This week’s likely top stories: Colombia and FARC agree to clear landmines; Peru recalls ambassador to Chile; Citigroup to sell Central American entities; Puerto Rico debates possible VAT; Chilean officials charged with corruption.
Colombia and FARC to Remove Landmines: The Colombian and the FARC guerrilla group reached an agreement on Saturday to work together to clear the country of landmines and explosive devices. Their joint statement was read by Cuba and Norway, the two guarantor countries for the peace process, and the Norwegian People’s Aid (NPA) will assist in the de-mining efforts. This weekend’s agreement marked important progress in the negotiations; for the first time, high-level military commanders were present, and the removal of mines and explosives is a major step toward disarmament. Over 11,000 Colombians have been hurt or killed by landmines in the last 15 years.
Peru Recalls Ambassador to Chile: On Saturday, Peru recalled its ambassador to Chile over spying accusations. Last month, the Peruvian government announced that three Peruvian naval employees were being investigated for allegedly disclosing military information to Chile. On February 20, Peruvian President Ollanta Humala sent Chile a diplomatic note requesting an answer regarding the claims, although Peru has not yet received a response. Chilean Foreign Minister Heraldo Muñoz stated that Chile “does not promote or accept acts of espionage in other states or its own territory.” Peruvian Prime Minister Ana Jara claimed that Peru will not send its ambassador back to Chile until the issue is addressed. Chile and Peru have long harbored tensions over their borders.
Citigroup Inc. to Sell Central American Operations: Citigroup Inc. may soon sell its Central American retail units to Banco Popular Español S.A., which is based in Madrid, Spain. According to a source’s comments on Saturday, Citigroup aims to sell its retail operations in Costa Rica, El Salvador, Guatemala, Nicaragua, and Panama in an effort to leave markets yielding low revenues and to streamline operations. Citigroup hopes to sell for $1.5 billion. The deal is not yet finalized and is subject to change. Spokesmen for both banks declined comment on the matter.
Puerto Rico Proposes Plan to Combat Tax Evasion: Puerto Rican Governor Alejandro García Padilla is supporting a new plan to impose a 16 percent value-added tax (VAT), in an effort to reduce the territory’s $73 billion public debt. The plan, which is currently being considered by lawmakers, would replace Puerto Rico’s current tax rate of 7 percent and would curb tax evasion on the island. Pending approval, producers would pay the VAT on raw materials, and include it in the price given to retailers, and the VAT would eventually be paid by consumers. Charging the VAT at each stage in the sales process would ensure proper collection. Currently, Puerto Rico’s informal economy is estimated to be worth $16 billion, a figure representing approximately 25 percent of the GDP. García Padilla is expected to make an announcement regarding the plan today.
Chilean Corruption Scandal Racks Opposition Party: After court hearings last week, a tax auditor, a former government official and four executives from the Penta Group, one of Chile’s largest financial groups, were jailed on Saturday for tax fraud, bribery and money laundering. Ten defendants were implicated in the scandal, including two tax officials and two politicians from the Unión Demócrata Independiente (Independent Democratic Union—UDI) opposition party. In a public declaration on Monday, La Superintendencia de Bancos e Instituciones Financieras (Superintendency of Banks and Financial Institutions—SBIF) announced that the Penta executives, including owners Carlos Délano y Carlos Eugenio Lavín, would be unable to maintain their positions as shareholders in the company.