NEW YORK, June 16 /PRNewswire/AsiaNet/-- Twelve international container and equipment leasing companies from the United States, England and Italy today announced that they are jointly suing the Republic of Venezuela for breach of contract to recover $55 million U.S. The heart of the dispute is the repudiation by the Venezuelan government of promises to and agreements with North American and other investors. The plaintiffs argue that the government encouraged its state-owned carrier Compania Anonima Venezolana de Navegacion ("CAVN") to become an inefficient bureaucracy heavily dependent upon the Government for financial support and then turned on the container companies which had supported it with equipment. Specifically, the twelve companies allege that containers and equipment which they leased to the Republic of Venezuela through its wholly owned entity, CAVN, were neither paid for nor returned. And they further allege that the government broke numerous agreements and promises to pay, forcing the container companies to incur substantial losses and pay substantial amounts of ransom to retrieve some of their containers. "This is a government that takes large sums of money from the IMF of which the United States pays a major portion, while thumbing its nose at American private investors. It is very hard to do business this way, and we have exhausted all other means at our disposal to resolve the dispute. Therefore, the container companies are now forced to take the matter to court and to sue the Republic of Venezuela. Historically, it's been extremely challenging for any international business to create a dependable working relationship with the government of Venezuela or any of its entities. It appears that the same attitudes and obstacles to doing business continue to prevail," said Edward A. Woolley of the industry trade organization, the Institute of International Container Lessors. The equipment leasing companies filing today in the U.S. District Court for the District of Columbia are Transamerica Leasing Inc., Trans Ocean Container Corporation, Triton Container International, Ltd., Matson Leasing Company, Inc., Sea Containers America, Inc., Sea Containers Italia srl, XTRA Inc., Flexi-Van Leasing Inc., Interpool Ltd., Trac Lease Inc., Bridgehead Container Services Ltd., and Cronos Container Limited. Chronology Institute of International Container Lessors vs. The Republic of Venezuela August, 1917 Compania Anonima Venezolana Navegacion (CAVN) is set up to own and operate ships on behalf of the government. June 11, 1974 Fondo de Inversiones de Venezuela ("FIV") is founded to dampen inflationary pressures by withholding surplus revenues from petroleum exports and investing such revenues in public sector corporations such as CAVN. 1980 - 1992 Plaintiff container Lessors enter into equipment leasing agreements with CAVN. These agreements stipulate that the shippers would provide specific equipment, and/or extend credit to CAVN. The Lessors are led to understand that CAVN operated on the full faith and credit of the Republic of Venezuela and would honor its obligations under those agreements. 1988 - 1994 Virtually all of the shares of CAVN are transferred to FIV, an agency of the Venezuelan government, by the Ministry of Transportation and Communications of the Republic, and by the Ministry of the Treasury of the Republic. 1993 - 1994 Ministry of Transportation and Communications transfers its shares in CAVN to FIV, thereby vesting FIV with over 98% of CAVN's outstanding shares. The Venezuelan government gives millions of dollars to CAVN. CAVN enters into repayment plans with Lessors. All CAVN disbursements must be submitted to FIV for approval. FIV does not allow CAVN to fulfill its obligations with the Lessors. 1994 Lessors seize ships when CAVN reneges on agreements. Lessors let ships go when CAVN makes part payments and promises. Finally, one lessor, Triton, seizes Cerro Bolivar in Guam and building in Miami. July-August 1994 After the imposition of foreign exchange controls by the Government of Venezuela, FIV hires a Venezuelan lawyer to deal with the Lessors as a creditor body. October, 1994 FIV closes CAVN and lays off CAVN workers. CAVN files for bankruptcy. CAVN ceases all shipping activities and is declared in liquidation. Lessors' trade association, Institute of International Container Lessors, hires former Ambassador, Philip S. Kaplan, to seek agreement. February - An agreement is successfully negotiated between the Sept. 1995 parties which would have allowed the Lessors to receive approximately $30 million from the CAVN bankruptcy through subordination of certain claims held by the government against CAVN. Thereafter, the agreement is repudiated by the Venezuelan Government. 1996 Lessors seek amicable agreement and are rebuffed by Government of Venezuela. Backgrounder Institute of International Container Lessors vs. The Republic of Venezuela Between 1980 and 1992, twelve American, British and Italian container lessors enter into equipment lease agreements with Compania Anonima Venezolana Navegacion (CAVN), the state-owned shipping company of Venezuela. The leases mainly involve shipping containers and related equipment. In the fall of 1994, CAVN is declared to be in liquidation by Venezuelan courts. At this point, CAVN allegedly owes the Lessors a significant amount in unpaid bills for services rendered. A year later, an agreement is reached between the Lessors (utilizing the good offices of their trade association, the Institute of International Container Lessors) and the Venezuelan government, under which the Lessors would receive $30 million in settlement of unpaid bills. Unfortunately, this agreement is repudiated by the Republic of Venezuela. The Lessors, represented by the New York City-based law firm of Schnader, Harrison, Segal & Lewis, expect to demonstrate that it was the Government of Venezuela that dictated the actions of CAVN in 1993-1994. Among the numerous items of evidence they cite in support of this claim are the following: -- CAVN is set up to own and operate ships on behalf of the Venezuela government in August, 1917. -- Between 1959 and 1961, Venezuela passes protectionist decrees that required cargoes destined for Venezuela are to be carried abroad CAVN ships. -- In the summer of 1973, Venezuela enacts the "Law for the Protection and Development of the National Merchant Marine" (known as the "Cargo Reservation Law"). This law requires that 100% of all imports by government bodies financially backed by the government of Venezuela must be carried in Venezuelan flag vessels or vessels chartered by Venezuelan carriers. -- During the period in dispute, 1993-1994, virtually all of the shares of CAVN are owned by Fondo de Inversiones de Venezuela (FIV), an agency of the Venezuelan government, by the Ministry of Transportation and Communications, and by the Ministry of the Treasury. -- In 1993-1994, the Ministry of Transportation and Communication transfers its shares in CAVN to FIV, thereby vesting FIV with over 98% of CAVN's outstanding shares. After the Venezuelan government gives millions of dollars in funding to CAVN, CAVN enters into repayment plans with the Lessors. But all CAVN disbursements at this point must be reviewed by FIV. FIV didn't allow CAVN to honor its obligations to the Lessors. -- FIV then hires a local lawyer to deal with the Lessors as a collective body. When the Lessors ask for 10 days to respond in October of 1994, CAVN is declared in liquidation and ceases shipping activities. -- Thereafter in 1995, an agreement was reached with Philip S. Kaplan representing the Institute of International Container Lessors which would have allowed the Lessors to receive $30 million from the CAVN bankruptcy in settlement of their claims. Later, as described above, the Venezuelan Government repudiates the agreement. Accordingly, the twelve Lessors have brought suit in Washington, D.C. to recover the money that they allege is owed to them by the government of Venezuela. SOURCE Hill & Knowlton -0- 06/16/97 /CONTACT: Geoffrey N. Smith of Hill & Knowlton for the Institute of International Container Lessors, 212-885-0355/