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Viewing cable 06LIMA2173, PERU: 2006 REPORT ON INVESTMENT DISPUTES AND

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Reference ID Created Released Classification Origin
06LIMA2173 2006-06-01 16:53 2011-08-25 00:00 UNCLASSIFIED Embassy Lima
VZCZCXYZ0000
RR RUEHWEB

DE RUEHPE #2173/01 1521653
ZNR UUUUU ZZH
R 011653Z JUN 06
FM AMEMBASSY LIMA
TO RUEHC/SECSTATE WASHDC 0789
INFO RUEHBO/AMEMBASSY BOGOTA 3484
RUEHQT/AMEMBASSY QUITO 0415
RUEHLP/AMEMBASSY LA PAZ JUN SANTIAGO 0598
RUEHCV/AMEMBASSY CARACAS 9553
RUEHBU/AMEMBASSY BUENOS AIRES 2435
RUEHME/AMEMBASSY MEXICO 3364
RUEHBR/AMEMBASSY BRASILIA 6809
RUCPDOC/DEPT OF COMMERCE WASHINGTON DC
RUEATRS/DEPT OF TREASURY WASHDC
RHEHAAA/NATIONAL SECURITY COUNCIL WASHINGTON DC
UNCLAS LIMA 002173 
 
SIPDIS 
 
SIPDIS 
 
DEPT FOR WHA/AND, WHA/EPSC, EB/CBA, EB/IFD/OIA, L/CID 
TREASURY FOR OASIA/INL 
COMMERCE FOR 4331/MAC/WH/MCAMERON 
USTR FOR BHARMAN 
 
E.O. 12958: N/A 
TAGS: EINV ECON ETRD PGOV PE
SUBJECT: PERU:  2006 REPORT ON INVESTMENT DISPUTES AND 
EXPROPRIATION CLAIMS 
 
REF: STATE 60294 
 
This is Post's response to Reftel, a request for input on 
outstanding Investment Dispute and Expropriation Claims. 
 
The US Government is aware of seven (7) claims that may be 
outstanding against the Government of Peru.  Since 2004, 4 
cases - Claimants D, E, J, and M - have been resolved and 
should be removed from the report.  Post also recommends the 
removal of 5 cases - Claimants C, F, K, L and O - due to 
continued lack of involvement by the claimants. 
 
1.   a.  Claimant A 
 
     b.  1999 
 
     c.  Claimant A's Peruvian subsidiary was a major 
     purchaser of Peruvian gold in the late 1990's.  In 
     1999, the GOP issued a decree that made the final 
     purchaser of gold responsible for verifying the 
     legality of the supply chain from mine to export in 
     order to receive the refunds of value-added tax (VAT) 
     allowed under law.  On the basis of this decree, 
     applied retroactively, and in the context of a broader 
     investigation into the loss of up to $150 million, the 
     GOP tax authority, SUNAT (Superintendencia Nacional de 
     Administracion Tributaria), charged that claimant's 
     subsidiary had participated in a scheme to defraud the 
     GOP by falsifying gold purchases.  SUNAT failed to 
     refund VAT payments and, in December 1999, executed 
     letters of guarantee worth a combined $28 million put 
     up by Claimant A to secure early payment of the 
     refunds.  Claimant A denied the accusations and filed 
     an administrative appeal, which was later appealed to 
     Peru's tax court.  Subsequently, the GOP filed criminal 
     charges against executives of claimant's Peruvian 
     subsidiary. 
 
     On February 4, 2003, the tax court ruled against 
     Claimant A, upholding SUNAT's resolution to withhold 
     the $28 million amount.  The tax court ruling did not 
     cite any direct evidence of specific misdeeds by 
     Claimant.  However, SUNAT contends that transactions 
     within Claimant's gold supply chain were simulated and 
     that the company was in a position to know of the 
     irregularities and wrongdoings of suppliers. 
 
     Claimant A asserts that GOP corruption caused the 
     execution of the letters of credit and the filing of 
     criminal charges. Claimant A argues that it should not 
     be liable for any possible wrongdoing by its gold 
     suppliers. 
 
