The controversy surrounding Compania Anonima Nacional Telefonos de Venezuela CANTV (NYSE:VNT) reached a high this weekend after Hugo Chavez cast further doubts as to whether the company's shareholders would be fairly compensated. The Venezuelan president announced in earlier this month that he would nationalize CANTV as well as the country's private power companies by the end of the year. While analysts believe that the country has sufficient funds to complete the $4 billion buyout, Chavez was quoted as saying: "So I don't want to hear stories about how I have to pay at such and such price, at the international price, no, no, no, CANTV was given away." Moreover, the government also noted that they would subtract monies owed to employee pensions from the final purchase amount. Combined, this news has caused CANTV stock to fall about 30% on the U.S. ADR market and 19% in the Venezuelan stock market, as investors continue to question just how much the country will pay.

Verizon Communications Inc. (NYSE:VZ) owns a controlling stake in the foreign company and stands to lose millions on its investment if Venezuela fails to properly value the company. This is further complicated by the fact that Chavez said his drive towards nationalization is intended to recover control of CANTV from U.S. interests and enhance service for neglected communities. In the end, it is unlikely that Verizon will be able to recoup the full value of its investment in CANTV and underscores the dangerous level of volatility involved with investing in emerging markets.