Identifier
Created
Classification
Origin
05SANTODOMINGO3930
2005-08-08 19:27:00
UNCLASSIFIED
Embassy Santo Domingo
Cable title:  

DOMINICAN REPUBLIC: 2005 INVESTMENT DISPUTES AND

Tags:  CASC DR EFIN KIDE PGOV EINV 
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This record is a partial extract of the original cable. The full text of the original cable is not available.
UNCLAS SECTION 01 OF 02 SANTO DOMINGO 003930 

SIPDIS

DEPT FOR EB/IFD/OIA/JPROSELI, L/CID/JNICO;
USDOC FOR 4322/ITA/MAC/WH/CARIBBEAN BASIN DIVISION
USDOC FOR 3134/ITA/USFCS/RD/WH; TREASURY FOR M WAFER

E.O. 12958: N/A
TAGS: CASC DR EFIN KIDE PGOV EINV
SUBJECT: DOMINICAN REPUBLIC: 2005 INVESTMENT DISPUTES AND
EXPROPRIATION CLAIMS REPORT

REF: A. 05 STATE 70014

B. E-MAIL KENDRICK OR MEIGS/MCISAAC

C. SEARBY

UNCLAS SECTION 01 OF 02 SANTO DOMINGO 003930

SIPDIS

DEPT FOR EB/IFD/OIA/JPROSELI, L/CID/JNICO;
USDOC FOR 4322/ITA/MAC/WH/CARIBBEAN BASIN DIVISION
USDOC FOR 3134/ITA/USFCS/RD/WH; TREASURY FOR M WAFER

E.O. 12958: N/A
TAGS: CASC DR EFIN KIDE PGOV EINV
SUBJECT: DOMINICAN REPUBLIC: 2005 INVESTMENT DISPUTES AND
EXPROPRIATION CLAIMS REPORT

REF: A. 05 STATE 70014

B. E-MAIL KENDRICK OR MEIGS/MCISAAC

C. SEARBY


1. This cable provides the 2005 Investment Disputes and
Expropriation Claims Report for the Dominican Republic.


2. The United States Government is presently aware of 18
claims (including 5 new ones for 2005) by U.S.
persons/entities against the Government of the Dominican
Republic (GODR). There has been considerable progress in
resolving the many of the cases that have languished for
years. A USAID-sponsored consultant has been working with
the Dominican Government to implement a system for evaluating
and resolving claims through the use of bonds. In 1999, Law
104-99 was passed, offering to claimants whose disputes arose
on or before August 16, 1996, the option of circumventing the
traditional method of claim resolution (at the "Bienes
Nacionales"),and instead to seek compensation from a
specially appointed Commission, provided the claimants are
willing to accept payment in bonds.


3. Action on resolution of claims stopped when the Fernandez
administration took office in August, 2004. Office of Public
Credit within the Ministry of Finance is responsible for
expropriations and investment disputes; it has had four
directors in less than a year. This high turnover rate with
the change in administration has delayed consideration of
claims. Embassy Santo Domingo sees no movement even now, 9
months in the administration.


4. The Embassy continues these expropriation and investor
dispute cases with the Dominican Government on a regular
basis, and all information provided herein was last updated
in June 2005. Details of the new claims follow:


14.a) Claimant M (NEW 2005)

b) 1992

c) Claimant M owned 400 m2 of land bordering the road to
the Santo Domingo Las Americas Airport, the land was
expropriated by the Dominican Government in the 1990's for
highway expansion. Claimant M's claim is being held up in

the Ministry of Finance-Office of Engineering. In order for
Claimant M to receive compensation, the Office of Engineering
must evaluate the claim and then pass it to the Office of
Public Credit for payment. The Office of Engineering has had
the paperwork since April 2002. The Embassy contacted the
Office of Engineering in June, 2005, asking the staff to look
into the matter and pass the paperwork on to the Office of
Public Credit for payment. The claim is worth around 400,000
Dominican pesos or about 14, 000 USD. Note: Claimant M had a
previous case involving an expropriation under similar
circumstances that was settled in 2004.

