Day 4 Hearing Transcript

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BEFORE THE INTERNATIONAL CENTRE FOR SETTLEMENT OF

INVESTMENT DISPUTES

ICSID Case No. ARB/19/6

In the Matter of Arbitration Between: --x

ANGEL SAMUEL SEDA AND OTHERS, :

Claimants, :

and :

REPUBLIC OF COLOMBIA, :

Respondent. :

---------------------------------------x Volume 4

VIDEOCONFERENCE: HEARING ON JURISDICTION AND MERITS

Thursday, May 5, 2022

The World Bank Group

1225 Connecticut Avenue, N.W.

Conference Room C 3-100

Washington, D.C.

The Hearing in the above-entitled matter

came on at 9:30 a.m. before:

PROF. DR. KLAUS SACHS

President of the Tribunal

PROF. HUGO PEREZCANO DÍAZ

Co-Arbitrator

DR. CHARLES PONCET,

Co-Arbitrator

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ALSO PRESENT:

MS. SARA MARZAL YETANO
Secretary to the Tribunal

Realtime Stenographers:

MR. DAVID A. KASDAN
Registered Merit Reporter (RMR)
Certified Realtime Reporter (CRR)
B&B Reporting/Worldwide Reporting, LLP
529 14th Street, S.E.
Washington, D.C. 20003
United States of America

MR. LEANDRO IEZZI
MR. RODOLFO VALERIO RINALDI
D.R. Esteno
Colombres 566
Buenos Aires 1218ABE
Argentina

Interpreters:

MR. CHARLES H. ROBERTS

MS. SILVIA COLLA

MR. DANIEL GIGLIO

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APPEARANCES:

On behalf of the Claimants:

MR. RAHIM MOLOO
MS. ANNE CHAMPION
MS. MARRYUM KAHLOON
MR. BEN HARRIS
MS. NIKA MADYOON
Gibson, Dunn & Crutcher, LLP
200 Park Avenue
New York, New York 10166-0193
United States of America

MR. PEDRO G. SOTO
MS. ANKITA RITWIK
Gibson, Dunn & Crutcher, LLP
1050 Connecticut Ave N.W.
Washington, D.C. 20036
United States of America

MR. ALEJANDRO MEJÍA
MR. JUAN PABLO PANTOJA RUIZ
Cáez Muñoz Mejía Abogados
Cra. 17 ##89-31
Bogotá, Colombia

Party Representatives:

MR. ANGEL SEDA
MR. JUSTIN ENBODY
MR. STEPHEN BOBECK
MR. JUSTIN CARUSO
MR. MONTE ADCOCK
MR. PIERRE AMARILGLIO

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APPEARANCES: (Continued)

Attending on behalf of the Respondent:

MR. CAMILO GÓMEZ ALZATE
MS. ANA MARÍA ORDÓÑEZ PUENTES
MR. GIOVANNY VEGA-BARBOSA
MR. CÉSAR RODRÍGUEZ
MS. ELIZABETH PRADO LÓPEZ
MS. YADIRA CASTILLO MENESES
MR. ANDRES FELIPE REINA ARANGO
MS. MARCELA MARÍA SILVA ZAMBRANO
Agencia Nacional de Defensa
Jurídica del Estado
Carrera 7 No. 75-66 - 2do y 3er piso
Bogotá
Colombia

MS. LAURA MARÍA MARÍN MORENO
Fiscalía General de la Nación

MR. CARLOS SABOYÁ
Director de Asuntos Jurídicos, Fiscalía
General de la Nación

MS. SANDRA MARTÍNEZ
Asesora de la Dirección de Asuntos
Jurídicos, Fiscalía General de la Nación

MS. SANDRA MONTEZUMA
Asesora en el Despacho del Vicefiscal,
Fiscalía General de la Nación

MS. TATIANA GARCÍA
Directora de Asuntos Internacionales,
Fiscalía General de la Nación

MS. LILIA ROSA MENDOZA
Asesora de la Directora de Asuntos
Internacionales, Fiscalía General de la
Nación

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APPEARANCES: (Continued)

MR. ANDRES FELIPE TINOCO
Asesor en el Despacho del Vicefiscal,
Fiscalía General de la Nación

DR. YAS BANIFATEMI
MS. YAEL RIBCO BORMAN
MS. PILAR ALVAREZ
MS. CAROLINA BARROS
MR. YOUSSEF DAOUD
Gaillard Banifatemi Shelbaya Disputes
22 rue de Londres, 75009 Paris
France

MS. XIMENA HERRERA BERNAL
Gaillard Banifatemi Shelbaya Disputes
165 Fleet Street
London EC4A 2AE
United Kingdom

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C O N T E N T S

PAGE

PRELIMINARY MATTERS...................................959

WITNESSES:

JOSÉ IVÁN CARO GÓMEZ (Resumed)

Continued cross-examination by Mr. Moloo.........960
Redirect examination by Ms. Herrera..............1016
Questions from the Tribunal......................1023
Further redirect examination by Ms. Herrera.....1035

WILSON ALEJANDRO MARTÍNEZ SÁNCHEZ

Direct presentation..............................1040
Cross-examination by Ms. Herrera.................1074
Redirect examination by Mr. Soto.................1141
Questions from the Tribunal......................1148
Further redirect examination by Mr. Moloo........1163

YESID REYES

Direct presentation..............................1168
Cross-examination by Mr. Soto....................1185
Redirect examination by Ms. Herrera..............1226
Questions from the Tribunal......................1227

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P R O C E E D I N G S

PRESIDENT SACHS: Good morning, ladies and gentlemen. I wish to flag something as regards today's program. I was told by the Court Reporters that we should strive stopping at 6:30 because it's a very long day, it has been very long days for them, for all of us, but particular for them, so I would ask you to contribute to it, that we try to keep with that schedule; and so, without further ado, we would then, at least you have housekeeping matters from your side.

Claimant, do you have anything you would wish to address?

MR. MOLOO: No.

PRESIDENT SACHS: Respondent?

MS. BANIFATEMI: No housekeeping, Mr. President. Just to flag we are encountering difficulties with the translation, sometimes, and that does slow the process.

PRESIDENT SACHS: Yes.

MS. BANIFATEMI: And we will continue to bring it up when we see there's an error, but I wanted to flag it because--

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PRESIDENT SACHS: Yes.

MS. BANIFATEMI: --the rest of the day will be in Spanish again.

PRESIDENT SACHS: Yes.

MS. BANIFATEMI: Thank you.

PRESIDENT SACHS: So, let's see. Okay?

MS. BANIFATEMI: I will go get Dr. Caro.

PRESIDENT SACHS: Dr. Caro, please.

JOSÉ IVÁN CARO GÓMEZ,

RESPONDENT'S WITNESS, RESUMED

PRESIDENT SACHS: Good morning, Dr. Caro. Please make yourself comfortable, to the extent that is possible. And we will continue with the cross-examination.

CONTINUED CROSS-EXAMINATION

BY MR. MOLOO:

Q. Thank you, Mr. Caro. I'm sorry you had to eat dinner alone yesterday evening.

Can you hear the translation? Is it working?

THE INTERPRETER: I don't think he's hearing the translation into Spanish.

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(Pause.)

THE WITNESS: I can now hear the translation perfectly. Thank you.

BY MR. MOLOO:

Q. Okay. Perfect.

I was apologizing that you had to eat dinner alone yesterday or at least without any of your colleagues in this room. But I can promise you, you'll be able to eat lunch with them.

Can you hear me okay?

Okay. All right.

A. I can hear you very well.

Q. It was just that my joke wasn't funny.

(Laughter.)

A. I'm very used to having dinner alone. I'm accustomed to it.

Q. I see. Okay. Well, I'll give you a smile for your joke.

Now, yesterday, we were talking about in your Requerimiento, your analysis of Corficolombiana's good faith, and I think we had discussed that Newport's good faith was not discussed in here, but

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let's go--we can go back to that document.

Before we put it up, I do want to ask you a question about the standard of determining diligence and good faith without fault.

You agree that it is not possible to define one single model for a prudent diligent person; correct?

A. Excuse me could you please locate me in the document we are reading from? What document are you making reference to?

Q. I'm just asking whether you agree with that statement: It is not possible to define one single model for a prudent diligent person; correct?

A. It is not possible. It is easier to say who is not a good-faith third party. That's easier than saying who is a third party of good faith. The law and case law establishes who is a good-faith third party. It is a concept of good faith, but it is not stated who can be a good-faith third party.

(Pause.)

Q. Okay. And it must be observed from the perspective of the person who you're assessing ex ante

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at the time that they conduct their diligence; correct?

A. Yes, of course. That's right.

At the time you conduct the assessment, that's ex ante and when you are conducting investigations or studies in connection with a good-faith third party.

Q. And any analysis cannot be done in the abstract and must answer to the specific qualities of each subject by virtue of their knowledge, skills, tools, and instrument at their disposal; correct?

A. Yes, of course. The study is conducted on the basis of the evidence and the documents that are included in the proceedings to assess whether the requirements are met for the individual to be a good-faith third party.

Q. Right. But it's not the same standard for everybody. You put yourself in the position of the person who's actually conducting the diligence; correct?

A. Of course. The thing is, the standards are different. This same standard does not apply to a

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regular individual, a regular Tom, Dick or Harry than for a financial institution. A financial institution is obligated to abide by the SARLAFT, which is a system to fight terrorism and money-laundering. In that case, the standard is higher in the case of that entity.

Q. Right. So, Corficolombiana, for example is subject to SARLAFT; correct?

A. It must be subject to SARLAFT.

Q. Right. But Newport would not be subject to SARLAFT; correct?

A. Also, Newport has to be subject to SARLAFT because it is a juridical person, an entity. In accordance with the directives of the Superintendence of Companies, it must meet standards for the due application of the SARLAFT.

Q. You told me earlier that SARLAFT applied to financial institutions. Do you know if Newport is a financial institution?

A. As I said, in spite of the fact that Newport is not a financial institution, it is a company; and, as such, it must meet SARLAFT regulations, this in

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accordance with the provisions set forth in or by the Superintendence of Companies.

Q. Okay. Let's look at--one second--we go to 24bis, which is the Requerimiento. If we go to 136 and 137.

So, here you quote the Financial Organic Statute. Do you see that on 136 at the bottom? This is the Requerimiento. 136 at the bottom. It's up on the screen as well.

A. Yes, sir.

Q. And this is where the SARLAFT obligations are contained; correct?

A. Yes, sir.

Q. And you see in (1) it says: "Obligation and oversight of criminal activities. Institutions under the oversight and monitoring of the Financial Superintendence or whomever acts in such a role shall be obligated to adopt appropriate and sufficient oversight measures..."

Do you see that?

A. Yes, I do see that.

Q. And then it lists four things in terms of

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the oversight mechanisms that those entities, under the jurisdiction of the Financial Superintendence, must do.

Do you see that?

A. I do see that, sir, yes.

Q. And your conclusion was that Corficolombiana did not meet these four things; correct?

A. That was the conclusion that I arrived at in the asset forfeiture Requerimiento that I submitted to the Court. However, one must clarify that the statement included in this Requerimiento is what needs to be discussed during the asset forfeiture trial before a tribunal in Colombia.

Q. Right. You hadn't asked Corficolombiana what they did; correct? This is just your assumption.

A. I didn't really have to ask anything of Corficolombiana as to whether it met the SARLAFT requirement or not. They know the rules that they have to abide by. If they don't abide by those regulations, then they may be subject to a SARLAFT breach.

It was not my obligation. The rules didn't

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require that of me. I didn't have to ask Corficolombiana whether it met the requirements of SARLAFT or not. That was the subject matter to be discussed during the asset forfeiture trial that we're going to put to the Court.

Q. Understood.

And let's go through these requirements.

The first one is: "Adequately know your client." Correct? Type of economic activity, its breadth, the basic features of their regular transactions; correct?

A. Yes.

Q. And the second is determine the frequency, volume, and features of their users' financial transactions; correct?

A. Correct.

Q. And the third is to determine again their clients' volume and movements of funds to ensure they're in line with their economic activities; correct?

A. That's right.

Q. And the fourth is that they must report to the Information and Financial Analysis Unit any

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information that they find out about their clients that would be in breach of the law or things like that; correct?

A. That's right.

Q. Now, all of these requirements are with respect to their own clients; correct?

A. The clients and the users of the financial system. Well, they must know their clients and their users, and they must abide by all of the provisions of the--this financial statute.

But I repeat, and this should be made clear in this diligence, what you're asking, counselor, is exactly what is going to be discussed during the trial, so I cannot anticipate my criteria when I have a case pending before the Colombian courts. This could be something counter-productive in connection with my claim for asset forfeiture and the claim of asset forfeiture that the State has.

Q. I understand your position on that.

And Corficolombiana was contracting with two parties; correct? One was Newport, and the other was La Palma; correct?

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A. I don't know who they did that with; but, in this case, Corficolombiana had signed a Trust Agreement with La Palma Argentina. And in the La Palma Argentina agreement, Newport was also there.

Q. So, they would have to do the SARLAFT process with respect to those two entities; correct?

A. Those and also the ones belonging to the financial users.

Q. Let's go to--just give me one second--138, at the bottom of 138.

Do you see that?

A. Yes, sir, I do see it.

Q. At the top of 139--and you can see that the ultimate conclusion is that, because, in your view--it's C-24 still?

Yes, sorry.

THE INTERPRETER: Counselor, are you talking about C-24. You're talking about Page 24?

MR. MOLOO: C-24, Page 139. 139. Thank you.

BY MR. MOLOO:

Q. Here you're talking about the fact--again,

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you're saying--you're talking about Iván López, you're talking about José Varela Arboleda. You can see on 139, for example, regarding the next holder of ownership rights Mr. Varela Arboleda, the financial entity could have confirmed that this person lacked assets in the financial system. And in the next paragraph, you say the same situation applies to Cardona, Tatiana Gil, Mónica Rendón Gil.

So, your objection is that Corficolombiana did not run the SARLAFT process with respect to everybody on title and their legal representatives.

Is that--am I understanding correctly?

A. If financial institutions such as Corficolombiana, with the prestige that it must have, it was its obligation to carry out those verifications due to the appropriate SARLAFT proceedings and it had to verify that the business was transparent and risk-free, in order to establish who preceded in the ownership transfer history of a property they were going to receive under a Trust agreement. That was their obligation.

Q. We just saw SARLAFT obligations. The

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obligation is just to know their client, not every person on title with respect to a transaction that they're involved in. They have to know their client. They can find out information about their client, about their financial information, how frequently--you know, the volume of their transactions, etcetera.

But how are you supposed to do that, and where is the requirement in what we just read to do that on every entity on title?

Are you allowed to go and find out financial information? How do you even do that for someone who's not your client? How much money do they have in their bank account? How do I find that out from someone who is on title in 1998?

