|
|
Enron Mail |
The Province of Rio Negro in Argentina claims TGS owes approximately $352=
=20 million in stamp taxes, interest & penalties.=01; TGS recently filed its fi= nal=20 administrative appeal in Rio Negro against that province's stamp tax=20 assessment.=01;=01;The administrative process normally could take a couple = of more=20 months, but because the Province of Rio Negro could reject=01;the appeal an= y day=20 and seek to collect the taxes, TGS has no choice but to immediately seek an= =20 injunction in the Argentine Supreme Court.=01; Once Rio Negro rejects the a= ppeal=20 (which it will), TGS waives its right to go to the Supreme Court for an=20 injunction, a risk it cannot afford to take.=01;=20 =01; This suit could potentially have a negative impact on Enron's bilateral=20 investment treaty (BIT) claim in the International Center for the Settlemen= t=20 of Investment Disputes (ICSID), because the parties are required to make an= =20 election under the BIT.=01; In other words, a party cannot have previously = filed=20 suit for relief in the local court if it seeks redress in ICSID arbitration= .=01;=20 Technically, Enron hasn't filed in the local court, and=01;we will argue th= at=20 Enron's claim under the BIT is independent of=01; the TGS claim in local co= urt.=01;=20 This=01;argument is novel, however, and it is not clear how it will play=20 out.=01;=01;Recall that on February 22, 2001, Enron filed its ICSID claim f= or a=20 declaratory judgment against the Republic of Argentina for the actions of= =20 both Neuquen ($224 million assessment)=01;& Rio Negro provinces.=01; Theref= ore,=20 even if ICSID rejects Enron's=01;claim=01;regarding Rio Negro, the Neuquen = claim=20 should remain valid giving Enron leverage for negotiation with the federal= =20 government.=01;=01; =01; =01;In late 1999, TGS filed an action in the Argentine Supreme Court for a= =20 declaratory judgment and=01;injunction against the Province of Santa Cruz= =20 ($17million assessment).=01; Our local contacts inform us that despite prec= edent=20 to the contrary, the Supreme Court appears to be leaning toward granting at= =20 least a partial injunction in that case. =01; About a=01; month ago, the federal government and the provinces tentatively= =20 agreed to do away with the stamp tax prospectively and the federal governme= nt=20 would provide another income stream for the provinces.=01; As you are aware= ,=20 President de la Rua recently asked his entire cabinet to step down followin= g=20 the resignation of Economy Minister, Machinea, citing the troubled economy,= =20 now in its 32nd month of recession.=01;=01;Machinea's office=01;has been fa= irly=20 ineffective as the arm of the federal government addressing the existing=20 stamp tax issues among the provinces, producers and transporters.=01; There= fore,=20 de la Rua's appointment of an orthodox, hard line economy minister, Ricardo= =20 Lopez Murphy, is seen by investors as positive.=01; It is unclear how this= =20 governmental change will impact the tentative agreement on the future of=20 stamp taxes, but I am investigating.=01; We will make arrangements to meet = with=20 Mr. Lopez Murphy, as we have with the past government officials concerning= =20 the stamp tax, its impact on Enron, and on the foreign investment climate i= n=20 Argentina. Please call me if you have any questions.=01; x56159. Regards, Michelle
|