Reversal of Fortune

December 15, 2012

How Latin Americans, like Venezuelan Alberto Vollmer, are changing their continent from within.

Alberto Vollmer is the old new face of Latin America. Old because, even though he’s only 44, the rum baron’s lineage stretches directly back through Venezuela’s ruling oligarchy to the day in 1818 when independence hero Simón Bolívar declared an end to slavery on the porch of the family hacienda in the Aragua Valley. New because, while the Vollmer family symbolizes the kind of land-owning aristocracy reviled by left-wing President Hugo Chávez, eldest son Alberto has turned around the family firm, Santa Teresa Rum, and established successful land reform and gang reconciliation projects.

The sound of thwacking rugby balls and the whistle of the steam train bringing tourists to the Santa Teresa hacienda can add a deceptive air of calm, but the reality is brutal. Since Chávez came to power almost 14 years ago, the murder rate in Venezuela has soared from 19 per 100,000 of the population to between 52 and 74 per 100,000, with an estimated 20-fold increase in kidnappings. Analysts claim that criminal gangs have now established a network so strong it has become an almost impregnable state within a state.

Over the past ten years, Vollmer has walked a fine line in negotiating with all sides in an increasingly violent struggle; surviving a kidnapping for money, a series of interrogations at the hands of the security services, concerned that, by bringing gangs together, he was fomenting a coup, and an assassination attempt by off-duty soldiers. He’s tried to change what he can, turning the potentially commercially devastating consequences of a land invasion into a showcase community housing project and initiating a restorative justice program that has reduced the murder rate in Revenga County, where Santa Teresa is located, from 67 homicides per year to fewer than 10.

Now he hopes to roll out his recipe for conflict resolution to other Latin American countries, tackling in some small way what he sees as the continent’s systemic failures: corruption (in business and politics), decrepit infrastructure, economic reliance on natural resources, and populist politics offering short-term handouts rather than long-term investment and planning.

“You can’t say, ‘Gimme, gimme, gimme’ and not give anything back,” Vollmer says. “How do we take the next step and change this community into a better community?”

Vollmer’s story is a microcosm of the fundamental challenges facing Latin America. The continent’s old autocracy is struggling to adapt to the nationalizations and land redistribution schemes initiated by populist governments in Venezuela, Bolivia, Ecuador, Argentina and Brazil. But Vollmer also represents a new kind of entrepreneur, who’s using business as a tool for social change and enlarging the continent’s emerging middle class by turning former ‘land invaders’ into home owners. How he fares in Venezuela may well be indicative of how Latin America fares as a whole.

An hour’s drive outside Caracas is the Hacienda Santa Teresa. The sugar-cane fields wind along a valley, hemmed in on all sides by violent barrios where poverty, high unemployment and crime are the norm. Armed guards and high fencing protect the Vollmer’s 18,000 acres from a local population that settles disputes with guns and knives. “This is a Chávista community, it’s very poor,” Vollmer says.

His own upbringing was radically different. With greying blonde hair and blue eyes that betray his European roots, he loves to retell family history. A young German merchant founded the dynasty when he married Simón Bolívar’s cousin, Panchita Ribas. The family went on to buy Hacienda Santa Teresa in 1885, quickly becoming the country’s second biggest rum producer. In addition to being wealthy landowners, the Vollmer family moves in influential circles: Vollmer’s father Alberto went to prep school with George H.W. Bush and served as Venezuelan Ambassador 
to the Vatican.

Vollmer says he was always the “black sheep” of the family, rejecting a role in the business to live and work in a slum. In 1996, he returned to the hacienda to rescue the now ailing family firm, but Vollmer’s business responsibilities coincided with the rise to power of Chávez, and he suddenly found himself an “enemy of the people” alongside whom he had 
once lived.