A. I just wanted to make something clear. All of these circumstances are going to be discussed during a lawsuit before the Colombian courts.

Now, however, to respond to your question, I must indicate that it was the obligation of Corficolombiana to carry out all these inquiries, since SARLAFT establishes that politically exposed persons must be specifically looked at in order to

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carry out a transaction of this nature.

For example, if Shakira, who is a famous individual, she's a wealthy individual, if she could be a politically exposed person, if Shakira buys property of the drug-trafficker, then she is going to ask for initial leverage of a financial institution in Colombia. So because it was transferred to Shakira, who we know has financial capabilities, and the financial institution providing the financial leverage, is not going to ask where the property comes from? Well, I would think that would reflect badly on the State allowing assets to be laundered in those conditions, because precisely that is a modality, that is a typology typical of money-laundering, as established in the 40 recommendations of the Financial Action Task Force.

Q. Mr. Caro, please just listen to the question and answer the question, and this will go a lot faster.

You did not identify, on 138 and 139, any concerns with La Palma or Newport, did you? You don't list them as having any issues; correct?

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A. I don't specify these because, mindful of the progressive nature of the investigation at that time, I could still not establish whether or not La Palma Argentina or other persons might be engaged in illicit activity. I only make reference to those that could be falling under grounds for asset forfeiture or on which the attention of financial entities had to be fixed, and that is the Judgment of Reproach that I precisely state in the Requerimiento, the filing for asset forfeiture.

Q. So, I think the answer was "no"; right?

A. Not with respect to the persons you're indicating, but it is an obligation of a financial institution.

Now, it just wasn't any property. This was a very costly property. And if Corficolombiana is a financial institution with a well-known reputation, it was under its obligation to undertake a proper SARLAFT.

Q. I understand, you've told me this several times. Yes, that's exactly what we're discussing: What was a proper SARLAFT?

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A. Well, I can't tell you what would have been a proper SARLAFT. They need to meet certain parameters; and, if they don't, then they might not be fully carrying out their obligations as a supervised institution, supervised by the Financial Superintendence.

Q. And nowhere in here do you say what Newport--that Newport was at fault, did you? You just say Corficolombiana was at fault; right? Nowhere in here do you say Newport was at fault.

A. Of course, I don't mention it because Newport speaks through Corficolombiana because it is the natural spokesperson of the property that was affected.

Q. Okay. I'd like to bring up a document, and I want to know if you've seen it. It's C-219.

Now, this is the testimony of Ms. Margarita Betancourt Gúzman, who is a Legal Director--although, I don't think she's the owner--of Fiduciaria Corficolombiana.

Do you see that?

A. Yes, I see it.

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Q. And in a 2018 arbitration, she gave testimony, sworn testimony, about all of the steps that Corficolombiana took prior to the acquisition.

Were you aware of that?

A. I have not seen this statement, and I have no reason to have seen it, because the following is also clear: The Asset Forfeiture Action is autonomous and independent of any other action or exercise. It's totally autonomous.

Now, it's natural, of course, that she, before a tribunal, would have to testify as to the actions she took . But I reiterate, that's going to be a matter to be debated in the proceeding that we find ourselves in.

Q. I understand it's completely autonomous of engaging in any process with the people who are subject to it, but let's just see if you knew some of the things that were ultimately--that she told--that she answered under sworn testimony. Let's see if you knew of some these things.

So, if we go to Page 4, the bottom third, she was asked did the fiduciary hire that law firm,

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Otero & Palacio.

And she said: "The fiduciary has a list of firms who can conduct title studies for us, and we recommend them to clients; and they hire those firms."

So, were you aware that Otero & Palacio was recommended to Newport by Corficolombiana at the time when you did this Requerimiento? Were you aware of that?

A. Of course, I am aware of it, and I am also familiar with the opinion that was given by Otero & Palacio.

Q. And then, the next--not the next question but the one after, says: What are the parameters that the fiduciary requires for a title study back in 2013?

So, what's normal? What do you normally do?

And she answers: In our title study, we verify the transfers of title of the property for the past 10 years. The attorney conducting the title study who submits the studies to us with all of its appendices verifies that each transaction leading to the transfer of ownership rights is free from any grounds of nullity or any error in the transfer of the

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Real Property. That is with regard to the civil aspect and in the Department, both outside attorney and ourselves do it. In the SARLAFT Department, a list is checked of all persons whose name appear in the title transfers of the Real Property both in the supplement and the annotations.

Do you see that?

A. (No response.)

Q. So, were you aware that that was Corficolombiana's general practice with every single case that they handle?

A. No, I can't tell you whether that was Corficolombiana's practice. Just that for this transaction, and in keeping with the particular conditions in which it was presented, one notes some omissions which allow me to establish that it might not be a good-faith third party. But let me reiterate, I don't decide that right now. That will be decided upon by a judge in an Asset Forfeiture Trial.

Q. So, you did not determine the good-faith status of Corficolombiana. Did I understand that

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correctly?

A. That is not correct.

Q. Okay. Well, were you aware that Corficolombiana has a SARLAFT Department? That's the next question. And they have a compliance officer that deals with all of the SARLAFT issues. And if you go on to the next page, what they do is conduct a study and verify information regarding the persons with whom the fiduciary will have some sort of ties, whether it's clients or they're entering into an agreement with.

Do you see that? It's the top of Page 4.

And they run them through various lists and it goes on and on about all the things they do.

Were you aware of any of this when you filed your Requerimiento? And you spent all day and night and every weekend putting it together?

A. Of course. It was my responsibility to be able to file the Requerimiento to establish whether certain minimum standards of SARLAFT were met so as to present it to the Judge.

Q. And if we go to Page 15 for a second. This

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comes back to the Otero & Palacio study--the very top, so she's being asked by the Arbitrator: Was it you or was it the attorney who decide it should go back 10 years?

And the answer was: No, the attorney drafted it, and when we received it, we determined that it was fine to go back 10 years, for that reason I'm giving you, because in civil actions that is what you do for title studies. In civil action is the statute of limitations is 10 years. They performed it. We received it, and asked for the supplemental information on the last part on a deed, but we accepted it going back 10 years.

And then, the next question: In other words, that title study was satisfactory for the fiduciary?

And she says: Yes, it was complete. It was submitted with appendices, all the reviews were conducted on the issue of the civil chain of title transfers.

And then at the bottom, again the Arbitrator says: Do you mean to say that the search and the list

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is not limited to those shown over the past 10 years?

And then the answer is: For the last 10 years, no. That is performed for all. So, what do we do? The commercial officer who was assigned to the client takes the certificate of transfer of title and enters it into an Excel sheet and runs all the individuals, et cetera.

So, that's the fiduciary's process.

Were you aware of that? Were you aware that this was the process that they undertook with respect to the title study?

A. Of course, I understand that situation. And here, the first failing of that title study, any Colombian lawyer who is familiar with asset forfeiture and who comes to learn--and they must know the Asset Forfeiture Action, is atemporal, has no statute of limitations. As this is the case, it was an obligation of a company performing the title study to have conducted a more in-depth study, a more rigorous study. Why? Because, if one noticed that there were several transfers and transformations of the property, both legal and physical, that should have set off the

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alarms for those lawyers who were performing the title study. That is why they should have undertaken a study going back to the origin of that real estate registration folio; that is to say, from the origin of the property. Of course, that was an obligation. For those who know about asset forfeiture cannot merely be content to undertake a study of a title or those who may be subject to asset forfeiture for only--going--in a study going back only 10 years.

And I'd like to explain it better so that the Tribunal can understand exactly what I'm driving at.

At present, we are still taking property from--

PRESIDENT SACHS: We understand, and please go on with your questions.

MR. MOLOO: Thank you, Mr. President.

BY MR. MOLOO:

Q. If we could just stick to answering the questions, that's the purpose of this. Thank you. We understand your position.

And are you aware that, in 2014, there was a

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W interview that was done by Mr. Seda? Were you aware of that? W Radio interview.

A. I have no reason to have any knowledge of that interview because I stick exclusively to what is in the process in the proceeding record.

Q. Are you aware that Mr. Iván López approached Mr. Seda in 2014? Well, you haven't interviewed Newport, so you may not know that, but I'm just asking if you are aware.

A. Yes, I am aware of it because it is in the file of the Asset Forfeiture Case.

Q. And are you aware--if we go back to C-219, that, in 2014, when Mr. Iván López approached Mr. Seda, that he told the fiduciary and everybody else that he had been approached, and you can see the bottom half, there is a question: "Did you know," on Page 6, "did you know or did the fiduciary know of any radio interview given by Mr. Angel Seda?"

And the answer is: "Yes, we knew. We didn't listen to the interview itself, but we did learn of the interview subsequently because he," Angel Seda, "sent a notice to the area of beneficiaries

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informing to them of that interview and about the situation that arose. We had already begun seeking information, we verified once again how the business deal had taken place, we verified the title studies, we verified the searches that Mr. Sintura had performed, and once again the tool we have is to search in the list for people whose name appear in the title transfer of the property and those who appear, especially for La Palma Argentina, that was generated. In other words, La Palma Argentina transfers it to me, there is clear title, and so they rechecked it again in 2014, and everything turned up clean."

Were you aware of that?

A. What I am aware of is what is in the record of the Asset Forfeiture Proceeding, and I limit myself to that because, for me, what is not in the record of the proceeding doesn't exist.

Q. So--and if you look a little bit above that--and you haven't interviewed anybody at Corficolombiana; right?

A. That is right, but I have no reason to interview them because they are represented by a

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lawyer who is going to attend an Asset Forfeiture Trial, and they will have to speak there to say what they might say to defend their interests.

Q. Right. They can tell the Court.

So, I assume, then, you're not aware--because this was asked of them: "Has a fiduciary ever been called into question for having entered into a business deal involving the company La Palma?

And they said: No. And in fact, when this came up, we reviewed what had been done at the time, and we reviewed La Palma, and everything was clean.

Do you see that? That's in the middle of the page, on 06: "There's no impediment to working with La Palma Argentina. In fact, when the situation arose, we crosschecked the list again for people affiliated with La Palma Argentina and those involved in the transfer of title of that Real Property, and they don't show up. There's no impediment to working with La Palma Argentina nor with those who appear on the transfer of title of the property."

Do you see that?

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They check that again. When this all came up, they said, and still nothing turns up.

Are you aware of that?

A. Very well. I'm just now finding out about this interview with the legal representative, no doubt, of Corficolombiana. But within the evidence that I requested in the Asset Forfeiture Proceeding, it's precisely a matter of asking the Financial Superintendency, which is the one oversees the financial institutions in Colombia, so as to establish whether they have some non-conforming products or results with respect to the SARLAFT, and that will be the subject of debate in an Asset Forfeiture Trial.

Q. Okay. One last question about this document. On the next page, I assume again you're not aware of this because you haven't had the chance to speak to a representative of Corficolombiana, but they were asked, when this interview had happened, you know, was there anything you did in terms of contractual, trying to terminate any agreements or anything like that, and they said: When that interviewed happened, the Agreement continued in force

[Page 986]

because there were no contractual grounds or any legal grounds for terminating it. On the contrary, the interview is there. The genter--sorry--the gentleman explained, the gentleman informed the area of beneficiaries--and I think they're talking about Angel Seda there--he made all the information available, which is the same information that we must review in order to enter into the Agreement in the first place.

And on the contrary--sorry, I should make clear, in the first place, is not actually in the text, that's just my clarification--and on the contrary, that we confirmed was that there was no impediment to the transfer of title of the properties that would permit claims against the fiduciary that it must return the Lot or anything that would affect the real estate Project. Since no legal or contractual grounds were present, the Agreement carry--continued being carried out. Terminating it would have meant breach of agreement by the fiduciary because there was no just cause to terminate it. On the contrary, we would have been targ--the target of claims, obviously from Newport, such as those pending today. Those

[Page 987]

would be against the fiduciary from all the area of beneficiaries.

So, had you interviewed Corficolombiana, you probably would have understood this position; correct?

A. Let me reiterate that Corficolombiana will have to provide its explanations before the natural Judge, the asset forfeiture judge. Therefore, guaranteeing those rights, well, it will have to appear and explain how it is that this fiduciary deal went forward. It was not my obligation to call Corficolombiana because the natural scenario for this debate is the trial which we are before a judge in Colombia.

Q. So, it's not your obligation to call Corficolombiana, and it wasn't your obligation to call Newport as well? I assume that's your position?

A. Newport, yes, of course. In fact it made itself present in the Asset Forfeiture Proceeding, it has filed tutela actions, several. It has filed the documents. That is why I recognized it as an affected party in my Requerimiento of asset forfeiture.

Q. Right. I'm just asking, so you didn't

[Page 988]

collect evidence in Corficolombiana, but you also didn't collect evidence from Newport; is that right?

A. From Newport yes- they are in the proceedings file , and Corficolombiana has also presented its arguments. In the procedural stage where that is going to be debated, is in a trial.

Q. Right, but just to confirm, that's going to happen in the trial. You haven't collected information from them; correct?

A. Of course, it was collected, and it's going to be presented at that trial, what they produced, in the legitimate exercise--

(Overlapping interpretation with speaker.)

Q. -I'm asking if you collected information directly from Newport or not? "Yes" or "no." Did you collect information from Newport?

A. I didn't have to do so at that procedural moment.

Q. Let's go to C-003bis. This is the Asset Forfeiture Law. And if we go to Article 118, the initial stage is the stage leading up to the Requerimiento; is that correct? The initial Stage.

[Page 989]

Is my understanding correct?

So, just go to first page of 118.

A. I'm sorry. I've not been able to find the document, what document is it can you repeat please?

Q. If you just go to the first page of C-003. C-003.

This is the Asset Forfeiture Law; correct? This is the Asset Forfeiture Law?

A. yes, it's the Asset Forfeiture Law.

Q. And the initial stage is the stage leading up to the Requerimiento; correct?

A. That is correct.

Q. If we go to Article 118. Go to Article 118 on Page 34--are you there?

A. Yes, sir.

Q. The initial stage is intended to achieve the following purposes.

Do you see that?

A. Yes, I see it.

Q. And you see Number 5: "Search for and collect the proof which makes it possible to reasonably conclude there is no good faith without

[Page 990]

fault."

You had to do that leading up to the Requerimiento, didn't you?

MS. HERRERA: Sorry, translation again.

"Infer," not "conclude."

MR. MOLOO: Okay.

BY MR. MOLOO

Q. To reasonably infer that there is no good faith without fault; correct?

A. Yes, that's what it says there.

Q. And so, you did search. In your position, you searched for and collected the proof to make this determination, "no good faith without fault," without talking to the Parties whose good faith without fault you were trying to assess?

A. Of course. The evidence was so clear, that had been collected for the asset forfeiture, that with the documents that were collected, I was able to establish with total clarity that absence of good faith without fault.

Q. I understand the position.

[Page 991]

Are you aware that the Constitutional Court has recently confirmed that good faith does not require the sort of diligence that you're calling for?