     The judge in claimant's tax case issued a decision in 
     May 2004 that threw out previous SUNAT and Tax Court 
     rulings against the company.  The court found that 
     claimant cannot be held responsible for the irregular 
     actions of third parties and that the GOP improperly 
     seized the company's letters of credit in 1999.  The 
     GOP then appealed this decision.  The Superior Court, 
     which heard the appeal, issued a split 2-1 decision in 
     March 2005, ruling in favor of Claimant A.  However, 
     Peruvian law dictates that the winning side must have a 
     minimum of three votes in its favor.  An additional 
     judge was assigned to the case in March 2005.  After a 
     hearing in April 2005, the new judge ruled in favor of 
     the GOP, tying the vote at 2-2.  A fifth judge has been 
     assigned to the case.  The Court issued a 3-2 decision 
     against Claimant A in August 2005. 
 
     Claimant appealed to the Constitutional Court.  In 
     January 2006, the Constitutional Court ruled 5-1 
     against claimant.  Claimant is considering taking the 
     dispute to the Inter-American Court in Costa Rica. 
 
     In the criminal case involving claimant's executives 
 
     (lumped together with more than 200 other defendants), 
     the government prosecutor requested that the judge 
     extend the period to investigate the case (adding 60 
     more days on to an investigative stage that has 
     lingered for 3.5 years).  In August 2005, the public 
     prosecutor proposed the dismissal of the case against 
     the claimant's executives.  The Court sent the case 
     file back to the prosecutor in February 2006 to amend 
     formal errors before making a decision.  In April 2006, 
     the prosecutor resubmitted his recommendation to the 
     Criminal Court to dismiss the case against the 
     Claimant's executives.  The Criminal Court will 
     schedule a hearing for August or September, and should 
     issue its ruling by December. 
 
     At Claimant's request, Embassy has engaged repeatedly 
     with senior GOP officials since 1999 regarding this 
     case. 
 
 
2.   a.  Claimant B 
 
     b.  1999 
 
     c.  Claimant B also is involved in a dispute with the 
     GOP regarding the refund of value-added tax on gold 
     exported from Peru between May 1997 and February 1999. 
     SUNAT, the tax agency, has withheld roughly $600,000 
     that claimant contends it is entitled to receive as a 
     tax refund.  The Tax Court issued a decision in 
     Claimant B's case to wait until a parallel criminal 
     case against Claimant B's local general manager is 
     resolved.  The company has appealed this decision, 
     arguing that the Tax Court had all the necessary 
     information to make a ruling and that such a position 
     creates undue delay.  The Superior Court, which heard 
     the appeal, issued a split 2-1 decision in March 2005 
     in favor of the government.  However, Peruvian law 
     dictates that the winning side must have a minimum of 
     three votes in its favor.  An additional judge was 
     assigned to the case and the Superior Court held a 
     hearing on May 24, 2005.  The new judge ruled in favor 
     of Claimant B, tying the vote at 2-2.  A fifth judge 
     was assigned to the case and the Court held another 
     oral hearing on June 15, 2005. In August, the Court 
     issued its decision, 3-2 against Claimant.  Claimant 
     appealed the case to the Constitutional Court, seeking 
     to overturn the ruling of the Tax Court, which 
     refrained from issuing a resolution until after the 
     criminal case concludes. 
 
     The criminal case against Claimant B's local general 
     manager is the same one that involves Claimant A's 
     executives.  The Public Prosecutor did not recommend 
     that the case against Claimant B's executive be 
     dropped. 
 
     In the September 2002 ATPDEA commitment letter, the GOP 
     pledged to resolve this case promptly, ensuring due 
     process and transparency.  In communications with GOP 
     officials, USTR has set progress in the resolution of 
     this dispute as a key factor that will determine 
     whether Peru is included in the potential free trade 
     agreement (FTA) that is sent to Congress. 
 
 
3.   a.  Claimant C 
 
     b.  1989 
 
     c.  Peru's Supreme Court ruled in December 1989 that 
     ships belonging to Claimant C had been illegally seized 
     by Peruvian Customs in 1985, and that Claimant C is due 
     financial compensation.  However, the amount of that 
     compensation is now the subject of a series of court 
     actions involving the Ministry of Economy and Finance 
 
     (MEF).  MEF contested the legality of Claimant C's 
     claim, stating that the statute of limitations had 
     expired.  The court ruled on March 12, 2004, against 
     the company on the statute of limitations issue. 
     Claimant C has appealed this decision to the Superior 
     Court, which was scheduled to start hearing the case by 
     August 2004.  An independent legal analysis requested 
     by the Embassy suggested that the lower court ruling 
     was within the bounds of Peruvian law. 
 
