Interview with Miguel Aleman, president of Cardno-Caminosca in Ecuador and attorney for the consortiums responsible for overseeing the Minas San Francisco , Sopladora and Toachi Pilatón projects. How did Cardno connect with the Caminosca exotics to buy it? Cardno established the vision to grow in five Latin American countries in 2011 and 2012. They started looking for companies in Peru, Colombia, Mexico, Chile and Ecuador to acquire a company and offer engineering services. Caminosca was the option to have been technically recognized and have participated in large projects in the country (Paute-Mazar, Coca Codo Sinclair, OCP, etc.). The company was already on sale for two or three years. What was Proventus's role in the negotiation? It was the broker that prepared Caminosca for sale, did the financial analysis, commercial and the promotional part. It is an intermediary between the buyer and the seller. Did not they do a complete analysis of the situation of the company? Looking a little further back I believe that more research on the risk of this operation should have been done, especially with more than 90% contracts with the State and a better evaluation of the past due portfolio. How did the sale of Caminosca take place? Cardno decided to acquire 100% of shares in 2013. The cost is defined based, among other items, on the sales projection and payment is made based on that plan, normally takes two years. In July 2014 the sale was completed and USD 16 million was paid. Were there no irregularities identified in the process? In that period, the review was carried out, optimization of administrative and technical issues and Cardno began to face strongly the lack of payment of the State in the projects completed and in execution. This is because, in the contracts, the control is tied to the advance of the construction and the constructors did not advance as scheduled; The scheduling was small in relation to the resources demanded by the audit. The gap widened to unsustainable levels. Optimization of administrative and technical issues and Cardno began to face strongly the lack of payment of the State in the projects completed and in execution. This is because, in the contracts, the control is tied to the advance of the construction and the constructors did not advance as scheduled; The scheduling was small in relation to the resources demanded by the audit. The gap widened to unsustainable levels. Optimization of administrative and technical issues and Cardno began to face strongly the lack of payment of the State in the projects completed and in execution. This is because, in the contracts, the control is tied to the advance of the construction and the constructors did not advance as scheduled; The scheduling was small in relation to the resources demanded by the audit. The gap widened to unsustainable levels. What projects were they? In 2014, the most important were five, between track inspection, hydroelectric and hydrocarbons. We had 850 employees, between 90 and 100 inspectors per work and monthly payroll expenses exceeded one million dollars. Without the financial support of Cardno, it was impossible for Caminosca to comply with the commitments. What solution did they give? Already a year was the gap because the projects began the 2011-2012, then Caminosca assumed all the expense. The contract said that to inspect, for example, had to have 10 inspectors, but they advanced so slow that only gave to have 4 inspectors. The three contracts of the consortia in which Caminosca participates (Minas San Francisco, Blower and Toachi Pilatón) were already signed and this forced Cardno to lend seven million dollars. Without this, he did not comply with the contracts. Was this emergency measure sufficient? Cardno put an American internal auditor , Robert Anderson, to see what was happening, to have the resources being used correctly, and to understand why the State was not fulfilling its obligations. They were about $ 20 million in accounts receivable and the exaccionistas remained as managers, including the financial area in their charge. So far, they faced a problem of cash flow, not of corruption ... That is, in early December 2014, the auditor identified an invoice in the name of a firm and did not know what service it was. Unjustified payments were found in consortia. Cardno was notified in the USA. UU. And Australia and decided to start an investigation, lawyers and computer analysts arrived in late January, confiscated computers and prevented exaccionistas from entering their offices. January, February and March 2015 analyzed (...). How did the exaccionistas respond? In early March 2015 they resigned and Cardno made a publication in Australia about the company's situation and unjustified payments. At the end of that month, Cardno proposed to me to take charge of the legal representation of Caminosca and the three consortiums. I assumed it as of April 2015. What was your evaluation? Payroll of 850 people, no income, demand for unpaid suppliers , non-payment to IESS, SRI; To top it off one makes an invoice, they do not pay him, but he has to pay taxes, there were SRI notifications and he was about to resign. At that time, Cardno invested nine million and did not see the clear picture, it was a silver sink. Why did he take the job? I accepted because I am a person of challenges. I started with a reengineering; From July to December I lowered the payroll by 400 people and focused on culminating the projects. In those who did not pay me, I asked the State to end by mutual agreement ; So ended two with Petroamazonas and still owe three million to date. Why does Caminosca report profits and since 2015 are beginning to fall? Australia's fiscal year begins in July and ends in June. By the close, when Cardno determines that there were unjustified payments, he decided to initiate legal action against the exaccionistas by the sale, in Miami. Cardno is listed on the stock exchange and must comply with anti-fraud and anti-corruption laws. This means that in June 2015 it declared a loss of 46 million, which includes the sale, credits, expenses and puts Caminosca on sale. There were some interested. What happened to the company while the trial is going on? We continue to execute the inspection projects, improve collection, comply with tax obligations and liquidate personnel. What agreements did you reach with the partners of the three consortia? Comply with contracts, do not pay any unjustified expenses, improve control and collect the past due portfolio. We request meetings with the electricity sector authorities to pay us. What actions did the supervisory bodies take before the publication of Cardno? I met with the Transparency Secretariat in April 2015; The process that Cardno carries with the exaccionistas is private and confidential. What did the Comptroller and the Superintendency of Companies do? Nothing to that date. At the moment I have several special examinations, that the Comptroller initiated to old projects executed by Caminosca outside my management, like the Multipurpose Baba, Ocaña, Metro de Quito phase 1 , via Lagarto-Baeza. Cardno assumed the technical defense of glosses and disclaimed them. In Ocaña is in preliminary hearing and on August 8 there is contentious and administrative trial. Surprisingly, Petroecuador filed a lawsuit against Caminosca for the Pascuales Cuenca project for USD 150 million, a claim made by the fugitive Carlos Pareja Yannuzzelli to justify Odebrecht's premium. How were unjustified payments resolved in the financial statements? 1.5 million were written off. With these payments billed abroad, did they comply with the rule to avoid double taxation? The exaccionistas were welcomed in 2012, When benefiting from this benefit inflated the expense and deducted taxes? Yes in November 2016 - that the partial arbitration award was issued in Miami and that is appealed by the exaccionistas, opened the books, were recognized as non-deductible expenses 3.1 million, which impacted on the payment of the Income Tax, In the participation of workers, additional VAT to the State, withholdings for payment abroad, plus interest and fines . The consortiums paid 1.7 million to SRI and the workers. What was the participation of the other consortium partners in this problem? They aligned to the solution proposed by Cardno in consensus. The participation of Leme Engenharia (Brazilian firm) in the two consortiums of Toachi Pilatón and Sopladora is 40% and in Minas San Francisco, Gas Fenosa has 30%, Integral 25% and Astec 15%. Why in 2016 there are expenses for USD 16 million and losses for 6 million? The problem is not the expenses, they are inside a normal operation with important indemnities of personnel with many years of service and that even they were entitled to the employer's retirement, from 2015. On the side of the income the contracts were extended by the delay of The builders , which affected the invoicing by inspection and therefore the results are negative in 2015 and 2016. Why did they take out foreign exchange tax for USD 260 000 in the last five years and 2016 were USD 2 million? We began to pay the credit Cardno lent us. After cleaning the house will they stay in Ecuador? Cardno Caminosca is committed to the country to fulfill the contractual commitments, as a foreign branch and to grow in Latin America. His experience He is a civil engineer and has led the operation of Entrix INC, a company acquired by Cardno, Australia.
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