Are you aware of--I'll pull up the decision, C-329.

Oh, sorry--yeah, it is C-39--329.

Are you aware of this Decision? From 2020?

A. Just a second while I find the document.

How do you have it titled here?

Q. 329.

A. Yes, I am familiar with this Decision by the Constitutional Court.

Q. Then you're aware, if we go to--I think I know what your position is going to be on this, but Page 42, this Decision--and apologies, there's no page numbers on this, but it's--I think it's the third page from the back. On the right-hand side, it says "decision." It's the last full page and the one before that.

And on the left--so, you can see there's the third full paragraph that starts with "moreover."

Do you see that?

And, are you aware--

[Page 992]

A. Yes, I see it.

Q. Are you aware that the Constitutional Court found in this case that the good faith and diligence that may be required of third party acquirers refer exclusively to assets that are the object of a legal operation but not to those persons who transfer domain over them?

In fact, when someone intends to acquire an asset, it is up to that person to ascertain the legal status of such asset in order to establish the history and the chain of title and tradition but not to inquire into the history or personal details of the Party that transfers the respective assets to him, especially when, in many cases, the transfer occurs when the State itself has not been able to prove or penalize the perpetration of illegal activities.

Do you see that?

A. Yes, I do see it.

Q. I want to go to--now, Newport and Corficolombiana, for that matter, would have conducted their due diligence in 2013; correct? 2012-2013, that's when they conducted their due diligence?

[Page 993]

1 A. They should have done it for their due

2 diligence, but it is necessary here to clarify

3 something in connection with the Judgment that you are

4 referring to. This Judgment issued by the

5 Constitutional Court was for a very specific and

6 concrete case whereby the Constitutional Court had to

7 study Grounds 10 and 11 of Article 16 on asset

8 forfeiture. It is a completely different case,

9 different from the one we are currently dealing with.

10 Q. I expected that to be your position, and we

11 will see what the Experts have to say about it

12 tomorrow, but I think the Judgment speaks for itself,

13 and I didn't have any questions about it for you other

14 than to know whether or not you were aware of it, in

15 that specific paragraph.

16 A. I certainly know it. And once again, it is

17 for a particular specific case that is completely

18 different from asset forfeiture process I am in

19 charge --in the Meritage Case. Two specific ground of

20 equivalence That is the one precision that I want to

21 make clear at this point in time.

22 Q. I appreciate your clarification, thank you.

[Page 994]

1 Well, I should make it clear: I appreciate

2 your position on the case.

3 Now, Newport and Corficolombiana would have

4 conducted their due diligence in 2013; correct?

5 A. Of course, they should have done it.

6 Q. And, in your Second Witness Statement, you

7 noted certain new developments in the Asset Forfeiture

8 Proceedings. If we go to Page 2?

9 A. Two of what document, excuse me?

10 Q. Your Witness Statement, your Second Witness

11 Statement. Do you have your Witness Statements in

12 front of you?

13 A. No, I don't.

14 Q. They're at the front of your binder. It's

15 the second tab. A lot of paper, I know.

16 On the second page, you talk about "new

17 developments." Do you see all of that? Do you see

18 that section?

19 A. That is correct.

20 [Redacted]

21 [Redacted]

22 [Redacted]

[Page 995]

1 A. Yes, that is correct, because the

2 progressive nature of the investigation establishes it

3 in that fashion.

4 Q. I understand.

5 Okay. I have one more line of questions, I

6 think, for you.

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6 MR. MOLOO: I have no further questions.

7 PRESIDENT SACHS: Thank you.

8 Thank you, Mr. Moloo.

9 Yes, I'm sorry, we should have a break--

10 MS. BANIFATEMI: Yes.

11 PRESIDENT SACHS: --before we have redirect.

12 And how long do you think your redirect will

13 be? You have 10 minutes, no?

14 MS. BANIFATEMI: Do you mean how long the

15 break or how long--

16 PRESIDENT SACHS: Your redirect.

17 MS. BANIFATEMI: I would assume it would be

18 10-15 minutes.

19 PRESIDENT SACHS: Okay. Let's resume at

20 11:20, please.

21 MS. BANIFATEMI: Just how are we doing with

22 time, just to have an assessment of the time that has

[Page 1016]

1 passed already. We will look at our emails.

2 PRESIDENT SACHS: Okay, good. 11:20,

3 please, and Dr. Caro, same rules as yesterday: Please

4 do not talk to anybody since your testimony is still

5 ongoing during the break. Thank you.

6 THE WITNESS: I will do that, Mr. President.

7 (Recess.)

8 PRESIDENT SACHS: So, we go to redirect,

9 please. Ms. Herrera.

10 MS. HERRERA: Thank you, Mr. President.

11 REDIRECT EXAMINATION

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[Page 1017]

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13 Q. Sir, if you look at C-31bis, if you can

14 please look at it.

15 A. Yes, I'm looking at it.

16 Q. At C-31bis, this is the response by the

17 Fiscalía to the right to petition for information by

18 Corficolombiana.

19 You were asked if you knew that

20 Corficolombiana had asked for a review of 65 years

21 in --in the chain of title and that the name of Iván

22 López was not in the chain of title for Meritage? You

[Page 1018]

1 were shown a list of the legal entities and legal

2 representatives and entities at C-31bis. Can we see

3 the response from the Fiscalía, which lists the

4 representative legal entities with respect to which

5 the Fiscalía requested a response? You should be able

6 to see it.

7 A. I'm looking at the document.

8 Q. Do you know whether the Fiscalía, when

9 providing this response, had the obligation of looking

10 at the corporate history of the entities listed here,

11 or was it limited to only provide an answer in

12 connection with the entity named therein?

13 A. Only in connection with the entity named

14 therein.

15 Please note that in this response a

16 clarification is made. Here it in capital letters,

17 in bold and underlined. To date, the record of the

18 legal and natural persons, this doesn't appear that

19 are listed as follows. As I said yesterday, this is an

20 exact snapshot of the time when the information is

21 requested.

22 This, to mean, that a day later, a week

[Page 1019]

1 later, a few years later, well, an investigation can

2 be commenced, including by the individuals asking for

3 this information given that

4 the function of the Prosecutorial Office, as

5 I indicated in the Requerimiento, its mission is not

6 to certify. It cannot be held as an approval to

7 conduct acts with legal effects.

8 What is more, those who know about asset

9 forfeiture know that it is not a good practice,

10 through a right to petition, to ask whether properties

11 are undergoing Asset Forfeiture Actions.

12 Q. Thank you, sir.

13 You were asked a number of times in this

14 cross examination about the relationship that

15 Corficolombiana had with Newport, and you answered a

16 number of times under the Trust agreement that they

17 had. Let's look at this irrevocable real estate

18 trust, C-208bis.

19 Claimants, could you please show 20.9 of

20 C-208?

21 MR. SOTO: Our technician doesn't speak

22 Spanish.

[Page 1020]

1 MS. HERRERA: Would you be so kind to

2 project on the screen C-208bis, and specifically

3 Clause 20.9 of that exhibit.

4 MR. MOLOO: It's not in the binder, by the

5 way.

6 MS. HERRERA: It is not?

7 MR. MOLOO: No.

8 (Comments off microphone.)

9 MS. HERRERA: C-208bis. 208.

10 MR. MOLOO: It's not a document we asked

11 about, so that's why it's not in the binder.

12 MS. HERRERA: Can we project it? This

13 relates to your questions about the relationship

14 between Newport and Corficolombiana and the Trust...

15 MR. MOLOO: I will leave it to the Tribunal

16 if they find it helpful.

17 But this is not a document we asked any

18 questions about, Mr. President.

19 PRESIDENT SACHS: Please, go ahead.

20 MS. BANIFATEMI: Thank you, Mr. President.

21 Just for the record, it's about a question

22 you asked.

[Page 1021]

1 VOICE: Ah, 28.

2 MR. MOLOO: We can put it up? It's C-28;

3 correct?

4 MS. HERRERA: Yes.

5 MR. MOLOO: Franz, can you put up C-28?

6 MS. HERRERA: Maybe--did you find it? Okay,

7 thank you. Thank you very much.

8 BY MS. HERRERA:

9 Q. Mr. Caro, could you please read--or I'll

10 read it--Clause 20. It says: "General obligations of

11 the fiduciary." If we look at Number 9, it says:

12 "Respond before the Trustor for any damage caused in

13 the performance of this Contract," and that's this

14 fiduciary contract; correct?

15 A. That's right.

16 Q. Mr. Caro, do you know whether there have

17 been any actions filed against Corficolombiana by

18 Newport at the domestic level in Colombian courts or

19 elsewhere?

20 A. With respect to the obligation arising from

21 this Contract, correct. I don't believe there's any.

22 Q. Okay. Thank you, sir.

[Page 1022]

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[Page 1023]

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4 MS. HERRERA: No further questions.

5 PRESIDENT SACHS: Thanks.

6 My colleagues have questions?

7 Yes, Mr. Poncet has questions.

8 QUESTIONS FROM THE TRIBUNAL

9 ARBITRATOR PONCET: Good morning, Dr. Caro

10 Gómez. I have a few questions for you.

11 THE WITNESS: Good morning.

12 ARBITRATOR PONCET: In the line of the

13 questions I asked Dr. Ardila Polo yesterday, my main

14 concern being the various considerations revolving

15 around due process in this case.

16 And I would like to discuss the next steps

17 with you, if you can help me in this respect.

18 My understanding is that we now have this

19 Decision of--recent Decision of April 22, if I'm not

20 mistaken, admitting Newport as a party with an

21 interest within the meaning of the Law on Asset

22 Forfeiture.

[Page 1024]

1 So, if we can look at the law for a second,

2 am I right that C-003bis, the next--well, you probably

3 know the law by heart; right?

4 THE WITNESS: That's right.

5 ARBITRATOR PONCET: Okay. So, the next step

6 is to determine in legal proceedings in Colombia if

7 Newport and/or Corficolombiana are bona fide owners of

8 this considerable real estate; am I correct?

9 THE WITNESS: That is right, and that is

10 precisely what will be at issue in the trial that is

11 going forward, Asset Forfeiture Proceeding. Newport

12 and Corficolombiana have full guarantees, mindful of

13 due process, to show before the Judges of the Republic

14 of Colombia that they are good-faith third parties

15 without fault. That is a guarantee that the Colombian

16 State provides for affected parties in an Asset

17 Forfeiture Proceeding and in any other proceeding.

18 Q. I understand, but my question was whether

19 the next step is to determine if they are, indeed,

20 good-faith owners. This is the case, isn't it?

21 A. That's right.

22 ARBITRATOR PONCET: All right. There are

[Page 1025]

1 two possibilities, if I understand correctly: Either

2 at the end of this process it will be decided that the

3 assets, the property, the land involved was bought,

4 was acquired with money that is tainted or it was--it

5 will be decided that it should go back to its owners;

6 am I correct?

7 THE WITNESS: That's right.

8 ARBITRATOR PONCET: Okay. If it is decided

9 that the land was acquired with money that is--that

10 was tainted originally, that would be presumably under

11 Article--would be under Article 16(3) of the law;

12 right? If you can take a look at 16(3). Which seems

13 to me to contain a definition of assets acquired for

14 the purpose of money-laundering. This is what we're

15 talking about.

16 THE WITNESS: That's right.

17 ARBITRATOR PONCET: Okay. So, if that is

18 the case, there will be forfeiture of the land,

19 extinction of domain--there will no longer be any

20 property rights and the land and the other assets will

21 go to the State of Colombia; right?

22 THE WITNESS: If the Judge so decides, then

[Page 1026]

1 that is what will be done. That is the procedure.

2 ARBITRATOR PONCET: Now, conversely, let's

3 see what happens if the opposite conclusion is

4 reached. And my first question in this respect would

5 be, with regard to Article 29(3) of the law--and

6 please, Dr. Caro Gómez, feel absolutely free not to

7 answer the question if it is an embarrassing one or if

8 it involves policy decisions that the Attorney

9 General's Office may have to take in future, but I see

10 there that--let me show off my Spanish a little bit

11 here, which is so limited that I would like to show it

12 off: "To correct at its own initiative or at the

13 request of a party, irregular acts that may have

14 carried out in the initial phase."

15 So that means you have the authority to

16 revoke those attachments, don't you? Autonomously?

17 My question is: Are you planning to do it?

18 And again, please feel free not to answer the question

19 if you feel it shouldn't be answered.

20 THE WITNESS: Within the asset forfeiture

21 process, that correction of irregular acts can be done

22 in an initial phase--in the initial phase.

[Page 1027]

1 Now, as the proceedings before the Judge, it

2 is the Judge who should decide whether to Decree the

3 forfeiture or not. Because I lose any judicial

4 competence to determine the fate of the assets as soon

5 as I file the Requerimiento before the Court.

6 ARBITRATOR PONCET: So, once the

7 Requerimiento is filed, you lose the powers you have

8 under Article 29?

9 THE WITNESS: That's right, because then I

10 have become a party to the proceeding within the

11 process--s.

12 ARBITRATOR PONCET: So, this will have to

13 go--I'm waiting for the interpretation--this will have

14 to go through the Court the process, and at the end,

15 there will be as is hoped by the Claimants, there will

16 be a decision releasing the assets and making them

17 available again to Corficolombiana and to Newport;

18 right? That would be the second possible issue,

19 either there is complete forfeiture or it is released.

20 THE WITNESS: Of course. And the Judge is

21 the one who decides-whether to decree or declare

22 asset forfeiture or not.

[Page 1028]

1 ARBITRATOR PONCET: Okay. As an experienced

2 Prosecutor obviously involved in several similar

3 proceedings, could you give me an estimate, in your

4 view, of the time frame of these proceedings, whether

5 they reached the ultimate conclusion that the assets

6 should be forfeited or whether they reached a

7 conclusion that the assets should be released? How

8 long is that likely to take?

9 THE WITNESS: The time frame- depends on the

10 complexity of the cases. There are some cases that

11 might last two years, others four or five years. That

12 depends on the complexity of the matter. The Asset

13 Forfeiture Law is designed for it to be a shorter

14 period. Indeed, that is why, with the Amendment to

15 the Asset Forfeiture Code, through 1849 of 2017,

16 procedural stages were abbreviated in order to make

17 the overall procedure more expeditious.

18 ARBITRATOR PONCET: And when you say two

19 years or four or five, that is the Final Decision, or

20 is it the First Court's Decision which could be

21 appealed either by your office or by the Claimants?

22 THE WITNESS: That could even take--that

[Page 1029]

1 time frame would take one to the end once an Appellate

2 Court decides.

3 ARBITRATOR PONCET: Okay. So, the

4 optimistic vision is two years from now, which will

5 bring us to 2024; right?