“It was a wake up call, quite literally,” Vollmer says, recalling the phone call he received one February morning in 2000. A security guard reported that almost 500 families had invaded Santa Teresa land, reclaiming it as their own. “I felt fear, frustration and impotence,” he admits, “but if you don’t confront it, like everything you fear in life, it will come back to haunt you every single night.”
He hurriedly went down to meet the people who had now set up temporary home on the estate. The land invaders had the Chávez government on their side, but Vollmer had negotiating tactics picked up at a business management course at Harvard: “They invaded my land, but I wanted to invade their minds.”

After weeks of discussions and negotiating, Vollmer agreed that the families could have 60 acres of land on three conditions: They must build proper houses, not slums; they must take responsibility for a mortgage and live in the house for 10 years; and the youngest son in each family must graduate from high school.
The result was Camino Real, a well-kept housing estate for 100 families. “At first we clashed. He was the owner; I was the invader,” says Jose Omar Rodriguez, who led the original land invasion. Compared to Vollmer he is compact and muscular, with dark eyes and a quiet voice. “It was a symbolic occupation. We wanted to call attention to the fact that this land was, in theory, without use, and there were poor people with no houses.” The negotiations led to a mutual respect between the two men. “Our relationship has gone further because we dream together of a better county,” Rodriguez says. “We started 10 years ago with a vision, and now I can look around and see that it’s gone the right way.”

Vollmer’s next wake-up call came in 2003. This time the Santa Teresa security guard reported that three members from the local Placita gang had mugged him, stealing his gun and radio. Police found the gang leader, known as Lion Face, and Vollmer offered him a choice: Either go to jail or return the gun and work for free for three months as compensation. If it worked out, Vollmer promised him a job. Lion Face agreed and, to Vollmer’s surprise, the two other perpetrators from the gang appeared at the gate by the end of the week, asking for the same deal. Ten days later, the other 22 members of the gang turned up, asking if they could work at the hacienda, too. It was the start of the restorative justice project known as Project Alcatraz.

“We increased their life expectancy dramatically,” Vollmer says. “They were teenagers, but they probably only had one more year to live. Now, their status in the community started changing. They used to be boys who were feared; now, they became young men who were respected.”

Within two months, La Placita’s rival gang, the Cemeterios, turned up. Vollmer agreed to bring the Cemeterios on board, but change did not come overnight. “It was hard at the beginning,” the leader of the fourth gang to join the project, Yimmy Sojo, says, “but I could see that I was developing as a person, and I liked the sense of trust.”

Now Hacienda Santa Teresa hosts six local gangs, which are taking part in a two-year project. Gang members work on the farm in the morning, see a psychologist and study in the afternoon, and play rugby, Vollmer’s personal passion. To qualify for the program, gang members must hand in their weapons, attend a reconciliation meeting and admit their crimes. “When you hear a man admitting to a mother that he killed her son, that means something,” Vollmer says.

Vollmer is committed to using Santa Teresa as a “development tool for this very poor and underperforming community.” It seems to be working. Yimmy Sojo, for example, is now taking a degree in restorative justice. He starts law school soon.

For Vollmer, the main challenge is how to scale this work into a project that can be replicated elsewhere. Former gang-members at Santa Teresa have travelled to Colombia and El Salvador to advise on reintegrating former combatants into society, while Project Alcatraz is cited as a model social program by the World Bank and taught as a case study at Harvard Business School and business schools across Latin America.

The social changes are real, but Santa Teresa Rum is struggling to survive Venezuela’s rampant inflation and strict export controls. While a resource-driven boom has lifted millions out of poverty, slowing demand from China means the windfall may soon end. At least one Latin American leader, Uruguay’s President Jose Mujica, warns that over-consumption may be setting up the continent for a crash. Perhaps Venezuela, under a cancer-stricken and ailing Chavez, will seek inspiration again from the beacon of it’s Bolivarian revolution—socialist Cuba, now experimenting with “restrained capitalism” and free market reform as a means of improving it’s economy. Whatever the challenges, Vollmer is determined to continue his work: “I’ll be the last to turn the lights off.”

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