Colombia regulators seize Interbolsa brokerage after cash flow clogs up

Colombian regulators seized control of Interbolsa’s brokerage arm, Colombia’s largest brokerage firm, after severe cash flow problems prevented the firm from following through on payment.

Allaying fear, President Juan Manuel Santos assured investors that their monies would not be lost, but rather transferred from Interbolsa to another brokerage firm.

The liquidity problems of the 22-year-old brokerage firm that started in Antioquia resulted from an aggressive, high-risk strategy.

“We have taken advantage of the moments the market has given us. And the greatest merit has been the capacity to let us assume risks,” Rodrigo Jaramillo, Interbolsa’s president, told El Tiempo earlier this year.

Gerardo Hernandez told Bloomberg that regulators were debating whether or not to liquidate the firm and facilitate a merger where the assets and liabilities will be assumed by another firm.

Even though investor worry is justified, Jaramillo says that the strength and solvency of Interbolsa is not in question and that clients’ assets are not at risk.

Tanja Nimeijer set to join Peace Talks in Havana

Tanja Nimeijer, a Dutch citizen, is set to join the Peace Talks between the FARC and the Colombian government in Havana as a representative for the Marxist guerrillas, according to the Colombian news magazine Semana.

Nimeijer joined the FARC after working as an English teacher in the city of Pereira. The teacher-turned-guerrilla says that she chose Colombia purely by coincidence because it offered an opportunity to fulfill a university internship requirement.

Nimeijer’s university instructors observed strong left-leaning political inclinations during her studies as a student of Romance literature in the Netherlands.

The message about the Dutch woman’s participation was reportedly not received well by the Colombian government because Nimeijer is not a Colombian citizen.

After concluding a round of press conferences in Oslo, Norway, the Peace Talks will move to Havana, Cuba. The talks between the FARC and the Colombian government began in secrecy in February of this year, and the intention to engage was made public by Juan Manuel Santos in August.

The armed conflict between the FARC and the Colombian state began in 1964.

Footloose Pesos: Ecopetrol Signs $1.2bn Deal with Essar Oil, Central Bank Harnesses Currency

Ecopetrol, Colombia’s state-owned oil & gas giant, announced on August 15th that it plans to sell $1.2bn USD in crude petroleum to Essar Oil, an Indian energy firm, over the course of one year.

The Colombian energy company is the fourth largest oil & gas company in Latin America and accounts for 60% of Colombia’s production. According to company financial reports released in July, Ecopetrol’s total unconsolidated sales climbed from COP$13,868.4bn ($7.74bn USD) in 2011 to COP$14,796.0bn ($8.26bn USD) in 2012. Its earnings per share (COP$) jumped 6.0% in the same period.

The Financial Times reported that “Essar seems to be looking at diversifying crude sourcing away from Iran, and Latin America is one of their focus regions,” according to an analyst at SBI Capital. Essar’s renewed interest in Colombian oil reflects a recent boom, where production of crude has almost doubled over the past six years.

Foreign investment in Colombia’s oil industry moved from $278mil USD in 2003 to $4.3bn USD in 2011, reported The Economist. Since cultivating an increase in security coupled with a set of policies under former President Alvaró Uribe that opened up massive tracts of land for energy exploration, and increased capital with which to improve efficiency, Colombia has triggered a blossoming energy sector (though not without its problems of success). Hostility toward foreign investment shown by Bolivia, Ecuador, and Mercosur – Latin America’s other oil & gas leaders – add to Colombia’s benefit.

It should come as little surprise, then, that Finance Minister Juan Carlos Echeverry has recently deployed a tactic for slowing down the strengthening peso. The Colombian central bank plans to lift its buying of US Treasuries from $20mil USD per day to $40mil USD per day, reported Businessweek. Colombia’s currency intervention scheme is aimed at keeping prices attractive to foreign merchants as the country sniffs out more export accounts like Ecopetrol’s hopeful Indian deal.

The Wrinkled Passport

Friday June 8th, 2012

Stepping off the bus at a station called Escuela Militar, I can be certain that I will see two or three young men dressed in dark green canvas fatigues wearing hard faces and patrolling the platform. The police, like the rest of Bogotá, rush past me at the station. Their seriousness fits nicely into the city’s Andean chill.