6 THE WITNESS: I don't think it would take so

7 long because this proceeding is well along. I already

8 filed the Requerimiento, and I have requested

9 evidence, since the Claimants' Appeal went to a court,

10 and the Court decided well, now, it goes to the Judge

11 of First Instance, and the trial will begin very soon.

12 ARBITRATOR PONCET: So, what is your

13 expectation of the time by which there will be a final

14 decision and--the Final Decision in this case as far

15 as Newport is concerned?

16 THE WITNESS: I would estimate one year it

17 could be less, we will already deciding or rather the

18 Judge will be deciding, the fate of the property

19 that's associated with that Asset Forfeiture

20 Proceeding.

21 ARBITRATOR PONCET: Okay. So, that takes us

22 to some time in 2023; right? The best possible

[Page 1030]

1 estimate.

2 THE WITNESS: It is possible.

3 ARBITRATOR PONCET: Okay. Assume, Dr. Caro

4 Gómez, assume that the Colombian courts do not share

5 your views and they find in favor of Newport. What

6 does a developer do when he recovers assets from

7 construction sites, buildings that have been attached

8 for seven years? How does one recover from that?

9 THE WITNESS: As soon as the Judge decides

10 that he's not going to decree asset forfeiture, what

11 the Colombian Authorities have to do is return the

12 property immediately.

13 ARBITRATOR PONCET: I understand that the

14 property is returned--but what does a developer, an

15 investor for the purposes that we are discussing

16 here--what does he do with assets that are returned to

17 him after seven years?

18 THE WITNESS: I believe that he should

19 continue forward with the Project on that property.

20 ARBITRATOR PONCET: So, your view is that,

21 if they prevail, they should simply carry on with the

22 Project, after seven years? That is the view of the

[Page 1031]

1 Attorney General's Office?

2 THE WITNESS: If the property's returned,

3 then the investors or owners of the property are

4 autonomous in terms of what they're going to do with

5 it, whether they're going to continue to move forward

6 with the construction of the Project or whether they

7 decide to use it for some other activity.

8 ARBITRATOR PONCET: Thank you, Dr. Caro

9 Gómez.

10 THE WITNESS: Thank you.

11 PRESIDENT SACHS: I have a few questions to

12 you, Dr. Caro. I would like to go back to the

13 Requerimiento. This is C-024bis. I look at the

14 English version and to Pages 138 and 139.

15 All right. Now, what we have seen--are you

16 with me?

17 THE WITNESS: Yes, Page 138 and 139.

18 PRESIDENT SACHS: That's the part of the

19 document which deals with good faith, and I would like

20 to start with the individuals that are named on the

21 Page 139.

22 When I look at them, Mr. Arboleda--that's

[Page 1032]

1 the mango vendor--Mr. Cardona Rodríguez, Mrs. Muñoz,

2 and Mrs. Rendón Gil. These individuals were named in

3 the list that was part of the petition to the Attorney

4 General's Office of August 2013. We can check it, if

5 the operator would please, in parallel, if possible,

6 show us C-031bis, and that would be Page 42.

7 So, in other words, my first question was:

8 In 2003--'13, sorry--when you received this petition

9 and you responded to it, those individuals were

10 commented as not listed in the information system.

11 So, in other words, I conclude from this that, at the

12 time, you were not aware that, for example,

13 Mr. Arboleda who was, according to the Respondent's

14 position, a frontman and a former mango vendor. Do I

15 understand that correctly, that you were not in

16 possession of such information in 2013?

17 THE WITNESS: The thing is that I'm not the

18 one to give this answer. It is given by the Chief of

19 the Unit at that time. I did not even--had not even

20 seen this document in 2013.

21 PRESIDENT SACHS: Okay. Fair enough.

22 On Page 138 of the Document C-24bis, your

[Page 1033]

1 main complaints seemed to be to say that, had the

2 title study covered a longer period than 10 years,

3 then the '94 deed would have been studied, and it

4 would have showed that the Company that was then named

5 Sierralta López had a legal representative, namely

6 Mr. López. But you say in this document on Page 139

7 that in '94, the Company was titleholder.

8 Do I understand that correctly?

9 So, in other words, here you say Mr. Iván

10 López Vanegas was the legal representative of

11 Sierralta, and records titleholder in '94. So, do I

12 understand correctly that you say here it was the

13 Company that was the titleholder in '94?

14 THE WITNESS: Of the property where the

15 Meritage real estate project was being built in the

16 chain of title as you've indicated, and I affirm this

17 in the Requerimiento. The legal representative of

18 this company was Iván López Vanegas. He was legal

19 López--legal representative of Sierralta López and

20 Company. Now, if the Study of Titles had looked at

21 these Public Deeds, and had they compared it with or

22 matched it up with a search in the Google search

[Page 1034]

1 engine, then the name Iván López Vanegas would have

2 come up, as in 2003, it was publicly--a matter of

3 public knowledge nationwide that Iván López Vanegas

4 had been sought in extradition and extradited to the

5 United States to face drug-trafficking charges.

6 PRESIDENT SACHS: What would be Iván López

7 in 2000--I'm sorry, in 2013, was he on the OFAC List,

8 the UN list? Do you know that?

9 THE WITNESS: No. As of 2003, the date

10 you're asking me about, I don't know if he would have

11 been.

12 PRESIDENT SACHS: '13. 2013.

13 THE WITNESS: 2013? I don't know if he was

14 still on the Clinton List or was or is still on the

15 Clinton List. That I don't know.

16 PRESIDENT SACHS: Okay. Let's assume he was

17 not on the list. Is it your position that the

18 acquiring Party should Google every legal

19 representative of any company that appears in the

20 chain of title?

21 THE WITNESS: Yes, if one undertakes a

22 careful study, it should have been done in that

[Page 1035]

1 manner, particularly in this case with respect to that

2 property, where one could see any number of

3 transformations, both physical and legal, of the

4 property, which would require any normal person who

5 might acquire that property to conduct those

6 additional verifications because this is even

7 established by the case law of the Constitutional

8 Court going back to Judgment C-1007 of 2002.

9 PRESIDENT SACHS: Okay. Thank you very

10 much.

11 THE WITNESS: Okay.

12 PRESIDENT SACHS: We have no further

13 questions. You are now released as a witness.

14 MS. HERRERA: Sorry--

15 PRESIDENT SACHS: Ah, a follow-up question?

16 MS. HERRERA: Yes. Thank you. Thank you,

17 Mr. President.

18 FURTHER REDIRECT EXAMINATION

19 BY MS. HERRERA:

20 Q. Mr. Caro, to be precise, could you explain

21 me that the illegality of this lot is in connection

22 with the acquisition in '94 or in 2013?

[Page 1036]

1 A. Going back to the acquisition in 1994, it is

2 from there that it is tainted by illegality.

3 Q. Mr. Caro, you have been asked with respect

4 to--about the duration of proceedings; and, in that

5 regard, bearing in mind the COVID situation, what

6 impact has that had in Colombia?

7 A. These are aspects to be taken into account,

8 first of all, we have the complexity of the case

9 toward the temporal nature of the case. Second,

10 COVID-19 clearly obviously delayed the proceedings or

11 the progress in judicial proceedings, but we should

12 also bear something else in mind, and that is the

13 following: Judges are only 11 for all of Colombia.

14 Each judge may have about 200 cases, and a Tribunal

15 may have about 80 cases.

16 Q. Mr. Caro, at this stage of COVID in

17 Colombia, were there any agreements to extend

18 deadlines?

19 A. Yes, there was an agreement.

20 Q. Thank you.

21 You were asked if you get to the end of the

22 Asset Forfeiture Proceeding, and it is decided that

[Page 1037]

1 Newport is--or if it is decided that there are

2 good-faith third parties and the asset forfeiture is

3 not carried out, the question is what would be the

4 situation of the builder that receives this Lot after

5 seven years. And you told us that construction could

6 continue. My question is: What other actions does

7 Newport has, can Newport do something else when the

8 State recognizes that the asset forfeiture should not

9 proceed? Can the State compensate? Or how does it

10 work?

11 A. If the Judge and the Tribunal decide to

12 proceed or not with the asset forfeiture, clearly

13 Newport and Corficolombiana have all of the actions

14 available to them to enforce them if any harm has been

15 caused.

16 Q. And the last question, Mr. Caro, Sierralta

17 López y Cia., it is a limited joint-stock company;

18 correct?

19 A. Yes.

20 Q. What type of company is it?

21 A. All of the members have share in this

22 partnership. Each have a share percentage based on

[Page 1038]

1 their contribution and participation.

2 Q. Thank you very much.

3 A. Thank you.

4 PRESIDENT SACHS: Thank you very much,

5 Mr. Caro.

6 THE WITNESS: Thank you very much.

7 (Witness steps down.)

8 PRESIDENT SACHS: You are now released as a

9 witness. You may leave the room or stay with us.

10 MS. BANIFATEMI: Mr. President, before we

11 move on to the first expert, if the Tribunal would

12 allow me to just make a point on the record in

13 relation to something that happened just before.

14 PRESIDENT SACHS: Yes, please.

[Redacted]

[Page 1039]

[Redacted]

[Page 1040]

[Redacted]

[Page 1041]

[Redacted]

[Page 1042]

[Redacted]

[Page 1043]

[Redacted]

10 PRESIDENT SACHS: Dr. Martínez Sánchez.

11 WILSON ALEJANDRO MARTÍNEZ SÁNCHEZ,

12 CLAIMANTS' WITNESS, CALLED

13 PRESIDENT SACHS: So, are we ready?

14 Mr. Moloo?

15 MR. MOLOO: I think we're ready.

16 MR. SOTO: Good morning, Mr. President.

17 Yes, we are.

18 MR. MOLOO: I'll introduce my colleague.

19 Mr. Soto will be handling the Witness.

20 PRESIDENT SACHS: Great.

21 So, good morning, Dr. Martínez Sánchez. You

22 are here as an expert witness. In front of you should

[Page 1044]

1 be a declaration that we would ask you to read out for

2 the record, please.

3 THE WITNESS: Good morning to all of the

4 Arbitrators of this Tribunal. Good afternoon for all

5 of the persons here in attendance, and I have the

6 statement here.

7 I have a little bit of an echo.

8 (Pause.)

9 THE WITNESS: I solemnly declare upon my

10 honor and conscience that I shall speak the truth, the

11 whole truth, and nothing but the truth and that my

12 statement will be in accordance with my sincere

13 belief.

14 PRESIDENT SACHS: Thank you very much.

15 So, we have agreed that you first give us a

16 summary of your findings, and we invite you to do so.

17 DIRECT PRESENTATION

18 THE WITNESS: Thank you very much, Members

19 of the Tribunal.

20 I would like to start by

21 underlining--underscoring some aspects of my

22 professional career that I believe enabled me to

[Page 1045]

1 appear as an expert on asset forfeiture and

2 interpretation of the Colombian Asset Forfeiture Law.

3 You have all of my résumé.

4 And I would just like to highlight that,

5 after working at the Office of the Attorney General,

6 in 2012, I was hired by the UN Office on Drugs and

7 Crime to develop the project of the Asset Forfeiture

8 Law that became Law 1708. I was in charge of the

9 commission that was in charge of drafting the

10 regulations that became the draft presented by the

11 Attorney General. I was with him throughout the

12 discussion of this draft before Congress. And when

13 the law was approved in 2014, I was also hired to help

14 with the Asset Forfeiture Code in Colombia.

15 After this, I was hired by the U.S. Embassy

16 to provide training to all of the judicial personnel

17 in Colombia to deal with asset forfeiture.

18 And later on, I was hired by the UN and

19 World Bank as part of the Asset Recovery Project, to

20 support the drafting of an Asset Forfeiture Code in

21 Costa Rica. This is still under discussion.

22 I was also invited to support the

[Page 1046]

1 implementation process in El Salvador for the Asset

2 Forfeiture Law.

3 And I also trained the members of the

4 judiciary on the implementation of this.

5 I also supported the review and the drafts

6 of the Asset Forfeiture Law in the State of Chihuahua,

7 Mexico.

8 I was also hired by the European Union in

9 2020 to carry out an evaluation of the process

10 regarding illicit proceeds of the crime.

11 REALTIME STENOGRAPHER: I apologize. This

12 is the Court Reporter. Could you please slow down so

13 that we can interpret you and record what you are

14 saying properly.

15 THE WITNESS: I was hired by the Pan

16 American Development Foundation to support the asset

17 forfeiture project or draft that was discussed in

18 Ecuador, and that became law last year.

19 I have been supporting the asset forfeiture

20 project in Panamá. I was hired by international

21 narcotics law enforcement by the Embassy of that

22 country to support training to the judiciary in the

[Page 1047]

1 area of asset forfeiture.

2 And I currently work as consultant with the

3 World Bank under the Asset Recovery Project, to

4 provide Technical Assistance to the Dominican Republic

5 and their asset forfeiture process.

6 With this background, I introduce myself so

7 as to be recognized as expert on asset forfeiture and

8 also for you to allow me to interpret properly the

9 Asset Forfeiture Law in my country.

10 I'd like to start by indicating the purpose

11 of asset forfeiture not only in Colombia but also in

12 any Latin American country. We have an international

13 standard that is the Model Law on asset forfeiture for

14 Latin America, which was developed by the UN office on

15 drug and crime. If you review that law and the others

16 that have been issued in Latin America, you will see

17 that asset forfeiture is a tool for the--in terms of

18 the policy implemented to fight organized crime, and

19 the intent of the law is to help countries to go after

20 the proceeds that fund criminal organizations.

21 Nevertheless, in our countries, and that is

22 the case of Colombia, have security and economic

[Page 1048]

1 problems as a result of the high percentages of the

2 population that are below the poverty threshold. This

3 means that the law on asset forfeiture, in addition to

4 being a tool to fight organized crime, should also

5 offer a legal framework that is the adequate one to

6 provide the certainty and security to have sustainable

7 economic development in our countries.

8 As you can see here on this slide, asset

9 forfeiture is intended to balance both purposes, to

10 become a tool to pursue criminal proceeds, and also to

11 provide legal certainty regarding the rights and

12 economic transactions in the country.

13 Asset forfeiture is not expropriation. But

14 when it violates the rights of those individuals that

15 are affected--it may become expropriation. So, this

16 is the reason why the second purpose is so important.

17 We need to make sure that we apply asset forfeiture

18 carefully and rigorously because, when we fail to do

19 so, we may fall into expropriation, and this may

20 entail a severe violation of the interests of all

21 Colombians.

22 Now, something important to understand is

[Page 1049]

1 that asset forfeiture is something that has an asset

2 content but, at the same time, is related to Real

3 Property rights. This has to do with assets, but the

4 State sent after the assets themselves; rather, the

5 asset that is part of the property. So, the assets

6 are the object--that is to say, these are limits that

7 are--can be assessed from an economic point of view,

8 beyond the asset that could be the subject of asset

9 forfeiture, the State is interested in going after the

10 asset inside those goods. That is the patrimonial

11 content.

