The last letter, dated November 10, 2020, signed by Scott Pollack, director Citibank NY, sent to the Minister of Government, Maria Paula Romo, rreveals important details to understand one of the largest investments of the Isspol (Institute of Social Security of the Police).
The one, the relation of Citibank NY y Nats Cumco in the process that is related to the swap operation for $ 327 million and how the ‘Magician’ Jorge Chérrez reaches them.
The combo includes the visit of six people who were in charge of the Institute in 2016. This letter was born from a request for information from Minister Romo.
Diario EXPRESO had access to that letter.
Citibank “was initially contacted by Lafise Corporation (Lafise), a securities intermediary in Florida, USA”, for the establishment of a GDN program (Global Depositary Notes or global notes) on internal debt bonds of the Government of Ecuador.
“After discussions with Lafise and Jorge Chérrez Miño it was clear that they were interested in using a GDN program for local Ecuadorian bonds (internal debt), Citibank is then conducting an analysis of the legal, regulatory and economic feasibility of the potential program ”.
And official entities also enter here. On June 15, 2015, and again on November 10, Citibank NY was meets with officials of the Ministry of Finance to explain the proposed program and received no objections. He also met with the Superintendency of Companies, control body, on June 24, 2015 to discuss the legal and regulatory environment for the global notes program. The plan was launched, without any objection, on January 19, 2016.
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In this operation, Citadel Casa de Valores, from Xavier Neira Salazar, was the securities intermediary of the IBCorp company, owned by Jorge Chérrez. For the transfer of the local bonds to Nats Cumco’s account at the Central Bank of Ecuador for the issuance of GDNs to IBCorp, Citibank authorized IBCorp to provide negotiation and settlement instructions to Citadel to facilitate the transfer. Although according to official information the bonds were credited to a Nats account at the brokerage house Picaval.
Citibank also reveals the names of the Isspol officials who visited the offices of Citibank NA Nast Cumco LLC in New York, accompanied by Mr. Jorge Chérrez Miño, attorney of the company IBcorp Investments and Business Group, in April 2016.
There were six members of the entity: the general David Proaño, Executive Director; Gabriela Proaño Larco, economic advisor; John Luzuriaga, Chief Risk Officer; Rafael Nuques, financial director; Santiago Duarte, legal director; and Gustavo Reyes, treasurer.
The six people associated with Isspol visited Citibank NY offices located at 388 Greenwich St, in New York, on April 18, 2016, for about an hour.
“The meeting was requested by Jorge Chérrez Miño on April 13, 2016, and Mr. Chérrez also attended the meeting. Citibank NY understood that the purpose of the meeting was generally to discuss the characteristics and operational aspects of the GDN program. There was no specific discussion about the GDNs transaction that took place in January 2016, and neither institute officials nor Chérrez identified Isspol as the source of the program’s underlying local bonds at that meeting, ”says Scott Pollack.
That visit – passages, lodging and meals – would have been paid for by Chérrez.
Last week EXPRESO asked Citibank officials for an interview to inquire about details of the operation, but the entity said there would be no pronouncement. Some experts consulted have indicated that if the compliance officers, such as the departments of the superintendencies dedicated to the control of money laundering, had warned of this type of operations, it was the duty of the entities to act.
CITIBANK’S SUBSIDIARY IS THE PAYER. As a custodian bank, Citibank is solely an intermediary for the purpose of issuing and canceling global notes, holding the underlying local debt bonds for the exclusive benefit of GDN holders and facilitating interest payments and redemption thereof.
“In other words, neither Citibank nor Nats Cumco are beneficiaries of the local bonds, nor do they maintain ownership of the interest and principal payment rights received by them. Any delivery of money derived “from these bonds held in custody by Nats Cumco, is made through Citibank NY to The Depositary Trust Company (DTC), which in turn distributes the money to the holders.”
A cloak of stealth covers $ 327 million in Isspol investments
$ 4.9 MILLION IN COMMISSIONS. As of November 6, 2020, $ 175,588,125 was paid by the Ministry of Finance of Ecuador in coupon payments and amortizations of local bonds. Citibank does not own the payment rights made in respect of the bonds; their compensation for managing the GDNs is commission-based. In total, it has received $ 4.9 million in commissions since January 2016. Citibank NY charged these commissions in connection with the distribution of interest payment coupons to holders (0.175% for each of the two annual coupons, totaling 0, 35% per year).