     Claimant C passed away in early 2005.  His wife has 
     since moved to the United States and is no longer 
     seeking Embassy advocacy on this case. 
 
 
4.   a.  Claimant D 
 
     b.  2001 
 
     c.  This case was resolved in May 2004.  Peru's 
     telecommunications agency, OSIPTEL, sponsored 
     competitive bidding for a subsidized, rural telephone 
     network contract in September 2000.  Foreign bidders 
     were required to form a consortium with a Peruvian 
     partner.  On September 28, 2000, OSIPTEL announced that 
     Claimant D and its Peruvian partner had submitted the 
     lowest bid (about $27.8 million) for a subsidy. The bid 
     submitted by Claimant D and its partner was 
     approximately $10 million less than the second-place 
     bid.  OSIPTEL issued an official resolution (a "Buena 
     Pro") declaring Claimant D's consortium to be the 
     winner. 
 
     To finalize the contract, Claimant D's partner was 
     required to obtain a concession from the GOP, which the 
     Claimant alleges should have been automatic.  The GOP 
     refused to do so, citing indictments against the owners 
     of the Peruvian partner firm.  The GOP awarded the 
     concession to the second-place bidder in 2001, allowing 
     the second-place firm to reduce its bid by $10 million 
     to match claimant's bid. Claimant D alleged that the 
     decision to award the concession to the second-place 
     bidder was prompted by that bidder's close contacts 
     with former senior GOP officials.  Claimant D alleged 
     that the GOP violated several of Peru's own laws and 
     regulations. 
 
     Working on the basis of guidance from the Department, 
     Embassy officers engaged actively with GOP officials to 
     encourage the GOP to investigate the claimant's 
     allegations and to consider an out-of-court settlement. 
     This case was resolved in May 2004 when Claimant D 
     received a settlement from the second place bidder of 
     $450,000. 
 
 
5.   a.  Claimant E 
 
     b.  2002 
 
     c. This case was resolved in 2005.  In 1997, the 
     Ministry of Transportation procured a radar system from 
     Claimant E under a turnkey contract.  The system became 
     operational in 1998 and, in July 2002, Claimant E 
     sought to close out the contract based upon a 
     satisfactory evaluation of the radar, as mandated by 
     the agreement.  The GOP refused to close the contract, 
     arguing that the system did not function properly and 
     that Claimant E had not fulfilled its obligations.  In 
     a possible breach of contract, the GOP ordered its bank 
     to collect from a $6 million performance bond posted by 
     Claimant E before negotiations to settle this dispute 
     could begin.  That bond drawdown order was stopped by a 
     temporary injunction granted by a New York court in 
     August 2002. 
 
     Claimant E and the GOP reached agreement in April 2004 
     on rules for submitting this dispute to local 
     arbitration in Peru. The parties initiated the 
     arbitration procedures on June 1, 2004.  The 
     arbitration panel issued its 3-0 decision on June 16, 
     2005, in favor of the GOP.  Claimant E is paid the GOP 
     $500,000 in damages and the GOP will issue a statement 
     absolving Claimant E from future obligations.  The GOP 
     returned the bond to Claimant E. 
 
 
6.   a.  Claimant F 
 
     b.  1999 
 
     c.  In October 1999, the GOP's forestry and parks 
     authority, INRENA, obtained an emergency decree halting 
     the movement of logging equipment and lumber in several 
     of Peru's jungle provinces.  INRENA shut down a logging 
     operation in which Claimant F had invested $2 million 
     and seized lumber intended for export to Claimant F. 
     The GOP alleged that the Peruvian company was engaged 
     in illegal logging.  Claimant F denied the charges, 
     asserting that the GOP's actions were intended to put 
     Claimant F's partner out of business.  Claimant F and 
     its Peruvian partner have waged a legal battle in Peru 
     against INRENA since then.  Claimant F has not sought 
     Embassy assistance since 2002. 
 