12 So, when we manage to differentiate between

13 the good and the asset and also the importance of the

14 assets as part of the asset forfeiture, we can

15 understand not only its nature but also many of the

16 grounds and the limitations.

17 Indeed, when carrying out an asset

18 forfeiture investigation, the first thing we run into

19 are assets, --and first thing that is investigated is

20 the origin, and the destination of those assets to

21 determine whether they are tainted by illegality. If

22 that is the case, they can move on with the

[Page 1050]

1 investigation; but, if not, that asset forfeiture

2 action has to come to an end.

3 Now, the fact that an asset is tainted by

4 illegality be it because it is the product of the

5 activity or because it is destined for an illegal

6 activity does not entail that asset forfeiture has to

7 be applied automatically because the second goal is to

8 protect the rights of third parties that are involved

9 in the economic operation. So, we need to see whether

10 there is a good-faith third party that is the owner of

11 that asset.

12 When the investigator, the operator finds

13 that the tainted asset is in the hands of a third

14 party, a good-faith third party, clearly, they cannot

15 go after that asset. The State recognizes a status

16 of protection to that third party, but that doesn't

17 imply that the State is frustrated in their

18 expectation to fight organized crime because the law

19 provides for a rechanneling of the investigation

20 towards other assets, and that's the reason it is

21 important to understand the difference between the

22 good and the asset. So, it doesn't mean that if you

[Page 1051]

1 are not going after going one good, you're not going

2 to go after an asset, so there is something that the

3 offender receives in exchange, and the State has the

4 authority, under the Asset Forfeiture Law, to go after

5 that asset that was received as part of the economic

6 transaction.

7 As you may see, the right--the third-party

8 rights are very important in this process because they

9 limit the capacity of the State to go after those

10 goods. Asset forfeiture is a legal limit to the

11 State's authority to declare the asset forfeiture.

12 How can we assess that good faith? How can

13 the member of the judiciary assess that good faith?

14 Good faith should be assessed based on the information

15 that the persons have when carrying out the

16 transactions because we are assessing the conduct of

17 that third party when carrying out the transaction,

18 when acquiring the right.

19 The information, gentlemen, is the raw

20 material of the diligence, as well as the prudence,

21 that has to be used by the party when carrying out any

22 legal transaction So, the information that is

[Page 1052]

1 available is critical to determine whether a person

2 has acted in good faith or not.

3 And that must be assessed based on the

4 information available at the time of the transaction.

5 It is not fair to assess the good faith of a person

6 based on the information available today, based on

7 information that emerged after the transaction.

8 That's the reason why, in all of the trainings that we

9 offered not only in Colombia but also in Latin

10 America, we always informed, and we always told

11 judicial operators that they need to objectively

12 forecast the situation a posteriori.

13 And what is that objective post-forecast?

14 It means that the judicial operator has to move in

15 time to the moment that the transaction took place,

16 and there should be an attempt to establish whether at

17 that point in time the person carrying out the

18 transaction had the possibility to have access to

19 information so as to know that the property they were

20 acquiring was contaminated. But if the information

21 was not available, if the information was wrong, then

22 those situations may not be transferred to the person,

[Page 1053]

1 and do not impact, as a matter of fact, their good

2 faith.

3 This is based on the regulation. This is

4 based on the law, and this is Article 3 of Law 1708 of

5 the Asset Forfeiture Law, and I would like to explain

6 it in a very simple fashion for you to understand.

7 Asset forfeiture is based on a very

8 elementary principle that can be based on any rule of

9 law, and that is that the crime does not produce

10 rights. One cannot claim an ownership right obtained

11 through a crime. That's why this is not an

12 expropriation because the Judge is not removing a

13 property. The Judge is stating that the person never

14 owned a specific asset.

15 When a criminal acquires the piece of real

16 estate as a consequence of or as product of a crime

17 and then signs a public document conveying that

18 property to a third-party, as a matter of fact, this

19 is not a conveyance of anything because one cannot

20 convey what you do not have. If you are not the owner

21 of the asset, if you do not have a right that should

22 be recognized by the State, then you cannot convey it.

[Page 1054]

1 You cannot assign it. So, that's the reason why this

2 third party is not acquiring any right that has been

3 originated on that public document for the transfer of

4 the asset.

5 But, if the third party has acted in good

6 faith, if the third party has acted with the required

7 diligence, the State of Colombia, on the basis of

8 these legal regulations of the asset forfeiture code

9 brings about a legal fiction. And it pre-supposes as

10 a result of that legal fiction that that individual is

11 the holder of the right that the person thought it was

12 acquiring. So, that individual is protected as the

13 holder of a property right.

14 Now, the right is not born out of the

15 document or the contract signed between the individual

16 and the wrongdoer. The right protected by the State

17 is the one that is born of good faith and of the due

18 diligence that was complied with during the

19 negotiations. That is why it is a new right. This is

20 a pure right. This is originated by good faith. That

21 is why this good faith that Article 3 of 1708 speaks

22 about is a good faith without fault. It is also known

[Page 1055]

1 under Colombian law as a good faith that creates

2 rights.

3 This provision indicates that there was a

4 status of a social contract here. This provision

5 provides for a social contract in which the State

6 imposes on the individual certain burdens, and tells

7 the individual: "You have to follow this due-diligence

8 obligations; and if you follow that due diligence, I

9 will recognize a certain status." And that legal

10 fiction is the one that protects Colombian economy.

11 It is fundamental for Colombia to have an economy that

12 has a minimum level of legal certainty in all of the

13 transactions.

14 This is so important that this was precisely

15 one of the main reasons why the Law Forfeiture Act was

16 amended in 2013. Law 1708 provides protection for

17 good faith third parties, a protection level that is

18 much greater than the one once in the laws that

19 preceded it. You can look at any asset forfeiture law

20 before 1708, and you will find that the focus of the

21 law was to create extraordinary capacities for the

22 State to go after illicit property.

[Page 1056]

1 Now, the other preceding law, 793, indicated

2 in its Article 13 that at the time the investigation

3 was opened, together with the order to commence the

4 proceedings, the prosecutor had to order Precautionary

5 Measures.

6 So, first, the property was seized, and then

7 the investigation commenced. That model brought about

8 many problems in Colombia. When you first seize and

9 then investigate, when you have seized an asset

10 without an investigation, the probability of judicial

11 error is very high, and this may lead to a high

12 probability of impairing the rights of the affected

13 parties--or the third parties. And this delegitimizes

14 this legal figure of asset forfeiture and the national

15 authority. It exposes the State to grave

16 compensations for the damages caused.

17 The second reason is that when property is

18 seized without investigation, there is an abusive use,

19 an exaggerated use of Precautionary Measures. This

20 means that the inventory of assets administered by the

21 State increases substantially.

22 The inventory of seized property in Colombia

[Page 1057]

1 grew significantly. It overflowed the capacity of the

2 administrator of the property which was the National

3 Department of Anti-narcotics, and also the capacity of

4 the oversight agencies to control this National

5 Directorate of Drugs , and this, of course, created

6 enormous corruption cases that led to the dissolution

7 of that government agency.

8 Today, the Administration of Property is in

9 the hands of the Special Assets Corporation because of

10 all these problems.

11 Also, third, there were economic problems.

12 When Precautionary Measures are taken, the financial

13 institutions, when they are notified of the existence

14 of Provisional Measures, must do accounting provisions

15 to cover for that contingent liability, and they have

16 to make provisions in their treasury to cancel the

17 loans or carry them forward because they cannot be

18 collected on, and this impacts the profit and loss

19 statements; and this, of course, reduces their

20 technical patrimony, the creditworthiness, the

21 liquidity margins, and consequently it makes loans

22 more expensive, and interest rates rise.

[Page 1058]

1 These macroeconomic and financial impacts

2 were analyzed. The banking association of Colombia

3 participated actively in the review of this draft law.

4 The standard of guarantee was enhanced to

5 try and solve all these problems. That is why, if you

6 look at Law 1708, you are going to see that the

7 Precautionary Measures are no longer taken without an

8 investigation. The philosophy behind Law 1708 is that

9 Precautionary Measures are to be taken once the

10 investigation is finished. Article 87 indicates that

11 the time for Precautionary Measures is the time when

12 the claim is provisionally determined.

13 The determination, the provisional

14 determination of the Claim disappeared because there

15 was an amendment in 2017, but back when this case came

16 about, that existed, and that was the right time for

17 the Provisional Measures to be taken.

18 If you look at Article 118, or, rather,

19 Article 87 of 1708--I don't know if you can see it on

20 the screen--there is a standard here that is

21 established. It says that Precautionary Measures must

22 be taken--and here it says--in any case, in connection

[Page 1059]

1 with the rights of third parties acting in good faith.

2 This was the purpose of the provision, to prevent

3 Provisionary Measures to be used in an indiscriminate

4 manner, and 87, Article 87 has been enhanced with

5 Article 112(2). What does Article 112(2) say? That

6 the addressee of this provision is the asset

7 forfeiture judge. And it says "Mr Asset Forfeiture

8 Judge : you must revoke Precautionary Measures" when

9 it considers they are unreasonable, unnecessary, and

10 that they lack proportionality. Reasonableness,

11 necessity and proportionality, these are substantial

12 conditions for the admissibility of a Precautionary

13 Measure in Colombia.

14 And reasonableness, as defined by the

15 Constitutional Court, makes reference, no less, to the

16 fact that asset forfeiture must be deemed to have a

17 probability to be successful. A determination of

18 Asset Forfeiture must be reasonably provable. Hence

19 to determine if a measure is reasonable, at a

20 minimum, one has to find out whether there is a

21 good-faith third party that can allege a better right

22 on that property.

[Page 1060]

1 Now, in this case, the Fiscalía made use of

2 an exceptional power under Article 89. Article 87,

3 together with 118, says that the time which

4 Precautionary Measures are taken, well, that is the

5 time when the Claim is determined. But article 89

6 exceptionally indicates that the Fiscalía may take the

7 Measures beforehand. If the Fiscalía decides to make

8 use of this exceptional power, the standard of

9 guarantee does not go down. It is enhanced. It is

10 enhanced because, as you can see, there were two

11 provisions included here:

12 First, that the Measure must be urgent.

13 Apart from it being necessary, reasonable, and

14 proportionate, the Fiscalía has to show that the

15 Measure is urgent in nature.

16 The second thing that was introduced was a

17 time limitation to six months. If the Prosecutor

18 decides to take the Measure beforehand, it has

19 six months to determine the Claim. We cannot be in a

20 state of lack of definition, and we cannot impair the

21 rights of the citizen for whatever period of time.

22 And that amount of time went longer in this case.

[Page 1061]

1 Now, let us look at the due-diligence

2 standard that must be considered to determine whether

3 an individual is a good-faith third party or not. It

4 is important to indicate that the standard in

5 Colombia--and this happens as well internationally,

6 not only in Colombia; this happens in the democracies

7 of all Latin American countries--the standard is not

8 that the citizen must carry out the diligence that is

9 possible. It is not that the citizen has the burden

10 of doing everything that is possible in abstract.

11 We're talking about due diligence here. That is to

12 say, those verification actions, those objective and

13 possible actions, imposed to the citizen by the law.

14 And we are going to see now I will mention it in

15 more detail that Judgment 327 of 2020 clarified this

16 matter quite well.

17 It is very important to understand this in

18 this case. One cannot say that the citizen has the

19 obligation of obtaining any kind of information that

20 it is obtainable, and that has to consult any database

21 that can be possibly checked. We have to be very

22 careful with that because otherwise we would be

[Page 1062]

1 putting on the citizen a number of burdens and

2 obligations that, under the Constitution, cannot be

3 placed on the citizen.

4 Also, we have to look at the legal

5 limitations. In Colombia, these are born of the law on

6 the protection of personal data. We have a Habeas

7 Data Law in Colombia that was created following

8 international standard centers for the protection of

9 data, and this is Law 1581 of 2002 that states that no

10 Colombian can process personal data without the

11 authorization of the owner of the data.

12 What is the processing of data? Well, that

13 is to say you collect data, you store data, you

14 classify data, or you use data or you share data.

15 This is very important when we're talking about due

16 diligence. This is the reason why banks, in their

17 client forms, include authorization provisions for the

18 bank to be able to process data of those clients or of

19 potential clients. I cannot have access to a database

20 using the name and the intended document of an

21 individual just because I can do it, just because

22 there is a web page where I can introduce that data.

[Page 1063]

1 No, I cannot do that, because if I do it, I can be

2 violating the right of privacy of that individual.

3 There is information that is confidential in nature,

4 and to have access to it, I need the authorization of

5 the individual.

6 I insist: We're not talking about possible

7 diligence. We're talking about due diligence, and

8 that's very important to underscore.

9 Also, in Colombia, there are two

10 due-diligence standards. One thing is the due

11 diligence that I can ask of a company that is

12 obligated to having asset-laundering prevention

13 mechanisms. We know of them in Colombia as obligated

14 subjects. And then, a different standard is the one

15 that I can ask of an individual or person that does

16 not have that obligation.

17 These are two different standards.

18 And I'm going to make a difference between

19 these two for them to be well-understood.

20 First, vis-à-vis the citizen, the standard

21 is not perfection. The law does not expect a common

22 citizen to conduct a perfect due diligence and to

[Page 1064]

1 always find the correct information. Information, as

2 we have indicated here, is the raw material of due

3 diligence. Without the information, or if the

4 information is not available or if the information is

5 incorrect, perhaps the individual can make the wrong

6 decision. Error is possible.

7 Civil law in Colombia recognizes that there

8 is a legal figure called "common error." Common

9 error, in Colombian law, is an error that anyone could

10 have made acting equally as prudently and diligently

11 in accordance with the standard set forth by the law.

12 Now, if an individual in those

13 circumstances, and respecting the standards set by the

14 law, makes the mistake, that is a common error. The

15 legal effect is that it is a common error and, because

16 it is common, it does not hurt the good faith in which

17 the individual acted, the good faith that subsists in

18 spite of the error. This has to be this way because

19 we have to ensure certain stability in economic

20 transactions, and to provide the citizens with a

21 minimum level of legal certainty. We could not ad

22 infinitum review all the contracts that we make every

[Page 1065]

1 time new information comes up.

2 PRESIDENT SACHS: I have to inform you that

3 your time is nearly up, so please try to go quickly

4 through the remaining pages.

5 MR. SOTO: And Mr. President, if I may,

6 Dr. Sánchez evidently--Martínez has evidently a whole

7 lot of slides left. We realize we will not have time

8 to cover them all. If we could ask for five minutes

9 of the Tribunal's indulgence, we're, of course, happy

10 to offer the same courtesy to Dr. Reyes. And if it's

11 of assistance to the Tribunal, given that so many

12 questions have been raised about the standard of

13 diligence, I propose two specific slides for the

14 Tribunal's benefit to hear from Dr. Martínez on them.

15 It would be Slides 18 and 20 and I offer this in the

16 spirit of expediting the process.

