Advisory Board

  • Cai Hongbin
  • Peking University Guanghua School of Management
  • Peter Clarke
  • Barry Diller
  • IAC/InterActiveCorp
  • Fu Chengyu
  • China National Petrochemical Corporation (Sinopec Group)
  • Richard J. Gnodde
  • Goldman Sachs International
  • Lodewijk Hijmans van den Bergh
  • De Brauw Blackstone Westbroek N.V.
  • Jiang Jianqing
  • Industrial and Commercial Bank of China, Ltd. (ICBC)
  • Handel Lee
  • King & Wood Mallesons
  • Richard Li
  • PCCW Limited
  • Pacific Century Group
  • Liew Mun Leong
  • Changi Airport Group
  • Martin Lipton
  • New York University
  • Wachtell, Lipton, Rosen & Katz
  • Liu Mingkang
  • China Banking Regulatory Commission (CBRC)
  • Dinesh C. Paliwal
  • Harman International Industries
  • Leon Pasternak
  • BCC Partners
  • Tim Payne
  • Brunswick Group
  • Joseph R. Perella
  • Perella Weinberg Partners
  • Baron David de Rothschild
  • N M Rothschild & Sons Limited
  • Dilhan Pillay Sandrasegara
  • Temasek International Pte. Ltd.
  • Shao Ning
  • State-owned Assets Supervision and Administration Commission of the State Council of China (SASAC)
  • John W. Snow
  • Cerberus Capital Management, L.P.
  • Former U.S. Secretary of Treasury
  • Bharat Vasani
  • Tata Group
  • Wang Junfeng
  • King & Wood Mallesons
  • Wang Kejin
  • China Banking Regulatory Commission (CBRC)
  • Wei Jiafu
  • Kazakhstan Potash Corporation Limited
  • Yang Chao
  • China Life Insurance Co. Ltd.
  • Zhu Min
  • International Monetary Fund

Legal Roundtable

  • Dimitry Afanasiev
  • Egorov Puginsky Afanasiev and Partners (Moscow)
  • William T. Allen
  • NYU Stern School of Business
  • Wachtell, Lipton, Rosen & Katz (New York)
  • Johan Aalto
  • Hannes Snellman Attorneys Ltd (Finland)
  • Nigel P. G. Boardman
  • Slaughter and May (London)
  • Willem J.L. Calkoen
  • NautaDutilh N.V. (Rotterdam)
  • Peter Callens
  • Loyens & Loeff (Brussels)
  • Bertrand Cardi
  • Darrois Villey Maillot & Brochier (Paris)
  • Santiago Carregal
  • Marval, O’Farrell & Mairal (Buenos Aires)
  • Martín Carrizosa
  • Philippi Prietocarrizosa & Uría (Bogotá)
  • Carlos G. Cordero G.
  • Aleman, Cordero, Galindo & Lee (Panama)
  • Ewen Crouch
  • Allens (Sydney)
  • Adam O. Emmerich
  • Wachtell, Lipton, Rosen & Katz (New York)
  • Rachel Eng
  • WongPartnership (Singapore)
  • Sergio Erede
  • BonelliErede (Milan)
  • Kenichi Fujinawa
  • Nagashima Ohno & Tsunematsu (Tokyo)
  • Manuel Galicia Romero
  • Galicia Abogados (Mexico City)
  • Danny Gilbert
  • Gilbert + Tobin (Sydney)
  • Vladimíra Glatzová
  • Glatzová & Co. (Prague)
  • Juan Miguel Goenechea
  • Uría Menéndez (Madrid)
  • Andrey A. Goltsblat
  • Goltsblat BLP (Moscow)
  • Juan Francisco Gutiérrez I.
  • Philippi Prietocarrizosa & Uría (Santiago)
  • Fang He
  • Jun He Law Offices (Beijing)
  • Christian Herbst
  • Schönherr (Vienna)
  • Lodewijk Hijmans van den Bergh
  • De Brauw Blackstone Westbroek N.V. (Amsterdam)
  • Hein Hooghoudt
  • NautaDutilh N.V. (Amsterdam)
  • Sameer Huda
  • Hadef & Partners (Dubai)
  • Masakazu Iwakura
  • TMI Associates (Tokyo)
  • Christof Jäckle
  • Hengeler Mueller (Frankfurt)
  • Michael Mervyn Katz
  • Edward Nathan Sonnenbergs (Johannesburg)
  • Handel Lee
  • King & Wood Mallesons (Beijing)
  • Martin Lipton
  • Wachtell, Lipton, Rosen & Katz (New York)
  • Alain Maillot
  • Darrois Villey Maillot Brochier (Paris)
  • Antônio Corrêa Meyer
  • Machado, Meyer, Sendacz e Opice (São Paulo)
  • Sergio Michelsen Jaramillo
  • Brigard & Urrutia (Bogotá)
  • Zia Mody
  • AZB & Partners (Mumbai)
  • Christopher Murray
  • Osler (Toronto)
  • Francisco Antunes Maciel Müssnich
  • Barbosa, Müssnich & Aragão (Rio de Janeiro)
  • I. Berl Nadler
  • Davies Ward Phillips & Vineberg LLP (Toronto)
  • Umberto Nicodano
  • BonelliErede (Milan)
  • Brian O'Gorman
  • Arthur Cox (Dublin)
  • Robin Panovka
  • Wachtell, Lipton, Rosen & Katz (New York)
  • Sang-Yeol Park
  • Park & Partners (Seoul)
  • José Antonio Payet Puccio
  • Payet Rey Cauvi (Lima)
  • Kees Peijster
  • COFRA Holding AG (Zug)
  • Juan Martín Perrotto
  • Uría & Menéndez (Madrid/Beijing)
  • Philip Podzebenko
  • Herbert Smith Freehills (Sydney)
  • Geert Potjewijd
  • De Brauw Blackstone Westbroek (Amsterdam/Beijing)
  • Qi Adam Li
  • Jun He Law Offices (Shanghai)
  • Biörn Riese
  • Jurie Advokat AB (Sweden)
  • Mark Rigotti
  • Herbert Smith Freehills (Sydney)
  • Rafael Robles Miaja
  • Robles Miaja (Mexico City)
  • Alberto Saravalle
  • BonelliErede (Milan)
  • Maximilian Schiessl
  • Hengeler Mueller (Düsseldorf)
  • Cyril S. Shroff
  • Cyril Amarchand Mangaldas (Mumbai)
  • Shardul S. Shroff
  • Shardul Amarchand Mangaldas & Co.(New Delhi)
  • Klaus Søgaard
  • Gorrissen Federspiel (Denmark)
  • Ezekiel Solomon
  • Allens (Sydney)
  • Emanuel P. Strehle
  • Hengeler Mueller (Munich)
  • David E. Tadmor
  • Tadmor & Co. (Tel Aviv)
  • Kevin J. Thomson
  • Barrick Gold Corporation (Toronto)
  • Yu Wakae
  • Nagashima Ohno & Tsunematsu (Tokyo)
  • Wang Junfeng
  • King & Wood Mallesons (Beijing)
  • Tomasz Wardynski
  • Wardynski & Partners (Warsaw)
  • Xiao Wei
  • Jun He Law Offices (Beijing)
  • Xu Ping
  • King & Wood Mallesons (Beijing)
  • Shuji Yanase
  • OK Corporation (Tokyo)
  • Alvin Yeo
  • WongPartnership LLP (Singapore)

