I am Hunter Carter, an attorney with Arent Fox LLP in New York City and Washington, D.C. and I have a passion for  law and business developments in Colombia. My posts are excerpted below, sorted by category on the right, and listed under the “Posts” tab above. Selected headlines are listed in the Twitter box on the right and @ColombiaLawBiz on Twitter. To subscribe enter your email in the box to the right or follow me on Twitter.  Who am I? Here’s my bio.  Please see the disclaimer: I am not your lawyer, this site is not legal advice, and I am not advertising for clients.

 

Announcing The Colombia Law & Business Forum, October 14 in New York City

On October 14, the Colombian American Association will hold a conference entitled “The Colombia Law and Business Forum.“

Our keynote speaker will be David Bojanini, Chairman of Suramericana Inversiones (also known as the Grupo Empresarial Antioqueño or the Sindicato Antioqueño).  We will also hear from David Stone, Managing Director of Pan American Capital Partners, on their infrastructure fund and projects.  

This half-day event will include presentations by up to six Colombian firms seeking investors, a panel of lawyers discussing “structuring for success” led by Bruce Wolfson of The Rohatyn Group, and a panel of lawyers discussing various topics for “managing risk,” that I will be chairing. 

The co-sponsors are Arent Fox LLP and ProExport, the Colombian Government Trade Bureau. The event will be held at Arent Fox LLP in New York City from 8 AM until noon.

For more information, please contact me, the conference chair, at carter.hunter@arentfox.com or 

Linda A. Calvet 
Executive Secretary

Colombian, Ecuadorean, Peruvian, and Venezuelan
American Associations
lcalvet@andean-us.com

212-233-7776
212-233-7779 fax

Announcing Private Equity Study of Colombia, Brazil, Mexico

I am pleased to announce the publication this week in the Latin America Law and Business Report of the New York City Bar’s Report “Private Equity Developments In Brazil, Colombia, and Mexico.” 

Recent Posts

 

Chiquita Brands Part III-C: Of Bananas, Money, Guns, and Drugs: What Did Chiquita Really Do?

Readers of my other posts about the Chiquita story will have seized on one of the central issues in determining Chiquita’s liability to the wrongful death claimants under the Anti-Terrorism Act and the Alien Tort Claims Act — how close is the relationship is between Chiquita’s payments to the FARC guerillas and the paramilitaries of the AUC, on the one hand, and the kidnappings and murders that resulted?

The federal court hearing the cases, Judge Marra presiding, ruled against Chiquita in the New Times Missionaries case that alleged that substantial payments were made to guerillas over a long period of time preceding the kidnappings and murders of the plaintiffs. Judge Marra ruled that if Chiquita’s payments were a “substantial factor” in the deaths it is sufficient to make Chiquita liable.  Legal observers and the parties hotly debate whether this standard of “causation” is too loose.

Chiquita’s Board appointed a Special Committee that found no evidence of anything more than admitted payments, specifically denying, in a footnote, any Chiquita involvement in arms shipments.

Was there more? In this post I take a detailed look at the allegations that Chiquita funded paramilitaries that Chiquita knew were using terrorist tactics against the guerillas in order to pacify the banana zone. The complaint on behalf of hundreds of plaintiffs against Chiquita in Henao Montes v. Chiquita Brands, No. 0:10-cv-60573 (S.D. Fla.) alleges that plaintiffs are either survivors of Colombian nationals who were murdered by the paramilitaries of the AUC, or were themselves injured by the AUC in Colombia, and seek to collect damages from Chiquita. Their allegations come right out and accuse Chiquita of involvement in drug and weapons shipments, to demonstrate a close link between the Chiquita payments and other actions, on the one hand, and acts of kidnapping and murder, on the other.

You be the judge. In Part 1 of this post, I am going to use an old trick of some judges, and hear the Defendant Chiquita’s argument first that the allegations do not measure up to the legal standard. Then, in Part 2, I will quote at length and comment on many of the operative allegations from the Henao Montes complaint.

Chiquita Brands Part III-B – Deterrence: How Private Litigation Can Supplement Anti-Terrorist Enforcement Actions

Increasingly, the crux of the Chiquita Brands case may be more than just admitted payments totaling US$1.7M to the paramilitary AUC from 1997-2004, but additional forms of support, including weapons shipments.

In testimony yesterday before the U.S. Senate Judiciary Committee, Subcommittee on Crime and Drugs, Lee Wolosky, a former National Security Council official and now lead counsel to many plaintiffs in the cases against Chiquita, addressed how private litigation can supplement anti-terrorist enforcement actions.

The deterrent angle that he argues in this testimony is undeniable. Any organization that is weighing a response to extortion threats for payments must be carefully evaluating whether it will face criminal fines and sanctions, and much larger potential damages awards under legal standards that are more easily satisfied than the high burden of proof for criminal conviction.