I can also be certain that a Colombian flag will be flapping somewhere high above the white stucco Spanish colonial architecture that hides behind high barbed-wire walls and keeps a wary eye on the outside world from armed military police towers. Across the road, this is the Escuela Militar.

The Escuela Militar des Cadetes, founded in 1976 is one of several military institutes in Bogotá that trains young people for service in the Armed Forces of Colombia. It is required of young cadets to spend at least 12 months in the National Police Service before completing their study.

Today, as I strolled across the platform to make my transfer, two policemen stopped me and asked me for my cédula extranjería. I knew what they meant. They wanted to check my alien identification card – the one I didn’t have.

One of the most surprising parts about life in Bogotá is how militarized the city is. Colombia’s National Police force populates the public transit platforms in Bogotá. In addition to police presence at transit hubs, there are many areas where armed soldiers clad in fatigues patrol every other corner. The strong military and police presence is the manifestation of President Santos’ iron-fisted emphasis on civilian security.

Another surprise to note is that the force tends to be made up of young men of no more than 25 years old. The young cadets are responsible for answering questions about directions. At times, they might help an old woman onto the bus before the doors snap shut. Their faces appear non-threatening and they move about on the platforms seeming listless and distracted. Almost every face looks young – almost innocent.

Not the face in front of me though.

The bright neon green jackets stared at me. I knew what they meant when they asked for my cédula extranjería. They wanted to verify my Colombian alien identification number – the number that the government uses to keep track of foreigners who enter the country for brief periods of time – people like me.

One of the primary duties of the National Police is to behave as permanent sentinels for the city’s transport system and to verify that the people using it are indeed registered residents of Colombia. Having an identification card, like having a passport, is a means of proving that you are not guerrilla, not rogue, not the bad guy.

I wasn’t the bad guy, and I knew it. But I still didn’t have my identification card, and that could be justification for – well – anything. They stared right at me. A heavy hand waved at me to come toward the stare.

I looked back at the two men. The one who asked for it was older, and wore a hard face, and he stared at my waist, not my eyes. He was waiting for me to take out my wallet while the younger one looked afraid and held a clipboard in his hands. He looked like he was waiting for something to happen.

Maybe he’s in training I thought. Maybe this is just a little drill. Maybe this won’t amount to anything.

I reached into pocket and pulled out my wallet. I took out an old shabby, wrinkled-up copy of my passport and handed it over to the officer. It was so worn out that you couldn’t make out my full name. Trying to feel brave, I hurriedly explained that I had just arrived in the country three days ago and that I don’t have my passport with the cédula extranjería stamp and identification number. I explained that the only form of identification I had is a copy of the first page of my passport. My mind went numb with a storm of possibilities over what was going to happen next. Fear drowned my focus. I felt like one hundred eyes were fixed on my wallet, the unmoving faces of two National Police officers, and the winkled passport in my hand.

The older officer took the document from my hands. It almost fell apart as he unfolded it. I entered a profound certainty that I was in danger of being seized by the National Police and tried to prepare myself for the ensuing confusion of having to explain my case. My body tensed. All I could smell were the fumes that spewed out of the buses roaring past. Noise thundered across the platform. It almost muted the officer’s next response. I leaned in and strained to catch everything that ran across those moving lips.

“Thank you, kind sir,” he said, and handed back the copy of my passport. As he did, a piece fell to his feet. The younger officer quickly bent down and snatched it, jumped up to his feet, and handed it to me.

I looked at him. A wave of relief rushed through me.

I told him thank you in return. Then I hustled off to catch the next bus back to my house in the Palermo, where my lunch would be waiting for me. I knew it would already be cold when I arrived.

A Reason for Applause


Monday June 4, 2012

Bogotá – There was a celebration when we landed. It’s traditional in Colombia to clap when the plane hits the runway. My hands, however, were cradling my head. It is Tuesday May 29th and I’m dizzy.

