Major stories from the world of trade finance and economics: Owners of major holding company accused of tax evasion, Latam integrated market may see new member.
Chile opens a new wind park in an effort to source more power from renewable sources. Photo via wikimedia
El Array√°n wind farm opens
On Tuesday, President Michelle Bachelet inaugurated the El Array√°n wind farm, located about 250 miles north of Santiago. The installation ‚ÄĒ which is 70 percent owned by the San Francisco-based Pattern Energy Group (PEGI) ‚ÄĒ has an installed capacity of 115 megawatts, enough to cover the average usage of 200,000 households. Bachelet said the wind farm was a step toward the government’s goal of having 45 percent of energy production coming from ‚Äúnon-polluting‚ÄĚ sources and highlighted the progress made toward that goal.
‚ÄúWe have reason to be optimistic, because this year there has been a significant development of non-conventional renewable energy projects in the country,‚ÄĚ she said. ‚ÄúIn the period from January to July 2014, 600 megawatts worth of production capacity have come into operation, while we entered 2013 with just 291 megawatts.‚ÄĚ
Penta group owners charged with tax fraud
The Internal Revenue Service (SII) has filed charges against two business leaders alleging they illegally exploited the controversial Taxable Profits Fund (FUT), which allows companies to postpone taxes indefinitely. The case against Carlos Alberto D√©lano and Carlos Eugenio Lav√≠n, the founders and owners of Penta Group, centers around an accusation by the SII that they misused receipts for their spouses in order to illegally lower the tax burden of their company, Inversiones Penta III Limitada. These new allegations follow those filed against the director of Banco Penta, Hugo Bravo L√≥pez, on July 29. Initial estimates place the tax evaded through this alleged fraud at more than US$400 million. Penta Group has assets of US$20 billion and is involved in insurance, finance, healthcare, real estate and education.
State Companies Recapitalized
Bachelet has signed an initiative that will provide up to US$4 billion to Codelco with the aim of helping it finance its investment plan, which is estimated to cost $23 billion over the next five years. The funding will be awarded annually and is subject to the state mining company meeting certain targets concerning its development. Of the $4 billion, $3 billion will be provided by the treasury while $1 billion will come from the annual profits of the company.
“This bill seeks to end the uncertainty over the future of Codelco and is the largest capitalization proposal that the company has received to date. The magnitude of this contribution is fully consistent with the role it has played and we want it to continue to have [a role] in the future development of Chile,” Bachelet said, at the signing ceremony.
Along with funding for Codelco, the president has approved a bill that will provide US$450 million to Banco Estado and US$50 million for the Guarantee Fund for Small Entrepreneurs (Fogape). This capitalization is expected to permit Banco Estado to significantly expand its operations, allowing the state-owned company to potentially increase its loan portfolio by US$5 billion, of which $1.5 billion will go to finance small- and medium-sized businesses and $2 billion to finance mortgages.
Shareholders approve recapitalization of Vapores
In their extraordinary shareholders meeting, the shareholders of Compa√Ī√≠a Sud Americana de Vapores (CSAV) approved the US$400 million recapitalization of CSAV as part of its merger with Hapag-Lloyd. The funds will mainly be used to underwrite its obligations in the deal signed with Hapag-Lloyed. Under the agreement, Vapores committed to a capital increase after the merger through which it will increase its participation in the German shipping giant from 30 percent to 34 percent. The remainder will go to covering the closing costs of the deal.
Government rejects aquaculture in national parks
The office of the Undersecretary of Fish and Agriculture (Subpesca) has announced the rejection of 232 applications requesting permission to farm in the Magallanes region’s national parks. Following a lengthy appeal procedure between the National Forestry Service (Conaf) and industry representatives, authorities finally sided with the former and banned the development of aquaculture in the region. Covacich Drago, the president of the Association of Producers of Trout and Salmon of Magallanes, described the decision as ‚Äúregrettable.‚ÄĚ
Mexico to join MILA?
Mexico has signed a cooperation agreement that would give it a path to join the Latin American Integrated Market (MILA). The agreement adds the National Banking and Securities Commission of Mexico (CNBV) to the Executive Committee and Oversight Committee of MILA, with the goal of allowing for greater cooperation and information exchange and to promote mutual regulatory recognition and new agreements between member countries ‚ÄĒ currently Chile, Peru and Colombia. The agreement may open a path for Mexico to eventually join MILA.
‚ÄĒ On the Horizon ‚ÄĒ
Massive Food services convention in Santiago
The Espacio Food & Service 2014 will be held at Espacio Riesco from 10 a.m. to 8 p.m. Wednesday Sept. 3 through Friday Sept 5. The convention is intended to create new business relationships within the food industry and to highlight the latest trends in food service such as new raw materials, equipment, tools and supplies. More information can be found at the event’s website.
By Edwin Sweeney
Copyright 2014 ‚Äď The Santiago Times