17 PRESIDENT SACHS: Agreed?

18 MS. BANIFATEMI: Confirm, yes.

19 PRESIDENT SACHS: Okay, good.

20 MR. SOTO: Thank you.

21 THE WITNESS: In this connection--and I'm

22 going to try to be brief--I would like to make

[Page 1066]

1 reference to Decision C-327 of 2020. This is a very

2 important Court Decision for this case. I'm not going

3 to explain the contents of the Decision. You are

4 going to be able to read it, but I'm going to refer to

5 the controversy that has existed between me and the

6 Colombian Expert in connection with applicability of

7 this Decision to this case.

8 If you look at the Decision, the subject

9 matter discussed is whether Grounds No. 10 and 11 of

10 the Asset Forfeiture Code, whether those are

11 constitutional in nature. They refer to the

12 possibility that Colombia has to go after lawful

13 pieces of property when the illicit properties are

14 held by bona fide third parties or when the illicit

15 property has been destroyed, lost, consumed, et

16 cetera. I don't think there is any controversy in the

17 sense that the Constitutional Court declared that that

18 provision was, indeed, constitutional. Here, we see

19 where the Court says that those two provisions are

20 constitutional. In Colombia, it is constitutional to

21 go after lawful property when they're equivalent to

22 unlawful property in the same conditions.

[Page 1067]

1 The Court conditioned the interpretation of

2 this provision, and the condition is very clear. The

3 Court says you can go after this piece of property

4 only if that property is held by the individual that

5 participated in the illegal activity.

6 The Court limits the scope of these

7 provisions. It says this cannot be applied vis-à-vis

8 third parties. It can only be applied when the person

9 holding the property participated in the illegal

10 activity.

11 Now, that is not important for this case.

12 The important thing for this case is how is it that

13 the court arrive at that conclusion; and, if you look

14 at the Decision, you're going to see that you have a

15 "CONSIDERATIONS" section where the Court exposes its

16 arguments. But if you look at Number 7 of that Court

17 Decision, you are going to find what's known as the

18 ratio decidendi. That is to say the specific reasons

19 why the Court reached that conclusion. You're going

20 to find there, the legal syllogism of the Court.

21 Now, what is the reasoning followed by the

22 Court? Well, the Court starts with a very interesting

[Page 1068]

1 assumption: Not all of the asset forfeiture grounds

2 are the same. There are two sets of groups--rather,

3 two sets of grounds. One through nine are based on

4 the tainting of the property, and the tainted nature

5 of the property, the property is illicit or it is

6 destined to illicit activity. The basis for the

7 grounds is that this is a tainted piece of property.

8 Then, you also have Grounds 10 and 11. In

9 connection with them, no problem exists with the piece

10 of property. The piece of property is legal, and it

11 is perfect. What is tainted is not the asset but

12 rather the whole estate to which that asset belongs.

13 So, these are asset-related grounds. That

14 is what the court says.

15 Now, having drawn this distinction, the

16 Court asks itself--and this is very important--what is

17 the due-diligence standard that, in accordance with

18 the Constitution, we must ask of a citizen. That is a

19 question that the Court posed upon itself: What is a

20 standard that, in accordance with the Constitution, we

21 could ask of a citizen?

22 Then, the Court clarifies precisely that.

[Page 1069]

1 It says, well, the only thing that we can ask of a

2 citizen is for the citizen to conduct the necessary

3 verifications to find out about the track record of

4 the property, the history of the property. Due

5 diligence must be related to the property being bought

6 and the ownership transfer history or title history.

7 You have to make sure that whomever is selling things

8 to you is, indeed, the owner, that your property is

9 encumbrance-free, and also to look for the reasonable

10 information to determine that this is not a property

11 that is born of a crime or use for a crime.

12 So, no individual can be asked to do a

13 meticulous and profound inquiry of the assets of the

14 seller. I cannot find out whether the seller's assets

15 increased or augmented in an unjustified manner. This

16 type of inquiry exceeds constitutional authorization.

17 For that reason, the Court's syllogism is impeccable.

18 The Court says, if Grounds 10 and 11 are

19 asset-related, if the Constitution does not allow us

20 to ask the person to conduct asset-related

21 investigations, then these grounds can't be applied to

22 the third party. I can only apply the grounds to the

[Page 1070]

1 owner of the property.

2 So, the controversy arises because they say

3 that that standard only applies to Grounds 10 and 11.

4 That is not true:

5 First and foremost, we cannot find a

6 different standard in the case law of the Court.

7 Second, there is no different due diligence

8 that can be required in connection with Grounds 10 and

9 11. What would be the standard in connection with 10

10 and 11?

11 Third, to say that there is more than one

12 due-diligence standard, well, that would lead us to

13 state inevitably that the citizen would have to know

14 ex ante what is the ground that can be impairing the

15 property. Do you know what kind of due diligence to

16 apply?

17 So, I think the Decision applies in its

18 entirety to this case when we have to take into

19 account the due diligence and that of the individuals

20 involved in this transaction used.

21 THE INTERPRETER: No microphone.

22 PRESIDENT SACHS: --shortly, Page 20, that's

[Page 1071]

1 your conclusion applied to the present case.

2 THE WITNESS: Okay.

3 PRESIDENT SACHS: One minute.

4 THE WITNESS: This one right here, okay.

5 As I said, these are two different

6 standards: One for the individuals that are obligated

7 subjects and non-obligated subjects. My position

8 after looking at the documents in this case, is that

9 the only obligated party I have found in this case,

10 well, is the fiduciary, Corficolombiana. In this

11 connection, the applicable regulation is the Organic

12 Statute of the Financial System, which governs the

13 relations between the institution and the clients and

14 the counterparts.

15 Now, we have to draw a difference between

16 the due diligence of Corficolombiana should have in

17 connection with its clients and Newport and La Palma,

18 and also the due diligence that it should have

19 vis-à-vis third parties. The only due diligence that

20 it had regarding their clients and counterparts is the

21 due diligence that we call enhanced or heightened,

22 which consists in doing everything possible to

[Page 1072]

1 identify not only directors, administrators and

2 representatives, but also partners, shareholders,

3 beneficiaries, and controlling shareholders of these

4 companies regarding their clients and counterparts as

5 well.

6 In my opinion, Corficolombiana did not have

7 to do an enhanced due diligence regarding third

8 parties with whom it did not hold a contractual

9 relationship as clients or counterparts.

10 Now, if we look at the chain of title and we

11 find in it a company that's there, then

12 Corficolombiana, according to the legal provisions in

13 Colombia, it is not obligated to conduct a due

14 diligence in connection with that person that is not

15 its client, is not its counterpart, and it's only

16 mentioned in the chain of title. It doesn't have to

17 look at who his shareholders are, beneficiaries are,

18 or administrative directors or representatives. This

19 would exceed, by far, what a financial institution can

20 do, and this will block the Colombian financial

21 system, if that were the standard applied.

22 MR. SOTO: Thank you, Mr. President. And

[Page 1073]

thank you to Colombia for the extra indulgence of a

few minutes.

PRESIDENT SACHS: It's close to 1:00. I

think we should have our lunch break now of one hour,

and resume at 2:00, please.

MR. SOTO: Thank you, sir.

PRESIDENT SACHS: Mr. Sánchez, you're an

expert and a lawyer, so you know that you should not

talk to anybody about the case during the break.

THE WITNESS: I understand.

MR. MOLOO: Mr. President, just in terms of

the overall timetable, not to infringe on folks'

lunch, but does it make sense to shorten our lunch a

bit to try and catch up? I'm in--completely in your

hands and obviously the Court Reporters' hands but I

thought I would ask the question.

PRESIDENT SACHS: 45 minutes? Yes? Yeah,

so a quarter to 2:00.

(Whereupon, at 12:58 p.m., the Hearing was

adjourned until 1:45 p.m., the same day.)

AFTERNOON SESSION

PRESIDENT SACHS: So, can we proceed to

[Page 1074]

cross-examination, Ms. Herrera?

MS. HERRERA: Yes, thank you, Mr. President.

CROSS-EXAMINATION

BY MS. HERRERA:

Q. Good afternoon, Mr. Martínez. How are you?

My name is Ximena Herrera. You're very

familiar with the dynamics of cross-examination. I'm

going to put some questions to you. I think we both

speak quite quickly, so we need to try to slow down a

bit to make sure that the interpretation can go well.

A. Fine.

(Pause.)

Q. Mr. Martínez, as you were telling us, you

have an impressive background, and you've held many

positions. You have been advising different agencies.

If you could be so kind as to turn to your

CV, which is Appendix A to your First Witness

Statement.

A. Which number?

Q. Appendix A. It's together with your First

Statement. In the first tab.

A. First tab?

[Page 1075]

THE INTERPRETER: The Interpreter notes that

the Expert is not speaking into the microphone making

it almost impossible to interpret. If he could be

instructed to speak into the microphone, much

appreciated. Thank you.

BY MS. HERRERA:

Q. You need to speak more closely to the

microphone.

A. Okay. Here it is.

Q. Thank you.

You are a graduate of Colegio Mayor de

Nuestra Señora del Rosario in May 2002; correct?

A. Yes.

Q. Thank you. And tell me a bit because I see

on your CV that there are some parts of your work

history that I don't understand very clearly, so if we

could look. You say that from 2006 to 2009, you were

Assistant Professor of criminal law; correct?

A. Yes.

Q. And you also say that you were a Judicial

Assistant to Professor Francisco José Sintura Varela,

this from January 2000 to December 2001; correct?

[Page 1076]

A. Yes, that is correct.

ARBITRATOR PEREZCANO: Ms. Herrera, excuse

me.

Mr. Martínez, could you speak up and into

the microphone, please, because I can hardly hear you.

Thank you very much.

Excuse me, ma'am.

MR. SCHIMPER: Yes.

BY MS. HERRERA:

Q. Sir, in the Colombian usage, when you refer

to "Judicial Assistant," before graduation, is that

what one would call "Patinar," say, "to skate"

literally?

A. Yes, dependent clerk

Q. So, that is, prior, Prior of getting

your law degree; correct?

A. Yes.

Q. Thank you.

And subsequently, you as an associate, as a

criminal lawyer, January 2002 to December 2010 at the

law firm of Sintura Varela y Abogados Asociados;

correct?

[Page 1077]

A. Yes, yes, that's right.

Q. And Sintura Varela is obviously the law firm

of Francisco José Sintura; right?

A. Yes, that is right.

Q. An afterwards it's not so clear to me,

Mr. Martínez, you had several positions, I understand,

in the Government, and when did you return to private

practice?

A. I was a staff number of the Office of the

Attorney General from January 2, 2011 to March of

2012, and then I went to work for the Office of the

Inspector General, if my memory serves me well, in

September of 2017 up until the December 2019.

Q. And during the period from 2013 to 2017,

where were you working, just to clarify?

A. I was--well, I have--ever since I graduated,

I have been a professor at the Universidad Rosario. I

was always a staff professor at that university, and

there you can teach and practice.

So, in addition to my teaching activity and

research at the university, I have also been engaged

in the--in a law practice, essentially the law office

[Page 1078]

on the issues--or in consulting on issues such as

we're discussing here, and these have been interrupted

by the periods in which I served as a public official.

There is a legal incompatibility to practice the

profession while being a public official . . .

REALTIME STENOGRAPHER: Sorry, could you

slow down, please, because now it's interfering with

the interpretation.

THE WITNESS: There is a legal

incompatibility in Colombia that stands in the way of

a public official practicing the profession. That

means that during those periods I have not practiced

the profession. Apart from those periods, I have

always been in consulting.

BY MS. HERRERA:

Q. Thank you, Mr. Martínez, but to be more

specific, from 2013 to 2017, September 2017, you

served as a professor but in addition you say you had

private practice.

A. Yes, that's right.

Q. At what private practice were you working at

because it doesn't say here.

[Page 1079]

A. No. I've practiced law in two ways. First,

because, as I mentioned here, I have had large number

of consulting contracts with international and

multilateral organizations, for example the United

Nations Office on Drugs and Crime, World Bank,

Pan-American Development Foundation, National Center

for State Courts, U.S. Department of Justice. They

all contract consultants as a natural person, so I've

have always contracted with them as such.

Now, apart from that, in Colombia, I

established a company that provides legal advisory

services, Leximas Colombia S.A.S. There, 50 percent

of the capital is mine; the other 50 percent--I'm

sorry, maybe I'm speaking too quickly. The other

50 percent is my--belongs to my wife, and, basically,

it's a company that provides legal advisory services

to small and medium enterprises.

Q. Thank you, Mr. Martínez.

So, from 2013 to 2017, you were not--did not

have a working relationship with Francisco José

Sintura?

A. Francisco José Sintura and myself are the

[Page 1080]

two Shareholders of a company that is devoted to

providing advisory services having to do with risks of

asset laundering and terrorism financing. Now I don't

remember the exact date when it was incorporated, but

it must have been around 2013. He has his law firm,

as you see there, where I worked up until 2010, and

after that I had no link or ties with that law firm.

Through that firm, he provides legal

representation. He practices corporate criminal law

and things of that sort. I am not a partner. I'm not

a director or administrator or consultant with that

law firm in any way.

Q. Thank you, Mr. Martínez.

You say--and I'm referring to your Witness

Statement, the First Witness Statement--you say at

Paragraph 10 that recently, you say you have more than

10 years of experience in the private practice of law,

recently as a principal partner at the

Sintura-Martínez law firm in Bogotá; correct?

A: Where, excuse me?

Q: It's the First Witness Statement. I think

you may have found it, but, otherwise, you'll find it

[Page 1081]

at Tab 1.

A. Yes, I see. I have it right here. That's

the firm I'm referring to, Sintura-Martínez.

Q. Recently, you say "recently," or "most

recently." And you told me since 2017 no--

A. Since 2013 more or less I believe

Q. Well, you say "recently" as a principal

partner at the Sintura-Martínez law firm.

Is recently 2013 to 2017?

A: No

Q: Explain to me

A: I'm a partner at that firm when the firm was

created. The fact that one is a partner may--well,

first of all, it is not a litigation or legal advice

firm. It has to do with consulting for risk

management.

I have been a partner of the firm since it

was founded in 2017 to this day, whereas--and when

I've been in public service, that firm has continued

to operate and I continue to be a shareholder of the

firm even though I don't participate in any of its

activities or didn't during that period.

[Page 1082]

PRESIDENT SACHS: Slow down. Please slow

down. Desperate faces.

REALTIME STENOGRAPHER: I suggest that you

speak more slowly and that you speak up. It seems

that you're speaking more softly and more quickly.

THE WITNESS: So, when I left the Office of

the Inspector General in December 2019, I resumed my

consulting activities with the firm.