Chiquita Brands, Part III-A — What (Allegedly) Did Chiquita Do In Colombia and What Are the Legal Consequences?

An outcry has erupted in recent days over former Colombian hostage (and former presidential candidate) Ingrid Betancourt. Almost eight years ago, Betancourt defiantly drove through dangerous territory in Southern Colombia, apparently against the advice of security forces, to meet with FARC rebel forces and try to break an impasse in peace negotiations. Instead, she was herself taken hostage and held for over six years. She was rescued in a daring raid by government troops that made headlines around the world. Last week, however, she started legal proceedings against the Colombian government claiming US$6 million in damages.  A new word was coined describing the public outcry at her actions: “Ingrititude.”  She was forced to withdraw the claim and to announce that she only holds the FARC forces responsible for her capture and suffering and, inexplicably, does not intend to claim damages for herself.

Is anyone else potentially responsible? Who provided the FARC terrorists with material assistance? These questions are being addressed as former hostages (and survivors of other victims) have sued for damages in some cases – not against the Colombian government but against private companies like Coca-Cola, Drummond Coal, and Chiquita Brands.  As I reviewed in Part Two of this series, the cases against Coca-Cola and Drummond Coal were dismissed.  A recent court decision, however, sustained – as a provisional matter and subject to evidence — lawsuits which allege that Chiquita provided extensive material support – not just extorted monies but covert arms transport – in a campaign designed to destroy banana unions and keep Chiquita in business in Colombia.

A review of the various allegations is very timely this week as the world considers: who is responsible in damages for murders and kidnappings carried out by the guerillas and paramilitaries in Colombia before they were beaten back by government forces?

Chiquita Brands’ Troubles With The Foreign Corrupt Practices Act (FCPA) In Colombia — Part II – Colombian FCPA Cases

What do the Chiquita Brands FCPA and related Alien Tort Statute cases mean for investors with present or prospective activities in Colombia? Are reports of perceptions of corruption an indication of the Justice Department aggressively challenging companies doing business in Colombia?  Is the FCPA a trap for investors in Colombia?

Only the unwary. As I wrote in Part One, best practices of international business require careful monitoring and training of managers and others to prevent corrupt payments, and to keep accurate records. But Colombia does not seem to be a disproportionate focus for FCPA prosecutions and investigations, and although there have been noted Alien Tort Statute claims by union leaders’ heirs, alleging wrongful death, they have not been successful. Will the newest Chiquita Brands’ cases, following after its $25M plea agreement with the DOJ, end differently? 

Chiquita Brands’ Troubles With The Foreign Corrupt Practices Act (FCPA) In Colombia – Part I – The FCPA Explained

Former FARC hostage Keith Stansell sued Chiquita Brands International, after being held more than 2000 days in captivity held by leftist guerillas of the FARC (Revolutionary Armed Forces of Colombia). Stansell alleges that Chiquita Brands made corrupt payments to the FARC – bribes, in his view; extortion, according to Chiquita and its Colombian counsel, in order to ensure the safety of Chiquita’s workers at its more than 200 banana farms in Colombia.  Stansell’s complaint against Chiquita joins complaints filed by some of Janis’s heirs and nearly 200 other plaintiffs. Chiquita has paid a fine – US$25 million – and made other agreements with the Department of Justice, for allegedly corrupt payments to the FARC’s mortal enemy, the paramilitary Autodefensas Unidas de Colombia (AUC).  Chiquita faces liability to sympathetic plaintiffs represented by litigation powerhouse Boies Schiller & Flexner’s Lee Wolosky, a former White House counterterrorism official in both the Clinton and second Bush administrations. In addition, there are shareholder derivative actions lodged against Chiquita Brands.

The Chiquita case – cases, really – teach a lot about risks that companies face – and can and should avoid. This article provides information about compliance with the Foreign Corrupt Practices Act (FCPA) and its aggressive enforcement, and outlines best practices to avoid liability.  In Part II, I look at Colombian FCPA cases, and in Part III I take a detailed look at the Chiquita allegations and the findings of it special litigation committee investigation. The conclusion, Part IV, will summarize the very unique nature of the Chiquita facts while cautioning that active compliance efforts are nevertheless necessary in Colombia as elsewhere.

Canada Approves Colombia Free Trade Agreement, Increasing Pressure on The United States

On June 14, Canada’s House of Commons approved a free trade agreement with Colombia. Questions should now be flying around Washington, coming from US exporters, why is the US Congress still sitting on its hands?  This article is a passionate argument that times have changed in Colombia, policies must keep up, that human rights activists must be heard and engaged seriously, and that trade normalization is vital for improvements in Colombia and to keep the US from losing significant exports to and influence in Colombia.

Who Is On The “Clinton List” and Can They Get Removed?