As we swooped in at 2,600m above sea level, I grew intoxicated with altitude sickness. Whispers of Spanish flickered around me as the flight came to a halt. I sat next to a tall Colombian-American boy who was on vacation with his family. I learned that he was studying medicine in Florida, and I also learned that he was the only boy in a family full of women. All of his siblings, whose chatter filled the rear of the cabin, seemed happy. But not his mother, whose face looked as weathered as the Bogotá I’ve come to know – the one that turns blue skies into rain and storm clouds into sun in what seems like a snap of the fingers.

Things can change fast in Bogotá.

Immigration didn’t stop me. I always feel as though officials have the power to come up with a silly reason to stop you at immigration. You didn’t spell your address correctly. You can’t speak Spanish. You’re too old. You’re too young. You’re too beautiful.

After a brief pause and a hard stare from the sad looking immigration man who hid behind the glass, I passed through, back into Colombia.

I’ve been here before. In 2009 I came to Colombia to study Spanish for 2 months. I remember the fear and anxiety that plagued me when I landed in Medellín at the beginning of the summer. But suddenly there was an old friend from university and a handful of others hanging over a balcony in the Medellín airport. They were shouting and waving, and my welcome, indeed my entire time in that lovely city, was warm.

Again, now in Bogotá’s El Dorado airport, even though the air is chilly, my welcome is warm.

Right as I walked away from the currency exchange window, I heard my name being called loudly. Cristian and Nataly, two members of the AIESEC Trainee Integration team, met me with huge hugs. They took photographs. They gave me a small traditional Colombian pouch with a hand-made Colombian poncho inside. A small bottle of aguardiente, the national white rum touted as a point of Colombian pride, came tumbled of the pouch as well. Then they bought me a hamburger.

I was happy. I felt comfortable. I felt safe.

The first thing you learn when you get to Bogotá is how dangerous it is, and how you have to tener cuidado or be careful. At first, I didn’t understand exactly what this meant. Did it mean that I was going to get killed? Kidnapped? Robbed? Tripped? Does it mean that some parts of the city are more dangerous than others?

“Everywhere in Bogotá is dangerous,” Yudbeny, the woman who runs my apartment, told me later. “After 8pm in the evening, if you are on the street alone, and the street is empty, then tener cuidado.”

It sounds like I have no choice when it comes to danger.

But the truth is: I do.

After hopping into a small car with Cristian, the road starts moving underneath me. Small, wobbly buses called collectivos zip and dart around us. It is dark. The road is dented with potholes and cracks. The car shakes violently. Cristian is cool.

As we zoom toward the house where I will stay for one week until I get settled, something in Colombia is happening.

What coincides with (almost to the day) of my arrival is the release of Roméo Langlois, a French journalist, by the FARC (Las Fuerzas Armadas Revolucionarias de Colombia). The FARC, a left-wing guerrilla group that formed in 1964 in opposition to Colombia’s tattered political climate, took Langlois captive during a firefight with the Colombian military in the mountains of Caqueta (a department in the south of the country) on April 28th.

When I learn of Langlois, my first impression is of a terrified hostage who is relieved to be set free.

But Langlois is not your average hostage.

During his 30 days in captivity, Langlois rigorously interviewed and documented the life of the guerrilla soldiers whose political motives and weaponry could decide life or death for the young Frenchman on a whim. He emerged from captivity claiming that he was treated well, and that the FARC desperately want to talk peace. Langlois came out of captivity singing the story of one of Colombia’s most marginalized and feared guerrilla groups – and how the international community needs to put pressure on Colombia for a peace process.

The next morning, as I read up on the news about Langlois’ mission, captivity and release, I also set out on my own mission: to learn the notorious Transmilenio, Bogotá’s public transit system, and try not to get lost.

Langlois’ story reminds me that I – like everyone – have a mission too, but more importantly, I have a choice.

I can weigh the risks in favor of safety and security. That is the route most people around me take in Bogotá. Colombia is not all war and conflict, but it does exist. I can, if I choose to, weigh the risks like Langlois did. I can make it my mission to get to the heart of a dangerous, messy, and deeply complex political story, and try not die.

I won’t though.