 
7.   a.  Claimant G 
 
     b.  1970 
 
     c.    Claimant G signed an agreement with the GOP in 
     1953 to build roads in rural Peru in exchange for one 
     million acres of land.  Claimant G began developing a 
     first installment of 60,000 hectares, but a military 
     government expropriated the land in the 1960s. 
     Claimant G filed suit.  In 1971, the Peruvian Supreme 
     Court ruled that the GOP had to pay Claimant G for the 
     roads he had built. 
 
     In its September 2002 ATPDEA commitment letter, the GOP 
     noted that the judiciary had recognized Claimant G's 
     right to indemnity for the road construction, the value 
     of which needed to be determined through further 
     proceedings.  The GOP further pledged to "ensure a 
     transparent and prompt resolution." 
 
     In March 2004, the GOP issued a supreme decree 
     establishing a special commission to negotiate a 
     settlement with Claimant G.  The commission and 
     Claimant G's attorneys have met three times in Lima, 
     but the two sides failed to agree on a final 
     compensation figure before the mandate of the 
     Commission expired. 
 
     Claimant G met again with GOP officials in 2005 to 
     discuss the methodology for establishing the market 
     value price for the work done in 1968.  The GOP 
     proposed that Claimant H agree to a new independent 
     appraisal to determine the base amount of compensation. 
     Claimant G agreed in principle, but the GOP refused to 
     compensate Claimant G in one lump sum. 
 
     In May 2005, the GOP found an official document from 
     Claimant G in an archived Ministry of Agriculture file 
     that claims the total value of the work completed in 
     1968 was $865,000.  According to the GOP, using a 
     mixture of Treasury bonds and bills, the current-day 
     value would total approximately $10 million.  Claimant 
     G asserts that the document was not a complete 
     assessment of work completed. 
 
     On March 30, 2006, Claimant G accepted the Peruvian 
 
     Government's offer of compensation.  The GOP is still 
     working to budgetary approval from the Peruvian 
     Congress. 
 
 
8.   a.  Claimant H 
 
     b.  2001 
 
     c.  Peruvian tax agency SUNAT served Claimant H in 
     November 2001 with a $49 million tax assessment.  SUNAT 
     claimed that Claimant H's local power company under 
     previous ownership underpaid taxes from 1996-1999 due 
     to improper use of depreciation after the privatization 
     of the power company.  Claimant H purchased the 
     privatized company in 1999.  The power company was 
     privately audited from 1996-1999, and its financial 
     statements for those years were approved by GOP 
     representatives on the company's board and by the GOP 
     privatization agency. 
 
     In December 2001, Claimant H filed an administrative 
     claim against the tax assessment.  In September 2002, 
     SUNAT upheld its assessment but reduced the amount to 
     $43 million.  In late September 2002, Claimant H 
     appealed this decision to the Tax Court.  The pending 
     assessment against Claimant H now totals more than $50 
     million with interest.  The Tax Court issued in May 
     2004 a decision disagreeing with the method of 
     depreciation employed by the company and asking SUNAT 
     to recalculate its assessment.  Parallel to these legal 
     proceedings, Claimant H and the GOP submitted this case 
     to international arbitration in 2004.  Claimant H 
     argues that SUNAT's reassessment violates a Legal and 
     Tax Stability Agreement between Claimant H and the GOP. 
 
     This case is pending a decision in international 
     arbitration. 
 
 
9.   a.  Claimant I 
 
     b.  2003 
 
     c.   In December 2003, tax agency SUNAT assessed Claimant I 
     $9 million in fines and reduced its income tax credit for 
     1998 from 32 million Soles (Peruvian currency) to 9 million 
     Soles.  The assessment was based on SUNAT's claim that 
     Claimant I's 1997 merger with a local metal refining company 
     had no economic substance.  Claimant I believes the merger 
     was done correctly and that its receipt of applicable tax 
     benefits was in strict compliance with existing Peruvian 
     law.  Claimant I contends that the economic substance of the 
     merger has been clearly demonstrated. In December 2004, 
     SUNAT, after reviewing Claimant I's 1999-2001 income taxes, 
     assessed the company with additional fines.  As of December 
     31, 2005, Claimant I's tax liability for the 1998-2001 
     assessments was estimated to be more than $110 million. 
 
