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Venezuela Orders Closure of Four Private Banks

Venezuela's finance ministry has ordered four private banks seized by the government to close, Reuters reported Monday.

The government took over management of the four small banks on Nov. 20, citing various irregularities.

The news comes one day after President Hugo Chavez threatened to nationalize banks that violate regulations, saying he'll do whatever is necessary to prevent irregularities amid a scandal that already has prompted his government to take over management of four banks.

"I warn the country's private bankers: I'll take away any bank from anyone who slips up," Chavez said during his weekly television and radio program. "Do you want me to nationalize the banks?" Chavez asked, then said he'd have "no problem" ordering state takeovers.

The four institutions — Canarias, Confederado, Bolivar and BanPro — account for 5.7 percent of Venezuela's banking sector. They were purchased in September and October by a group of investors headed by Ricardo Fernandez, who is involved in the food industry and sells products to a network of state-run subsidized markets known as Mercal.

Fernandez and his lawyer Jose Camacho have been arrested on charges of misappropriating deposits and providing loans to other businesses in which they were investors.

Fernandez's business connections with state-run businesses have prompted Chavez opponents to seize on the scandal as evidence that Venezuela's socialist leader has failed to crack down on corruption and cronyism involving top-ranking government officials and their private-sector associates.

"The president is attacking not corruption but rather one of the criminal organizations that is operating within the government," said Delsa Solorzano, an opposition politician, in a telephone interview. "This scandal is linked to internal conflicts surrounding the president involving groups that manage state resources.''

Chavez did not directly address such criticism on Sunday, but he said some Venezuelans who claim to support his "Bolivarian Revolution" — a political movement named after 19th-century independence hero Simon Bolivar — betray its leftist ideals and embrace capitalism.

"There are people from the proletariat in this struggle that end up siding with the devil," he said.

Since taking office over a decade ago, Chavez has ordered the nationalization of major players in steel, electricity and oil sectors. His government has also seized control of dozens of other private businesses, including coffee processing plants, sugarcane mills and cattle ranches.

The Associated Press contributed to this report.