* Arrest in purge of businessmen with government links
* Minister calls for tighter financial regulation
CARACAS Dec 5 Venezuela arrested the brother
of one of President Hugo Chavez's senior ministers on Saturday,
the latest move in a clean-up of the financial system that has
closed banks and pointed to corruption close to the
Police arrested Arne Chacon Escamillo, president of one of
seven small banks seized by the authorities this week, on
unspecified charges linked to irregularities in the bank he ran
in South America's top oil exporter.
"Chacon Escamillo, the president of Banco Real, was
detained in the afternoon of Saturday, Nov. 5, after handing
himself in," the attorney general's office said.
The arrest of the banker, whose brother Jesse Chacon has
worked with Chavez for nearly twenty years and is now science
minister, shows the president clamping down on a new class of
businessmen made rich by their connections to the government.
In a turbulent week for Venezuela, the government took
control of the seven banks owned by such businessmen, who are
known as "Boli-bourgeoise," in reference to Chavez's idol and
Venezuela's independence hero Simon Bolivar.
Chavez has sought to calm depositors and investors after he
sent Venezuela's bonds and currency tumbling in value this week
by twice threatening to nationalize the financial system if
banks broke rules.
Five bankers have now been detained and 10 arrest warrants
issued in what some have described as a Cuban-style purge of
figures connected to the former para-trooper's decade-old
Chavez seems to have acted now to prevent problems in the
banking sector from spreading, and to show rectitude ahead of
legislative elections in September.
Some opposition politicians say the purge reflects a fight
between different economic groups linked to top officials.
Corruption has been a perennial feature in Venezuela for
generations. Despite Chavez's promises to clean up government,
Venezuela is frequently ranked as one of the world's
"This requires a serious revision of our institutions,"
said Jorge Giordani, minister of economic planning. "We have to
make changes to certain laws, not only in the banking system
but also in the stock market and insurance."
Part of the government's investigation is focused on why so
many of the deposits in the collapsed banks, notably Banco
Canarias, came from government institutions.
Four banks belonging to Ricardo Fernandez, a jailed
billionaire whose wealth largely came from government
contracts, were closed on Monday for regulatory problems
including unanswered questions about the source of some of the
"You begin to have doubts when they cannot demonstrate the
origin of funds," Giordani said in an interview on state
television. He said investigations would determine whether the
banks had been used to launder drug money.
(Reporting by Eyanir Chinea and Frank Jack Daniel; editing by