U.S. persons must not engage in transactions with individuals and entities the U.S. Government has put on the famed “Clinton List,” at risk of severe civil and criminal sanctions.  Also known as the OFAC list, or list of Specially Designated Nationals, this is a list no one wants to be on. Can people on this list get removed? It is not impossible. There is a way to do it. And it does happen.  How often? Read this post to the end and find out. You will be astonished how many have been removed in the last year.  What do almost all of them have in common?

Pass The Colombia Free Trade Agreement 

The Colombia FTA is good for America (exports), good for Colombia (growth through peace and stability), and good for the region.  Passage would boost U.S. exports, stabilize Colombia’s worldwide trade relations, and would reward and encourage Colombia for more major improvements in security, human rights, and the economy.

IFC Investing Intensely, Backing Bancolombia Big-time

There have been seven transactions – more than one a month – in the less than six months since I last wrote about the IFC investing in Colombia,  including the largest IFC deal ever in Colombia, $400 million dollars.  That brings the amount IFC has invested in its 43 deals since 2004 to well north of $2.5 billion. The financial sector remains IFC’s largest focus, with big bets on Bancolombia and microlenders associated with the Women’s World Bank.  Infrastructure funding is also a big winner, with an innovative private equity fund and a port deal in the mix. IFC even funded a 100% family owned dairy company.

IFC Funds Salvadoran Firm’s Cali Hotel Plans

In addition to the seven recent Colombia transactions I have covered, there is one more that relates to Colombia and is worth noting.  Grupo Poma from El Salvador is arranging for additional IFC financing that includes another hotel, this time in Cali, Colombia. Poma is the group behind the Marriott-flagged property on the Avenida El Dorado in Bogotá.

IFC Backs 100% Family Owned Dairy Firm Alqueria

Rounding out the seven newest projects announced by IFC in Colombia is financing for Alqueria, the third largest dairy products company in the country.  The IFC facility is a mix of debt and equity.

IFC Backs Ashmore I Infrastructure Private Equity Fund

IFC will invest up to $20 million equivalent, not exceeding 20% of total commitments, through a $500 million private equity fund focused on Colombian infrastructure.

Infrastructure projects abound in Colombia these days, thanks to a pro-investment climate and dramatic improvements in public safety and access to the country.  So, when news broke last year that the Colombian government was helping to create a private equity fund for infrastructure projects, it was big news, and I wrote about it here. The fund’s $500 million size and its infrastructure purpose made it big news. The fund is dedicated to projects in sanitation, telecommunications, transport, energy, and logistics. It was also big news that Ashmore I was formed as a private equity fund or Fondo de Capital Privado, FCP. FCP’s are a special kind of private equity fund that are specifically designed to attract institutional investors, mainly pension funds, due to specific safeguards in corporate governance standards, such as investment committees, external managers, and reporting requirements. Ashmore Investment and Inverlink were selected to be the managers of the fund. Ashmore and Inverlink were the winners out of five teams who submitted bids. Macquarie Capital is the technical advisor.  Bancoldex (Banco de Comercio Exterior de Colombia) will be a 50% investor in the fund. 

IFC Boosts Women’s World Bank Micro-lenders

IFC continues to back micro-lenders with two recent deals associated with the Women’s World Bank.  Bancamia is being transformed with $30 million in IFC funding from an NGO to a bank.  IFC is injecting $6 million into Fundación Mujer Mundial, from Popayan, in Cauca department.

Arbitration and Bylaws: Protecting Foreign Investors With a Foreign Arbitration Clause in the Bylaws of a Colombian Corporation

Arbitration provides investors an extra sense of security when partnering up with Colombian entities. There is a trend toward greater freedom of contract in creating business entities and in resolving disputes. In general, arbitration provides certain advantages over local courts. it is an important factor to consider in Colombia that arbitration is broadly permitted.  Foreign arbitration is permitted (where at least one party is a foreign national) on almost completely equal footing. Nothing in these laws expresses a limitation on arbitration or even foreign arbitration of an investor dispute under the bylaws that can be resolved by private agreement.

Winners Announced For the Ruta Del Sol Concessions

The Ruta Del Sol is the biggest infrastructure project underway in Latin America after the Panama Canal, and has made a major advance, as INCA, the Colombian national concessions authority, announced the winning bidders to construct, operate, and maintain the gigantic highway system.

Brief Summary of Colombia’s Investment Promotion Policies

 

The Government of Colombia, seeking to rebuild the country as decades of violence now recede into the past, has adopted a number of pro-investment strategies. This post describes the elements of the overall scheme.

Private Equity Actors In Colombia

In anticipation of the first Colombia Private Capital Forum, in Bogotá November 19, 2009, this post discusses the known private equity and venture capital players in Colombia.