BY MS. HERRERA:

Q. Fine, thank you.

But then you, I would understand that, up to

a certain point, you have grown with Mr. Sintura. He

is been like a mentor for you or something of the

sort.

A. We're partners.

Q. You're partners, of course. But you were

a--his junior before, when you started out in your

career.

A. Well, many people have been very important

in my career.

Q: I imagine, but I'm asking you about Mr. Sintura.

A: If you ask whether he's been an important figure in

[Page 1083]

my career, I would say "yes," like many other persons.

Q. Fine, thank you.

And tell me, Mr. Sintura was Deputy Attorney

General; correct?

A. I understand that the answer is yes.

Q. And that was around the early '90s?

A. I understand that the Office of the Attorney

General in Colombia emerged in 1991. Gustavo de Greiff

was the first Attorney General, and my understanding

is that he was the first Deputy Attorney General.

Q. Thank you very much.

And you, too, held the position, you were

telling us, of Deputy--Attorney General of the

Republic; correct?

A. Briefly, yes.

Q. Briefly is like for about six weeks; right?

A. No, I think it was something like three

months.

Q. Three months? Excuse me. I have it here:

It says June of 2012 to 5 March. Pardon me.

24 January 2012, 5 March 2012.

Mr. Martínez, and you graduated in March of

[Page 1084]

2002; correct?

A. Um-hmm.

Q. Mr. Martínez, to be Deputy Attorney General,

how many years of experience as a attorney with the

degree are required for that position?

A. At that time 10 years of experience were

needed.

Q. So, since you had graduated in March of

2002, you did not meet this criterion; correct?

A. In effect, that matter was a point of

discussion because the Administrative Department of

Public Service at that time had a regulation that made

it possible for graduate studies to be counted as time

of professional experience. And since I had a

Master's degree and a Doctorate, that allowed me to

accredit more time; and the Legal Department of the

Office of the Attorney General in due course was the

Legal Department of the Ministry of Justice and the

Administrative Department of Public Services, all

accredited that I did have enough time to serve as

Deputy Attorney General.

Q. I didn't have such luck at the court though

[Page 1085]

Now, Mr. Martínez, you say--or you state in

your Witness Statement--I'm still in the same

statement--that you have submitted an opinion as an

independent expert on asset forfeiture and asset

laundering--or money-laundering, and you say that even

the Fiduciaria Corficolombiana retained your services

to present an independent expert report on asset

forfeiture laws as part of the process on legality

review of the precautionary measures over the

Meritage lot.

A. Yes, in effect.

Q. What year was that, sir?

A. I don't know. 2016, I believe.

Q. Could you please turn to C-173, and that's

at Tab 16.

A. A moment, Here I am.

Q. Thank you very much.

It is C- 173, the second page, that is your

opinion; correct?

A. That's right, September 12, 2016.

Q. And, I see, it is directed to Fiduciaria

Corficolombiana and also to Mr. Angel Samuel Seda,

[Page 1086]

representative of Newport. Correct?

A: That is so.

A the Representative of Newport. Who asked

you for that opinion? Corficolombiana or Mr. Seda?

A. It was the fiduciary company, directly. I

was hired by the fiduciary, and we signed a

consulting contract with the fiduciary, and

they paid for the opinion.

Q. So, then, why--if you could turn to

SP-0025-and you will correct me if I'm mistaken--but

here it says that the client is Newport S.A.S.

A. Where is this, I'm sorry?

Q. If you go, in the --you could turn, in the

same document, C-173, SP-0025, towards the end.

A. Yes.

Q. This is a sales invoice; correct?

A. Um-hmm, yes that's right.

Q: and I assume it is for services

A; of course

Q. And the client is Newport. Not

Corficolombiana.

A. The fiduciary asked me to send the invoice

[Page 1087]

to Newport.

Q. So, your client was Newport and not

Corficolombiana.

A. Not necessarily,. The one who is the client

is not the one who pays but the one who asks for the

information.

Q. Okay. Let's continue.

If you could remind me, please--well, this

opinion which you presented in the Meritage case

specifically was attached, and you tell me--with the

Memorial that was submitted, it was submitted by

Corficolombiana with respect to the Precautionary

Measures; correct? Legality.

A. Yes, I understand that they were.

Q. Thank you.

Do you know who Corficolombiana's lawyer was

at that time? Who presented it?

A. Of course I do. It was Francisco Sintura.

Q. With whom you had a company on the date on

which submitted this opinion was submitted.

A. Yes, indeed. It's my understanding that

when Corficolombiana took note of--that it had a

[Page 1088]

problem with the Meritage Project, they sought help

from Francisco Sintura. He's been their lawyer for a

long time. He's been a lawyer with Grupo Aval for

many years, going back to the 1990s or so, and they

asked him to take on the case (overlapping

interpretation and witness) that we need someone to

analyze this, and he says where--where do we stand and

what the-what the fiduciary asks me, and that is why I

say that my client is the fiduciary company because

they were the ones who asked me. I had a meeting with

the fiduciary . They're the ones who said we need

someone to objectively analyze--what the company asked

me to do was to carry out a study and to tell them,

objectively speaking, what is their risk of asset

forfeiture in this case, and that is why I issued an

opinion to the Vice President. I understood that, as

the project involved Newport, they asked me to send it

to him as well, to direct it to him as well.

Q. Thank you very much.

A. And if you may allow me, when I delivered

the opinion as normal, one invoices for--

(Overlapping speakers.)

[Page 1089]

Q. Yes, I understand. You don't work for free.

A. That's true. I don't work for free.

And that is the reason why the fiduciary

told me please issue the invoice to Newport.

Q. Thank you, Mr. Martínez.

And you tell me if I'm right, that this was

a report by an independent expert on the Asset

Forfeiture Law in the Meritage matter, you as an

independent expert.

So, at that time, you had a relationship

with Mr. Sintura, in the same company yet you

considered even so that it was an independent opinion?

A. Of course. Because what they're asking me

to do was to assess the situation objectively so that

Francisco Sintura, whoever their lawyer might be,

could develop a legal strategy.

I was not asked to study how to validate the

company's acts. They did not ask me to issue an

opinion to validate Corficolombiana's actions. They

did not tell me we need you to help us, evaluate

whether we did this properly. What I was asked to do

was come up with an assessment of what happened, what

[Page 1090]

is our risk, and objectively tell us where we stand.

Q. But you gave your opinion on due diligence,

the due diligence of Corficolombiana; correct?

A. Yes, of course because that was part of the

documentation they provided to me on the--

(Overlapping speakers.)

Q. On the time frame in relation to good faith;

correct?

A. Yes, that's right.

Q. And specifically on this case and the

studies that had been done in the Office of the

Registrar on Meritage, the Meritage Property; correct?

A. Yes, that is right.

Q. Mr. Martínez, you state--in your Expert

Report, you state: In addition to my public service,

I have more than 10 years of experience in private

practice, principal partner of Sintura-Martínez in

Bogotá, specialized in issues on asset-laundering. In

this capacity, I served as an independent expert.

Are you saying that, as a partner of the

Sintura-Martínez law firm or law office?

A. I don't understand your question, but I can

[Page 1091]

tell you the following, which is that I'm an expert to

be able to give that opinion is the trajectory that I

have had on asset forfeiture issue, money-laundering

prevention, designing risk management and management

of systems to reduce risks or man--systems for risk

management in relation to asset forfeiture and

money-laundering.

Q. Yes, I understand that you're explaining to

me that you are authorized. What I am asking you is

why do you say that you are....

PRESIDENT SACHS: I'm sorry, this is too

quick. Both sides, please.

Your question again?

BY MS. HERRERA:

Q. I understand, Mr. Martínez, that you are

talking to me about what authorizes you to be expert.

What I'm saying is that you submit an opinion as

principal partner of the Sintura-Martínez Office.

Mr. Sintura is representing Corficolombiana. Now, you

tell me that it's an independent opinion, and now you

also believe you are present here as an independent

expert; is that correct? That you are appearing

[Page 1092]

before this Tribunal as an independent expert?

A. I was called before this Tribunal as an

expert witness on behalf of the Claimant.

Q. As an expert witness?

A. Correct, that's what I understood.

Q. Not as an expert?

A. As an expert. I am called expert. I

understand that I attend as an expert in Colombian

law.

Q. In Colombian law, not as a witness of facts?

A. No, I don't know the facts. I have no

personal knowledge of them.

Q. But you told me you're appearing as an

expert witness. So, were you expert of the facts in

the Meritage Case? Do you make references to it? Did

you study the legality control? I imagine that you

have some familiarity with the facts at least in

relation to the legality control.

A. I understand that in order to be a witness,

one must have direct knowledge of certain facts. I

have not had direct knowledge of any of the facts that

are the subject matter of this discussion. The

[Page 1093]

knowledge I have had is mediated by--or is by way of

certain documents, certain information that was

provided to me. And, based on those elements, I

provided an opinion based on my knowledge and

experience in respect to the asset forfeiture.

So, beyond the semantic discussion about

what an expert witness is or if it is an expert, what

I can tell you is that, technically speaking, I am not

a witness to the facts because I am not aware of them.

I didn't sign those agreements, I was not there when

they were negotiated. I don't know what was going on

there. I was given certain documents, and based on

those documents, just like any expert who analyzes the

situation, that has certain elements in respect of

which one can issue an opinion, and that's the basis

of my opinion.

Q. Understood. So, I would assume that you did

come to learn about the Precautionary Measures, their

legal content thereof at least?

A. Yes. The documents that contained the

Precautionary Measure, yes. I am familiar with them.

Q. And here, you say that you appear as an

[Page 1094]

expert witness, independent expert. No matter your

associations with Corficolombiana or the work you've

done with Mr. Sintura.

A. Well, your question--

(Overlapping speakers.)

A. --is whether I'm an expert witness or

independent expert?

Q: No, no, we have already spoken

about that

A: Well, you're asking about independence.

Q. Yes, I'm asking you about independence.

PRESIDENT SACHS: This is very hard for the

Interpreters and the Court Reporters to follow your

dynamic dialogue. I appreciate the Latin American

temperament, but please slow down.

MS. HERRERA: It's compounded by the

Colombian element.

THE WITNESS: So, your concern is about my

independence?

BY MS. HERRERA:

Q. Correct.

A. Well, let's clarify it.

[Page 1095]

At the time when I gave an opinion to

Corficolombiana, and once I assumed a legal position

in that case, I have in one way another lost my

impartiality because I have already taken a position.

Basically, what I'm doing is explaining at

length--and I will explain it in this forum or any

other forum that I might be called before--the legal

basis of my opinion.

Q. Understood. Thank you.

Mr. Martínez, once again referring to your

First Witness Statement, you state at Paragraph 63

that it is my professional opinion is that Newport had

standing as an affected party and should have been

accepted as a procedural subject in the Asset

Forfeiture Proceeding. I understand that it was not,

which was a violation of its procedural rights;

correct?

A. Yes, that's what it says there.

Q. Mr. Martínez, do you know if Newport was

included as an affected party by the Office of the

Attorney General?

A. I understand that it was not, to the point

[Page 1096]

that the pronouncement by the Superior Court of Bogotá

in April of this year did recognize Newport as an

affected party. Now, if Newport had already been

considered affected party, why would there be another

decree or decision recognizing that status?

Q. Thank you.

Could be so kind as to turn to Annex C-24.

And it's Table 6. Volume 1, I'm told. Or Tab 6, not

table.

Yes, it's Volume 1, and it's Number 6. It's

Exhibit C-24.

A. Okay. I'm here.

Q. Thank you.

If you could go to the end of the document

or perhaps you might want to look at the cover page to

see what I'm talking about.

A. Just a second, please.

Q. This is the filing or Requerimiento for

asset forfeiture of 16 April 2017. And it is the 53rd

Prosecutor who issued this.

Excuse me, I'm going to draw your attention

to a part that's at the end of the document. Indeed,

[Page 1097]

it's the last page, it is Page SP-0151.

A. Yes, I see it.

Q. Thank you.

Now, you see at the top of that page, it

says: "Identification and place of notification of

Affected Persons and intervening persons." And the

first--

A. Yes, I see it.

Q. Thanks. The first says Gladys Lucía Sánchez

Barreto in her capacity as legal representative of

Newport, correct?

A: That is correct.

Q: so it seems that it is included there as an

affected party.

A. It appears including in the in the filing

for asset forfeiture. That is true.

Q. Correct. There's two categories, and tell

me if I'm wrong: One is either an affected party or

Intervening Party; correct?

A. Yes.

Q. And the ones who are intervening parties are

the Ministry of Justice and the Office of the

[Page 1098]

Inspector General.

A. Yes.

Q: Hence, the affected party would be

Newport.

A: Yes.

Q. Thank you very much.

Now, you're telling me--so, I understand you

are taken by surprise by this because it's not

consistent with what you said in your statement;

right?

A. No. The thing is, there's a point that

needs to be clarified. When the Prosecutor presents

the filing for asset forfeiture, the Requerimiento,

the Judge has to issue an Order in which he admits

that filing. And once he does so, he should Order

that notice thereof be made to the persons affected.

And once one is given notice, one takes on that

capacity. It's not just because the Office of the

Prosecutor says it here, rather it's because they have

been so notified of that status and they can intervene

in the proceeding or be involved in the proceeding in

that capacity.

[Page 1099]

Now, my understanding is that was not

recognized. And indeed, my understanding is had it

been recognized, why did the Tribunal of Bogotá issue

a notice saying it recognizes it? It--there would be

no need to say I recognize Newport as an affected

party if it's already been recognized in the

proceeding.

Q. Well, it's my understanding that there's two

phases, but my question was whether the Office of the

Prosecutor had included it as an affected party, and

here we established that the answer is yes. So, if

there is an Order, I suppose it's because the Judge,

and you say so yourself can afterwards decide whether

to recognize that status or not.

Now, let's move on to the second point. You

were mentioning the Decision, the Tribunal's Decision,

Court's Decision, in the judicial stage.

Mr. Martínez, when you say that you did not

know and that it had not been included, this--are you

referring to the Decision by the Second Judge?

A. I'm referring to the Chamber for Asset

Forfeiture of the Superior Court of Bogotá.

[Page 1100]

Q. Yes. That was on appeal; right?

A. I understand that it is appealing an Order

in which certain evidence was not taken into account

and recognition was denied.

Q. But are you aware that there was a Decision

by the Second Judge of the Medellín Circuit, in

which--and here if you'd like, you could look at C-57.

A. I'm sorry, which one?

Q. It's at Tab 15.

A. Yes.

Q. Mr. Martínez, were you familiar with this

Decision?

A. Let me take a moment.

Q. Sure.

(Pause.)

A. Yes, it's right here.

Q. Mr. Martínez, could you please go to Page

SP-0059 of that document?

Yes, 59.