     In February 2006, Claimant I hired CONATA, the Peruvian 
     state-owned appraisal agency, to evaluate 10 percent of 
     the company's holdings as a test.  The results were 
     lower than Claimant I's own appraisal by 30 percent. 
     According to Claimant I, the CONATA appraisal valued 
     the company's assets individually (as one would do in a 
     liquidation) rather than as part of an integrated 
     profitable enterprise.  Claimant I in May 2006 
     requested that CONATA conduct an integral assessment. 
 
     There is also a growing backlog of VAT refunds due to 
     Claimant I, dating from mid-2004.  In September 2004, 
     as a result of Claimant I's request for a VAT credit, 
     SUNAT conducted a full audit of the company's January- 
     July 2004 tax documents, inquiring why the company did 
     not pay VAT on some zinc and copper sales. In November 
     2004, SUNAT assessed that Claimant I owed more than 
 
     $2.2 million in back VAT payments and offset this 
     amount against the refund for VAT credit.  SUNAT then 
     began an audit of Claimant I's VAT documents dating 
     from 1999-2001.  As of December 31, 2005, the company 
     has an assessed VAT liability of $44 million for the 
     years 1999-2001.  In January 2006, SUNAT began another 
     tax audit of Doe Run, this time for the 2002-2003 
     period.  This audit is still in process.  While the 
     audits continue, SUNAT refuses to grant Claimant I's 
     credit on VAT refunds, which total more than $100 
     million. 
 
 
10.  a.  Claimant J 
 
     b.  2001 
 
     c.  This case was resolved in September 2005.  Claimant 
     J is a local power company majority-owned by two US 
     energy companies.  Claimant J signed a ten-year legal 
     and tax stability agreement with the GOP in 1994.  Tax 
     agency SUNAT disputed the company's continued use after 
     1999 of accelerated depreciation, which was permitted 
     under Peruvian law for companies that underwent 
     reorganizations. The issue initially went to 
     arbitration and a parallel Tax Court proceeding. 
     Claimant J won in both instances, but SUNAT was 
     permitted to revisit the case.  In July 2003, SUNAT 
     assessed claimant with $56 million in back taxes due 
     since 1999. Claimant J again appealed the SUNAT 
     assessment to the Tax Court, which ruled in February 
     2004 that Claimant J had a right to revalue assets and 
     that there should be no assessments for the years 1996- 
     1998.  The Tax Court, however, asked SUNAT to review 
     the 1999 assessment again; SUNAT concluded Claimant J 
     overvalued its assets to reduce its tax burden. 
 
     After another appeal by Claimant J, the Tax Court in 
     late January 2005 directed GOP agency CONATA (a state- 
     owned valuation firm) to conduct a new assessment of 
     Claimant J's 1994 assets.  The Tax Court issued a 
     ruling on July 26 instructing SUNAT to utilize the 
     CONATA assessment to resolve the dispute.  SUNAT 
     determined that Claimant J owed approximately $282,000 
     in back taxes and interest through 1999.  The company 
     paid the amount in September 2005.  SUNAT also agreed 
     to not appeal the Tax Court decision that prevented the 
     agency from reopening the 1996-1997 tax years. 
 
 
11.  a.  Claimant K 
 
     b.  1970 
 
     c.  Following receipt of a letter from Congressman 
     Silvestre Reyes (Texas) concerning Claimant K's case in 
     December 1999, Embassy received a letter from Claimant 
     K in February 2000 and met with claimant at his request 
     while he was visiting Peru in May 2000.  According to 
     Claimant K, in about 1970, Peru's military government 
     expropriated his farm as part of a general land reform 
     act that expropriated farms over 250 hectares. 
     Claimant's farm, however, is just under 200 hectares. 
     Claimant K was issued compensation bonds, which have 
     since become worthless as the result of hyperinflation. 
     Claimant K asserts that, because he believed the 
     expropriation to be illegal and because he was living 
     in the United States at the time, he made no attempt to 
     redeem the bonds.  Claimant K has provided no estimate 
     of the land's current value, maintaining that his goal 
     is to have it returned. 
 
     Claimant K began efforts to recover his farm in 1999. 
     At Embassy's suggestion, he joined an association 
     composed of others whose land was expropriated. 
     Claimant K has also contracted legal counsel in Peru, 
 
     but has not separately pursued remedies through the 
     Peruvian courts. 
 