Being Roméo Langlois – a reporter – is something that’s been on my mind for awhile. Colombia, a country where reportage is important but risky, is no doubt an exciting place for a youngster to dig in and cut his teeth.

Then again, I think I’ll be patient.

US – Colombia FTA: Taking a Stab at a Better Image

Peering down toward his boots through the glass window below, a crane operator lowers the boom to snatch one of hundreds of container boxes that zoom through Colombia’s port city, Cartagena, where an expected $50bn over the next 5 years in fresh flowers, cotton textiles, and a torrent of other products now come and go cheaper than before under a free trade agreement recently signed by the US and Colombia earlier this year.

Colombia is generally optimistic about the new relationship, expecting 4.8% GDP growth in 2013, according to Reuters’ reporting. Even though its 2013 projection slouches slightly next to last year’s 5.9%, President Santos’ administration requested 185.5 trillion pesos (USD$103bn) in spending, a 12.2% nudge in investment up from 2012, a government official told Reuters.

 

The Free Trade Agreement will dismantle hefty duties and tariffs for commodities like coffee, oil, and precious metals. But it should also attract American companies and local entrepreneurs to set up in its Andean capital city, Bogotá, where increased security in recent years coupled with Colombia’s investment optimism make for a magnetic arena for doing business.

Some companies have already bitten the bullet and have decided to race to Bogotá for new opportunities.

Cincinatti-based Convergys, a company that specializes in customer relationship management (CRM) solutions, has already begun to tap into Bogotá’s thriving bilingual talent base. Convergys, whose global presence employs about 70,000 across 5 continents, chose Bogotá to set up a state-of-the-art call center. Known as “the Athens of South America,” Colombia’s capital attracted Convergys because of “the number of top-notch colleges and universities located in the city… and advanced telecommunications and transportation infrastructure,” according to a press release.

 

Richard Strub, director of operations for Convergys in Colombia, told The City Paper, a Bogotá local English-language newspaper, that “government incentives, a central location just hours from from North America and South America, and a motivated, highly educated workforce have played key roles in drawing business to Colombia, and to Bogotá.”

 

Not everyone can claim the same optimism as companies like Convergys though. Some, like Buenaventura’s port city, where roughly 80% live in poverty, could be wary of strong promises about more wealth and bounty for all. According to the Washington Office on Latin America a long history of abuse toward labor groups, who have historically occupied the violent margins of Colombia’s industrial thrusts, are still tender. Colombia Reports says that the FTA’s labor-related promises come with a rickety plan, which might not be enough to wipe clean workers’ harsh skepticism toward Colombia’s new commitment.

A sure group definitely falls in line to benefit from Colombia’s free trade kick. To educated Bogotanos the FTA means new opportunities. People like Strub and the optimism he carries should serve as signals to the rest of the world that Colombia is trying to change its image, that it is eagerly opening up for business and trade, and that the country is desperate to show off its nearing successes, not its appalling past.

Sogginess Is Expensive for Colombia

Flooding in Cali, Colombia

February 2012

Lately, life in Colombia resembles fiction more than anything else. That is foreboding considering that its literature, when not whispering about love, is strewn with scenes of political violence and the wrath of nature. This time the imagery leans more toward the latter.

Flooding that followed the Niña, a series of Pacific warm weather patterns that agitate Colombia’s wet season, caused mudslides, eroded farmland, and left a painful proportion of the country homeless.

What is worrisome is that the damage looks worse than it was last year, where costs associated with the flood stung at the touch of $5.1 billion or 2% of Colombia’s GDP. But it might not be as much of a burden to clean up. One reason the costs will not climb that high this year, according to analysts, is because after the 2010 floods, the Colombian government decided to set aside $850m for over 4,000 government led projects that intended to corral the chaos expected out of the following wet season. Seems like a good preventative step, doesn’t it?

That is how the floods are viewed from Bogotá’s perspective.  But the wrath brought on by the floods is still a very immediate threat to the real time cash flow of workers and businesses.

For the herders whose cattle are stranded while trying to graze in standing water, and for the truck drivers who cannot meet their shipping partners because the road linking them to the port city of Buenaventura is being diced up by mudslides and washouts, the costs are sure to keep feeling suffocating.