Dispute Resolution and Enforcement In Colombia Compared to Brazil and Mexico

When businesses assess emerging market economies, what is the importance of their dispute resolution systems?  Each of Brazil, Colombia, and Mexico has been enjoying substantial economic growth over the last several years. Each also faces very negative worldwide perceptions about corruption in their legal systems.

The Latin America Venture Capital Association reports on these factors in its 2009 LAVCA Scorecard, which measures “perceived corruption,” strength of the judicial system, bankruptcy procedures, protection of minority shareholders, corporate governance, and intellectual property protection.  Another look at dispute resolution and enforcement issues is found in The World Bank 2010 Doing Business report (link is to Colombia page). It measures “protecting investors,” “enforcing contracts,” and “closing businesses” (bankruptcy procedures).

Colombia compares very favorably to the world, to Latin America, and to the OECD on protecting investors, and Colombia compares favorably to Latin America and the Caribbean on closing businesses, with rankings that are fairly high. Colombia’s bankruptcy procedures are ranked well by the World Bank, better than by the LAVCA Scorecard, which is primarily focused on venture capital/private equity needs.  

But the data point for costs and delays in enforcing contracts sends Colombia’s ranks down considerably (rank no. 152 vs. no. 5 and 32, respectively, in the other categories). It is a real outlier.  But it is based on hypothetical court processes, whereas contract enforcement in Colombia often relies upon arbitration. Arbitration is very robust in each of the three countries (see this site’s post about arbitration in Colombia).  

Thus, the already positive signs for the Colombian dispute resolution system in terms of investor protection, corporate governance, and bankruptcy procedures should not be discounted because of the weak local court system for enforcing contracts – unless and until the strong local system for arbitration and recognition of foreign arbitration is tested and factored into the analysis.

What Are “Legal Stability Contracts” And How Do They Work?

What is a legal stability contract, exactly?  The concept is clear enough — a contract between an investor and the government to prevent adverse changes in specified legal standards governing the investment, in exchange for a premium and accomplishment of the investment and its jobs and other objectives. The legal standards stabilized by the contracts vary, of course, as do the investor’s obligations — the amount of investment, the legal stability premium, the number of jobs anticipated, and so forth. 

How should the contracts be evaluated, and how do they actually work? For those interested in reviewing one in English, there did not appear to be any publicly available translation until now.  GYPLAC, S.A., a plasterboard manufacturer building a facility at the Mamonal Free Trade Zone in Cartagena, Colombia, signed Legal Stability Contract No. 1 of 2009, which I have chosen at random to provide a relatively recent example of a stability contract. 

There are several other posts on this site about stability contracts (see the category to the right).  Comments on the analysis and information provided are welcomed as are other analyses of stability contracts.

New Competition Law Takes Effect

Colombia’s Competition law was updated in late July, after two years of consideration.  Law 1340 of 2009 (no English translation appears to exist yet, but the old law was translated and available through Globalex) updates the old competition laws, primarily Law 155 of 1959, Decree 1302 of 1962 and Decree 2153 of 1992.  Its main features are a central authority, national public notice of proposed combinations, statutory timeframes for the authority to consider proposed transactions, a presumption in favor of approval of transactions that concern less than 20% of a market, rule of reason analysis dependent upon the impact of a transaction on competition, presumptions in favor of transactions that increase or are not harmful to competition as shown by empirical evidence, and increased penalties matched with flexibility to reward whistleblowers and self-reporting.

Bogotá law firms have been prolific in drawing attention to the new Competition Law’s central features.  Posse Herrera & Ruiz distributed the analysis of the new law, prepared by partner Alvaro José Rodríguez, that is reproduced in full below. In addition, Brigard & Urrutia in Bogota published a review of the law that has been reproduced on the World Services Group professional services network website. Prieto & Carrizosa published its report  (in Spanish only, currently). And Cavelier Abogados published its review of the Competition Law in its Infolex legal bulletin.   Comments are welcome here and readers should refer to these law firms for more information about this description.

Why Look At Colombia? A Country Transformed?

Do you know about the social and economic transformation of Colombia?  The July 2009 slide show prepared by the Colombia Trade Ministry (ProExport) is entitled “The Transformation of a Country.”   With detailed and relevant data, the slides reveal an amazing social transformation on a massive scale: greatly reduced violence, increased economic activity, improved conditions for most (but not all) of the country. Comparative data shows Colombia surprisingly out-performing other Latin American countries and cities in some significant ways.  There are also several industry-specific slides (for example, communications, health, automotive, infrastructure). 

 

I have researched and written two posts on the social and economic transformation in Colombia.  Please read the first post, and confront and analyze the data and statistics.  Please post any comments you may have about their accuracy (and links to more accurate information).  In the second post in the series, I critically evaluate the poor (dated) quality of information and impressions that (primarily) Americans have about Colombia. Please also post comments in reaction to my evaluation.

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