     Embassy Officers met with Claimant K in 2000, and were 
     in contact with Claimant K on one occasion in 2001. 
     Embassy officers have requested details on the 
     expropriated property, a timeline of events related to 
     the expropriation, and any legal analysis supporting 
     the Claimant's assertion that the expropriation did not 
     comply with Peruvian law.  To date, Embassy has not 
     received this information.  Post has had no contact 
     with claimant since July 2001. 
 
 
12.  a.  Claimant L 
 
     b.  1976 
 
     c. According to Claimant L, pursuant to the Agrarian 
     Reform Law, the Peruvian Agriculture Ministry (MinAg) 
     in 1976 transferred about 60 hectares of land he had 
     purchased in 1964 to the Comunidad Campesina de Oyon 
     (CCO), located in the district and province of Oyon in 
     the department of Lima.  MinAg allegedly did so without 
     his knowledge and without notifying him of the action. 
 
     Claimant L hired a lawyer to undertake administrative 
     procedures for recovering his land in 1976, but the 
     claim was lost, and in May 2000 MinAg found that his 
     claim had no merit.  He appealed administratively and 
     also received a letter in November 2000 from the Huaura 
     Superior Court indicating that the GOP's General Office 
     of Agrarian Reform had mistaken him for another 
     landholder with a similar name. Simultaneously, 
     Claimant L filed suit against local mining firm 
     Buenaventura, which Claimant L asserts took advantage 
     of the title dispute to cut down all of the trees on 
     what was wooded land.  Claimant L also says that the 
     dispute led to threats against him from the CCO, and 
     that terrorist activity in the area prevented him from 
     returning to his land until 1990. 
 
     Claimant L sent Embassy documents in November 2000 
     related to the alleged expropriation of his land.  At 
     Embassy's request Claimant L provided a brief letter 
     laying out the facts of the case in March 2001. 
     Embassy forwarded this letter to MinAg, with a request 
     that it be given appropriate attention.  The Ambassador 
     received a letter dated May 6, 2002 from MinAg, 
     confirming that the land had been transferred under the 
     agrarian reform program to the CCO on June 19, 1976, 
     and that title had been confirmed to the CCO on 
     November 8, 1982.  MinAg asserts that, as a result, 
     Claimant L only has a right to claim the fair market 
     value of the land, and must pursue this through the 
     courts. 
 
     Claimant L has not contacted the Embassy for assistance 
     since 2002. 
 
 
13.  a. Claimant M 
 
     b. 2001 
 
     c. This case was resolved in January 2006.  Claimant M 
     entered into a consulting services agreement with 
     PRONAP (now PARSSA) to provide design services for 
     potable water supply and wastewater system.  During the 
     performance of the contract, Claimant M performed 
     additional work at the direction of PRONAP but has yet 
     to receive payment.  Claimant initiated arbitration in 
     June 2001 in order to recover the costs of this 
     additional service.  In March 2004, the arbitration 
     panel found in favor of Claimant M and ordered PARSSA 
     to pay approximately $1.5 million.  PARSSA disagreed 
 
     with the arbitration decision, claiming that the 
     arbitration panel was neither independent nor 
     impartial, as PARSSA was not involved in the process of 
     determining the arbiters.  PARSSA appealed to the 
     Judiciary in April 2004, requesting an annulment of the 
     arbitration decision. 
 
     In August 2005, the Judiciary issued its ruling in 
     favor of Claimant M, denying a GOP appeal to reject the 
     binding arbitration.  The court ordered PARSSA to pay 
     the amount owed, which with interest could total 
     approximately $3 million.  On September 2, the Ministry 
     of Housing appealed the August ruling in favor of 
     Claimant, claiming there were irregularities in the 
     handling of the arbitration case.  Claimant formally 
     appealed the submission of the case in October 2005, 
     citing a mid-July Supreme Court Directive that 
     instructed the Judiciary to not overturn arbitration 
     decisions. 
 
     After Embassy advocacy on Claimant's behalf, the 
     company received a $1.9 million partial payment for its 
     arbitration award on December 23.  In early January, 
     Claimant received a second payment of $600,000. 
     Claimant M and the GOP continue to negotiate the final 
     payment of the remaining $141,000 in legal fees. 
 