Founding Directors

  • William T. Allen
  • NYU Stern School of Business
  • Wachtell, Lipton, Rosen & Katz
  • Nigel P.G. Boardman
  • Slaughter and May
  • Cai Hongbin
  • Peking University Guanghua School of Management
  • Adam O. Emmerich
  • Wachtell, Lipton, Rosen & Katz
  • Robin Panovka
  • Wachtell, Lipton, Rosen & Katz
  • Peter Williamson
  • Cambridge Judge Business School
  • Franny Yao
  • Ernst & Young

Monthly Archives: May 2017

PERUVIAN UPDATE – The Impact of “Lava Jato” on M&A in Peru

Editors’ Note:  This post was written by Jose Antonio Payet and Mario Lercari Bueno of Payet Rey Cauvi Pérez, one of Peru’s leading firms with significant experience in foreign investment in Peru.  Mr. Payet is a member of XBMA’s Legal Roundtable.

Background: Lava Jato reaches Peru

Corruption has always been a sensitive issue when doing business in Latin America. In recent years, the Brazilian “Lava Jato” investigation has been in the spotlight for its implications throughout the continent. Brazilian construction giants such as Odebrecht, OAS, Camargo Correa, Andrade Gutierrez and Quieroz Galvao, among others, were indicted in Brazil and other jurisdictions with criminal charges for corrupt practices. As the evidence for this corruption network became clearer, the main representatives of these companies started to participate in leniency programs to reveal information concerning the officials of the respective countries that were involved in the corrupt practices. Peru has been no exception to this reality.

The indictment issued by the U.S. Department of Justice in late 2016 states that Odebrecht representatives acknowledged the payment of US$ 29,000,000 to Peruvian officials from 2005 to 2014. For these payments, Odebrecht allegedly received illegal benefits such as the award of investment projects with favorable conditions, the disqualification of other consortia in the bidding processes, and the execution of addenda to increase projects costs, among others alleged benefits.

This revelation started a political crisis in Peru in which it became clear that major investment projects during 2005 to 2014 were tainted by corrupt practices affecting bidders and Peruvian officials. Criminal investigations have been started against the responsible public officers  – some officers are already imprisoned and an international warrant has been issued for the arrest of former President Alejandro Toledo for charges of receiving a USD 20 million dollar bribe from Odebrecht.  In this context, the Government of Peru (“GOP”) has issued additional measures directed mainly to provide additional safeguards against corruption in public bidding processes, to prevent the sale of assets by companies involved in cases which would jeopardize payment of penalties to the Government, and to increase sanctions for companies involved in corruption practices.