15.a) Claimant N (NEW 2005)

b) 2003

c) Claimant N is involved in a contractual dispute with
the Dominican Procuraduria General de la Republica (Attorney
General) concerning a telephone system for Dominican prisons.
(Note: this is a system similar to those used in U.S. Federal
Bureau of Prisons.) Claimant N's company, in partnership
with a California-based equipment maker, is having trouble
activating the system in the prisons due to bureaucratic
delay in the Dominican Procuraduria. His telephone equipment
has already been installed in the central offices of the
Procuraduria General and the Najayo, Puerto Plata and La
Victoria prisons.

In 2004, when representatives Claimant N went to activate the
equipment at the central office, they were informed they
could not operate the equipment until they had a letter of
authorization from the Procuraduria's office. Claimant N has
invested over $150,000 and is currently losing $7,000 a month
waiting for the Procuraduria to sign the appropriate letter.
Claimant N signed a contract with the Dominican Government on
Sept 4, 2003. A new presidential administration began on
August 16, 2004 and appears reluctant to honor the agreements
of the previous administration. The Embassy has met with the
Deputy Attorney General for Prisons the Dominican
telecommunications regulating agency of behalf of Claimant N.


16. a) Claimant O (NEW 2005)

b) 2005

c.) On May 7, 2004, Claimant O and the company he
represents signed a contract with the Dominican Government
(Corporacion Dominicana de Empresas Estatales - CORDE)
granting Claimant O the right to exploit a government-owned
salt mine in the area of Las Salinas, Province of Barahona,
for a period of 25 years. Claimant O alleges the Dominican
Government is not honoring the contract and is denying his
company access to the area. Claimant O has invested money in
equipment and has made other investments including
contractual payments and tax payments to the Dominican
Government. The contract requires Claimant O to invest U.S.
$1.5 million in the mine over the first five years of the
contract and then U.S. $150,000 USD every year thereafter.
Claimant O has been unsuccessful in his attempts to obtain
meetings with government officials.

A new presidential administration began on August 16, 2004
and appears reluctant to honor the agreements of the previous
administration. The Dominican Government has sent this
contract to a newly established government ethics commission
for review. The Embassy has contacted the Dominican
Government's commission several times, as well as the General
Director of Mining, to advocate on the behalf of Claimant O.


17. a) Claimant P (NEW 2005)

b) 2002

c.) Claimant P entered a contract with Unidad Corporativa
Minera (UCM, a government-owned entity closed in 2004) to
determine the economic viability of sulphate based gold
reserves at the Pueblo Viejo mine. UCM contracted Claimant P
to conduct an environmental study, fish assessment, tailings
dam sitings and an overall technical review. The job was
finished in June 2002, but UCM failed to pay Claimant P more
than U.S. $125,0000. Embassy officials have been in contact
with UCM and the Director General de Mineria. Obtaining
payment from the Dominican Government has been difficult in
part because the UCM no longer exists and the changing of
officials at the Office of Public Credit has slowed
processing.


18. a) Claimant Q (NEW 2005)

b) 2002

c.) Claimant Q is currently involved in a legal dispute
with the Anabalca Shipyard Company (50% owned by the
Dominican Navy),the company he contracted to repair his
tugboat. Anabalca is holding his tugboat as collateral for
$40,000 in repairs performed after the tugboat experienced
transmission problems. Claimant Q claims Anabalca did not
correct the transmission problem and he refuses to pay for
the services Anabalca has provided. The case is currently
before the Dominican Court of First Instance in Santo
Domingo. Claimant Q's tugboat has been in the Port of Las
Calderas, Province of Peravia, since June 2001. Embassy
officials have raised this issue with the managers of the
Anabalca Shipyard and the Dominican Armed Forces.

Claimant N: Carlos Langa
Claimant O: Gabelle Prison Telephones- Ruben Cerezo
Claimant P: Pedro Antonio Martinez, Agregados del Lago,
S.A
Claimant Q: Pincock, Allen & Holt, subsidiary of
HartCrowser
Claimant R: Tugboat Linda W- Gene Martin
MEIGS