businesses at large. The state does not have direct investment with the government of Venezuela. As such, it is mostly a symbolic measure that is intended to send a message to the Maduro regime that Florida will not sanction its brutality. And it is also one that resonates with businesses in South Florida that also oppose the regime and do not want to support it.
So the bottom line is: Many Florida businesses have been actively engaged in the transportation of basic necessities like food, hygiene products and vital drugs to Venezuela and will be able to continue to do so. The approved resolution will not negatively impact U.S. businesses located in our state that do business with the SBA and the government of Venezuela, so long as their activities are not in violation of federal law.
In my opinion, Gov. Scott’s resolution is a step toward protecting Florida businesses while continuing to help Venezuela escape Nicolás Maduro’s dictatorship. However, companies that do business with the SBA must keep a close eye on the economic sanctions that are being imposed on Venezuela through executive orders signed by President Donald Trump, the most recent one, prohibiting U.S. individuals and institutions within the U.S. from buying new debt issued by the Venezuelan government or from PDVSA.
Adriana Kostencki is a partner at Berger Singerman where she leads the firm’s business immigration law practice. She is also the president of the Venezuelan-American Chamber of Commerce and the Venezuelan American National Bar Association.
▪ The views in this article are the writer’s and do not necessarily reflect those of The Miami Herald and Business Monday, for which this article was written.
▪ Have a ‘My View’? If you have a point of view on a business topic you would like to share, consider writing about it for Business Monday. Pitch your idea to rclarke@MiamiHerald.com or email@example.com. Guidelines: Submissions should be around 600 words; should state a topic clearly, with supporting examples; and use examples drawn from South Florida. They should also be accompanied by a photo of the writer, emailed as a jpeg. ‘My View’ submissions that are accepted are published as space allows.