The Government takes action: Measures to counter corruption practices

On October 2016, the Peruvian Congress passed an authoritative law in which it delegated to the executive branch faculties to legislate in the prevention and fight against corrupt practices, among other matters. Under such circumstances, the executive branch issued Legislative Decrees N° 1341 and N° 1352 that introduced severe administrative sanctions to companies convicted for corrupt practices and money laundering. Furthermore, on February 2017, the executive branch issue an Urgency Decree to prevent the sale of assets of companies convicted for such crimes. Finally, new legislation establishing criminal liability of legal entities has been passed.

All these measures have an important impact in M&A processes, including due diligence, structure, drafting and execution.

  • Modification of the State Procurement Law (Ley de Contrataciones del Estado): Legislative Decree N° 1341 modifies the State Procurement Law to incorporate new grounds for permanently disqualifying entities to contract with the GOP. In this sense, a company whose representatives have been convicted in any jurisdiction for corruption related crimes and/or money laundering will not be able to contract with the Republic of Peru. The same sanction applies if such representatives acknowledge the commission of such crimes in a leniency program in any jurisdiction.
  • Criminal and administrative sanctions for companies: Legislative Decree N° 1352 establishes administrative sanctions for the companies whose representatives have been convicted for corruption related crimes and/or money laundering, among others. In this cases, the liability of the company is determined in the criminal process of the person(s) that allegedly committed such crimes. The administrative sanctions that the criminal judge may impose are:
    • Fines of more than the double of the illegal profits obtained but less than six times such profits;
    • Disqualification in any of the following forms: (a) suspension of the company’s activities, (b) temporal or definitive prohibition to carry out the same activities in which the criminal conduct was performed and (c) to contract with the GOP.
    • Cancelation of licenses, concessions or rights or any other authorization granted;
    • Temporal or definitive foreclosure of their offices and/or establishments; and
    • Dissolution of the company.

The implicated company may avoid these administrative sanctions if, prior to the commission of the crime, it adopts and implements in its organization a prevention model appropriate to its nature, risks, needs and characteristics, consisting of appropriate monitoring and control measures to prevent the aforementioned crimes or to significantly reduce risk of their commission.

Change of ownership in a company does not affect liability for past acts.

  • Restriction of the Transfer of Assets: Urgency Decree N° 003-2017 and its Guidelines establish certain restrictions for companies which are included within its scope of application. The most relevant provisions include: (i) restriction on the transfer of funds abroad, (ii) the need for prior authorization from the Ministry of Justice in case of a transfer of rights and/or assets; and, (iii) the withholding of payments that GOP entities must execute in favor of the included companies. The subjective scope of this regulation will be applicable to the following companies:
    • Companies which have been convicted or whose officials or representatives have been convicted in Perú or abroad by a final decision for crimes against public administration or money laundering or equivalent crimes (if they have been committed in other countries) against the GOP.
    • Companies which have recognized or whose officials or representatives have recognized the commission of crimes against public administration or money laundering or equivalent crimes (if they have been recognized in other countries) against the GOP.
    • Related parties to the companies set forth in the preceding items.

To this date only the economic group of Odebrecht S.A has been included under the scope of this decree.

The GOP has dictated other measures to prevent and fight corrupt practices. In this sense, it is worth noting that all the new PPP Agreements shall include an anti-corruption provision that will permit the GOP to terminate any PPP Agreement in which corrupt acts were performed during bidding or selection process to award the PPP.

Lava Jato’s hangover: A new way of dealing with M&As

The Lava Jato investigation is having a profound impact in the political landscape in Peru. Information received in leniency programs in Peru, Brazil and the United States, have allowed Peruvian prosecutors to indict corrupt officials, and further investigations are underway. Although these investigations will have a short term negative impact in infrastructure investment in Peru, the long term effects will probably be beneficial.

On the other hand, companies involved in the Lava Jato investigation will probably need to sell some or all their Peruvian assets. These include assets in toll roads, electricity generation, irrigation, oil and gas, among others. Many of these M&A transactions will have to comply with the provisions of Urgency Decree N° 003-2017.

In addition, as criminal and administrative sanctions to companies have grown harsher, Peruvian companies must implement compliance and prevention models according to its nature, risks, needs and characteristics. Accordingly, legal firms are upgrading their compliance and white collar criminal law practices as future M&A transactions will surely include an in-depth revision of compliance and prevention models of the target companies.

The views expressed herein are solely those of the author and have not been endorsed, confirmed, or approved by XBMA or any of the editors of XBMA Forum, nor by XBMA’s founders, members, contributors, academic partners, advisory board members, or others. No inference to the contrary should be drawn.

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