 
14.  a. Claimant N 
 
     b. 2004 
 
     c. According to the Claimant, SUNAT announced in 
     October 2004 that it was levying taxes for fuel 
     supplied to outbound international carriers and would 
     be collecting these taxes on sales (IVG) for the past 
     four years (2000-2004).  For Claimant N, these back 
     taxes amounted to $15 million. 
 
     The GOP, in an effort to resolve the problem, passed a 
     new tax law in January 2005 that classified future 
     sales of fuel for international transport (air and sea) 
     as exports, exempting the sales from IVG.  The law, 
     however, failed to make the tax exemption retroactive. 
     The Ministry of Finance, working with Claimant N, 
     drafted an amendment to the new tax law that would 
     retroactively grant companies an IVG credit for 
     previous sales of fuel for international transport. 
     The Peruvian Congress voted in favor of this law in 
     October 2005. 
 
     While the Congress passed the law, SUNAT claimed that 
     it was not retroactive and therefore Claimant N could 
     not claim a credit on its $15 in back taxes.  To 
     rectify the situation, the Ministry of Finance is 
     drafting a regulation to be passed by Congress to allow 
     for retroactive credit of the back taxes. 
 
 
15.  a. Claimant O 
 
     b. 2000 
 
     c. Claimant provides telecommunications services over 
     the world's first integrated global Internet protocol 
     based network and has deployed a sub-sea fiber optic 
     network around South America.  The submarine fiber and 
     transmission equipment sit on the ocean floor more than 
     12 nautical miles from shore, except where a cable 
     system lands in a country to connect that country to 
     the worldwide network. 
 
     Tax agency SUNAT conducted an assessment of Claimant 
     O's assets.  Per SUNAT's request, Claimant O paid 
     customs duties and VAT on all goods imported into Peru, 
     including for equipment extending 12 nautical miles 
 
     from Peru's coast.  In November 2000, SUNAT re-assessed 
     Claimant O's property and imposed $43 million in 
     additional duties and VAT, based on an assessment of 
     equipment located between 12 and 200 nautical miles 
     from the coast of Peru.  Claimant O has appealed the 
     reassessment. 
 
     Claimant O has not contacted the Embassy for advocacy 
     since 2005. 
 
     Note:  In 2003, a Singaporean Company purchased 
     Claimant O, but Claimant maintains its headquarters in 
     the United States.  Post advocated on behalf of the 
     company based on US national interest. 
 
 
16.  a. Claimant P 
 
     b. 1996 
 
     c.  Claimant P purchased an existing light 
     manufacturing facility in 1994 and began operations the 
     same year.  Although the company complied with all 
     district regulations and received all necessary 
     permits, the city of Lima, the governing municipality, 
     continues to refuse to finalize the permitting and 
     registration process for the facility on the grounds 
     that it is located in an environmentally sensitive 
     area. 
 
     Claimant presented its permits and details of the plant 
     to the District Government on June 6, 2005.  The 
     district government has one month to make a decision. 
     Once it makes a decision, it will forward the paperwork 
     to the Lima Provincial Government for its 
     consideration. 
 
     If the Municipal Government refuses to recognize the 
     Claimant's permits, the company could be forced to 
     move, which would cost approximately $3.7 million. 
 
 
17.  To our knowledge, none of the following have signed 
Privacy Act Waivers.  The companies are as follows: 
 
Claimant A - Engelhard 
Claimant B - Princeton Dover 
Claimant C - Big 3 Marine 
Claimant D - STM Wireless 
Claimant E - Northrop Grumman Corporation 
Claimant F - Newman Lumber 
Claimant G - Mr. Roy LeTourneau, U.S. Citizen 
Claimant H - Duke Energy 
Claimant I - Doe Run 
Claimant J - Luz del Sur 
Claimant K - Dr. Jaime Muro-Crousillat, U.S. Citizen 
Claimant L - Mr. Manuel A. Vizurraga, U.S. Citizen 
Claimant M - Parsons 
Claimant N - Exxon Mobil 
Claimant O - Global Crossings 
Claimant P - Kimberly Clark 
 
STRUBLE