A. Okay, I'm there.

Q. Thank you, sir.

You'll see that here there is a question

[Page 1101]

raised by the Second Judge, which is what right,

whether of a real or a pecuniary nature, may be

burdened against NEWPORT S.A. TIN 900313924-9, if as a

first step it is not registered in the real property

recordation documents for the assets to be forfeited?.

Now, a company that appears in the folios of

real estate registry, appears there because it has a

right in rem principal or ancillary; correct?

A. Yes.

Q. And here it doesn't appear.

A: No

Q: And do you know why the Court

concluded--I'm sorry, why the Second Judge

concluded that Newport was not an affected

party?

A. Yes, because it made a mistake.

Q. It made a mistake?

A. Yes. Because the thing is, that the general

rule to be an affected party states one must be the

holder of a Real Property right. Nonetheless,

Article 32 of Law 1708 establishes that a person may

also be an affected party who does not have a Real

[Page 1102]

Property right on the condition that they have a

personal right, which gives them a patrimonial right

over the property affected. Why does this provision

exist?

Now, it's important to clarify this because

it often happened in Colombia that a person would sign

the public document to transferring title,

transferring the right to property. But in Colombia,

the right to property cannot be acquired by merely

signing the public act or the sales Contract. Rather,

it must be entered--that right must be entered in the

registry of the Property Registry. So, until the

right is registered in the Registry, one is not really

the owner.

So, it would often happen in Colombia that

one would sign a contract, the public document would

be granted, and before it's registered, a

Precautionary Measure would come in from the Fiscalía

in an Asset Forfeiture Proceeding, so much so--and

this would make it such that the person would be

unable to obtain the Real Property right. Many people

had suffered serious negative impact because they paid

[Page 1103]

for the property, they signed the Contract but then

they could not actually acquire the property nor would

they admit it in the Asset Forfeiture Proceeding

because they didn't have a Real Property right.

That is why Number 2, Clause 2, of

Article 30 was included, and this situation is similar

to this case because not a Sales Contract but it's a

Trust Contracts

Q. Please, first answer the question and then

you can clarify.

A. But I'm answering your question. You're

asking me why I said they made a mistake, and I'm

telling why the court made the mistake.

Q. You already answered that you believe that

it's because they correspond to patrimonial rights,

correct?

A. Yes, exactly. Personal with pre-patrimonial

content.

Q: Personal with pre-patrimonial

content, right. And nonetheless, if you

look at your First Witness Statement at

Paragraph 44, you say that all affected

[Page 1104]

persons must be given an opportunity to

participate in forfeiture actions. That

is all persons who hold Real Property

rights?

A. Yes.

Q. So, that is the Judge's explanation that

there need to be Real Property rights and they would

be the affected parties. That is feasible, at least

it coincides with your own in that First Opinion?

A. The thing is, that that first phrase must be

understood in context. I am explaining the general

rule, and, as such, I've said it here: The general

rule is that the affected parties are the holders of

the Real Property rights, that is the general rule.

Now, that's not an obstacle to their existing as in

all legal systems' exceptions, and one of the

exceptions is what I just mentioned.

Q. We're talking about Law 1708 of 2014;

correct?

A. Yes.

Q. So, Article 30--and I can let you know where

it is, but I imagine that you know it by heart.

[Page 1105]

A. Mhmm.

Q. So, what is being affected here? Is it a

plot of land?

A. Yes, it is a plot of land .

Q. And if we go to 31 and I read "affected," it

says: (Reading.) "In the case of corporeal assets,

real property or chattels, any natural or legal

person affected that alleges to have a right in rem

over the assets to be subjected to Asset Forfeiture

Action is considered an affected party" Right?

A: That's what it says.

Q: And that was the basis for the Second

judge's decision?

A. Yes clearly, but you need to read the second

paragraph.

Q. Yes. In the case of personal rights or

rights to credit, affected persons are the legal or

natural persons who alleged to have standing to claim

the performance of the corresponding obligation., But

here we're not talking about the forfeiture of

personal rights but of personal rights are not

extinguished; rather, in rem rights.

[Page 1106]

A. Yes. What the rule says--what the law says

that a person who is not the holder of a right in rem,

but of a personal right, may appear as an affected

party as long as they have a personal right to have

that Real Property right transferred, and this is what

happens here. There is a Trust Contract, and

Corficolombiana, as the administrator and the

spokesperson of an autonomous asset, has the

obligation to transfer the ownership of the asset to

Newport if certain conditions are met. One of those

conditions is for the Project not to be carried out.

And these are not my words; these are the Superior

Tribunal of Bogotá's words. This is why it recognized

it as affected party.

Q. And if we go back to 30, it says affected

parties, and here we include any natural or juridical

person that is, is the holder of the assets that is

the subject matter of the action. So here, once

again, we're talking about the Lot, and I understand

that you do not agree with the Second Judge, but there

is a basis here.

A. I differ from the opinion of the Second

[Page 1107]

Judge because I think he was wrong.

Q. He was wrong? According to you. But

according to that there is a basis.

A. If you tell me, in my opinion, the mistake

by the Second Judge is not a reasonable, a plausible

mistake because, if he had applied the second

paragraph, he would have realized they had the right.

It had to do with a literal interpretation of the law.

They did not need to consult the spirit of the

decision-maker nor the case law, it is part of the

rule.

Q. So, it is necessary to read the law in its

literal terms, and at that moment it was the lot--it

was perfectly plausible -that was the asset.

A. Of course, the question you must ask is

whether Newport has some right for the property to be

assigned to it at some point in time, and the answer

would have been yes, that is in the Trust Contract.

Therefore, it is an affected party.

Q. Yes, but in the future--so, this the way it

could be interpreted.

A. Yes, and look at what it says here, it says:

[Page 1108]

"To claim for the compliance of the obligation." The

rule itself is saying it is towards the future.

Q. So we are in agreement: it is not at the

present when we have the asset is the lot.

A. Right.

Q. Mr. Martínez, here we were--you speak about

the SARLAFT --and, you're a specialist in

money-laundering, you know this topic. Let me present

a hypothesis to you. Let's assume that Rodríguez

Orejuela, the Mexican, a former drug-dealer, who is

dead, from the Medellín Cartel, obtains a property,

and he doesn't want to have it under his name.

A. Correct.

Q. So, he uses the name of a third party that

is not the actual owner. It would be his frontman.

Let's call it frontman X. And I imagine that you

have seen several instances in which that frontman

transfers it to another frontman; correct? Let's say

Y. Yes?

A. Yes, please go ahead.

Q. And if that frontman, Y, the one that we

call Y, asks the Office of the Attorney General,

[Page 1109]

please--let's say that there is a petition that is

presented, tell me if there is a criminal proceeding

against frontman X, and the Office of the Attorney

General says no, and all of this is just done to

appear to be acting in good faith. Do you think that

that is not an abuse of the request for information?

A. You're asking me about the right of

petition, if that is an abuse of the right of

petition??

Q. No. I'm asking you about the right that ,

specifically you say in your statement, 1, at 48,

you're refer to the fact that Corficolombiana sent as

part of the due diligence a request for information to

the Office of the Attorney General, and you're saying

that this is also an extraordinary situation that

really shows the good faith of the buyer of Newport

and the Fiduciary, and my question is: The fact that

I present a Request for Information to the

Prosecutor's Office in connection with a list of

individuals, does that really show in full the good

faith of a person?

A. The answer is the following, and that is:

[Page 1110]

If your question is, whether the only--the fact that

there is a request for information to the Office of

the Attorney General, and if that is a condition to

prove good faith, the answer is "no." If the question

is whether that consultation with the Office of the

Attorney General together with other positive acts

that fall within the requirements of due diligence

under the law, I would say "yes." It shows that the

person is acting in good faith because he or she is

going beyond the standard. The person is requesting

A, B, C, and the person did A, B, C, and D, but on top

of that also requested information of the Office of

the Attorney General.

Q. Yes, but I'm saying that you are very

emphatic when you're saying that that request shows

the good faith of Newport. I am just referring to you

back to what you said.

A. Yes, but--because before I also clarified

that all of the other obligations were exhausted.

Q. I am just referring--I am repeating your

words that this is undoubtedly proven. Mr. Martínez,

I imagine, as other Colombians, you must have heard

[Page 1111]

about the scandals with the Rodríguez Orejuela who

went and presented requests for information to a

Prosecutor's Office regarding whether there were

criminal proceedings against them, and in that unit

they were told "not in this unit," and--then they used

that to be able to go all over the country without

being detained by the police. Do you recall that?

A. I do not recall that specific situation. I

know that criminals resorted to several tactics, that

could have been one.

Now, if you're asking me if I remember

specific instance of that, I'm saying no.

Q. And if I tell you that this happened in

early Nineties, does that seem feasible?

A. It wouldn't seem strange or unusual.

Q. And more specifically in '92-'94?

A. No, I wouldn't say that it is unusual.

Q. And that was when Mr. Sintura was the Deputy

Attorney General of the nation; correct?

A. How is that related? I do not see the

relationship.

Q. I asked you a question. Please Answer.

[Page 1112]

A. What is your question?

Q. I asked you whether in '92 to '94,

Mr. Sintura was the Assistant Attorney General.

A. I understand that that must have been when

he took office. The exact dates in which he took

office and resigned I do not know.

Q. Thank you. Mr. Martínez, would you please

look at Tab 25, C-31.

A. I'm looking at it.

Q. Thank you.

This is the Request for Information

presented by Francisco José Sintura to the Office of

the Attorney General. And here it says "Sintura

Abogados Consultores". Do you see that?

A. Yes. Yes.

Q. This is a request for information. Right to

petition for information.

And then would you please look at Page

C-031bis.

A. Yes.

Q. SP-002, second paragraph, it says: "In the

exercise of the right to petition for information and

[Page 1113]

1 in fulfilment of high standards of prevention, the

2 company seeks to know information incorporated in the

3 Unit's systems that could identify whether there are

4 actions underway against the real properties or their

5 current or former owners. In accordance with Article

6 74 of the Constitution, Law 57 of 1985, and Article 18

7 of Law 906 of 2004 there is no reserve set by law on

8 said information."

9 And then you see a list of individuals. You

10 see a list of persons.

11 A. Yes.

12 Q. Could you please tell me, in this document

13 you are being asked about a number of people. You were

14 aware of this request. Correct?

15 A. Yes.

16 Q. Aha. And he was not here,--you know who Mr.

17 López Vanegas is. Correct?

18 A. Yes, I do.

19 Q. And here he was not included; correct?

20 A. No, he was not listed, no.

21 Q. But the idea was to cover the current and

22 former owners; correct?

[Page 1114]

1 A. Yes.

2 Q. So, we could say that this was not complete,

3 the list was not complete.

4 A. I think that it is important a

5 clarification, if you allow me. May I?

6 Q. Yes.

7 A. In Colombia, we do not have a unified

8 Registry of legal representatives, shareholders or

9 final beneficiaries or controlling Parties for the

10 companies, so when a company is carrying out due

11 diligence in connection with Real Property, they only

12 have the certificate issued by the Registry Office

13 where they see the holders of the property right. If

14 in the ownership transfer history of the property

15 there is a legal person, a company, establishing who

16 was the legal representative when that transaction

17 took place is the issue. Because I can go to, first,

18 that certificate doesn't tell me who the

19 representative was. I have the name of the Company,

20 so I need to go to the proper Chamber of Commerce. We

21 have several in Colombia, and I need to request a

22 certificate of existence and legal representation-of

[Page 1115]

1 that company.

2 So, they do have that certificate of

3 existence and representation, but it is up to date, so

4 I see who the legal representative is today.

5 So, if I want to know who the legal

6 representative was back then, I would have two ways.

7 I would first have to request a Chamber of Commerce to

8 provide the historical data on all of the Company

9 legal representatives. And in the case of some

10 Chambers of Commerce, that is an option, but it is

11 more difficult in the case of others.

12 If the Chamber of Commerce provides the

13 information, I say okay, now I can--I know who the

14 legal representative was back then. But if the

15 Chamber of Commerce does not have that information,

16 the only way I can do that is by looking at the act of

17 incorporation and the changes to that Act of

18 Incorporation to try to see--to try to go to the

19 notary offices that recorded that and ask for a copy

20 of the deeds to see who the legal representative would

21 be.

22 So, that's the reason why in my presentation

[Page 1116]

1 I referred to the due diligence that we need to carry

2 out in connection with the client and the other Party

3 and also the due diligence in connection with the

4 other individuals that are included in the chain of

5 title, and so sometimes it is exaggerated if we have

6 it that way.

7 Q. Thank you very much.

8 A. And for that reason, I understand that for

9 that reason as part of this Request for Information,

10 information is being requested in connection with

11 individuals that are currently included as registered,

12 but to go beyond this would have been--and I

13 apologize--an absurd standard because it would have

14 entailed to use excessive resources that are not

15 demanded by the law.

16 Q. So, according to the standard, it is just 10

17 years.

18 A. 10 years of what?

19 Q. 10 years. 10 years of going back?

20 A. I never said 10 years.

21 Q. But I understand--I'm telling you--do you

22 know what is the basis for this list?

[Page 1117]

1 A. No, please let me know.

2 Q. I'm sorry, what?

3 A. What is the basis? You're going to tell me.

4 Q. No, I thought that you knew--

5 (Overlapping speakers.)

6 Q. --since you had studied this. Since you had

7 studied the due diligence carried out and you issued

8 an opinion, I imagine that you saw the study by Otero

9 Palacio?

10 A. No, but we're talking about Otero Palacio.

11 Let me tell you where that is. You're confusing me

12 because you're asking about a document, you're citing

13 a different one.

14 Q: No, I can imagine, you do not know these

15 documents..

16 PRESIDENT SACHS: Once again, this is

17 impossible. Please slow down.

18 And can we get back to the case at hand?

19 So, we have seen documents--to be more precise, we

20 have seen documents, for example, the deed in 1994.

21 It shows that Mr. López acted as the legal

22 representative of that company. It also appears from

[Page 1118]

1 those documents that apparently it was the general

2 partner in the Company that was at the time

3 titleholder of the property in question, Sierralta

4 López y Cia. together with Sebastian López Betancourt.

5 So, all of this is in the record. Could we

6 start from there, please.

7 MS. HERRERA: Thank you, Mr. President.

8 BY MS. HERRERA:

9 Q. Mr. Martínez, as it was said the deed

10 showed Sierralta López y Cia.

11 .... A: In what deed is that reference?

12 Q: Specifically in deed 1554.

13 A. And what year are you referring to?

14 Q. 1554. That is the deed of 1994.

15 A. That is--let's see if I can understand you.

16 So, you're saying that they did not look for

17 a deed of 1994 to determine who signed that deed. Is

18 that your reproachment?

19 Q. Am I talking to you about any sort of

20 reproach? I'm asking you whether the name is there or

21 not.

22 A. And I'm telling you it does not appear

[Page 1119]

1 there, and according to my opinions in spite of the

2 fact that it's not there, it does not undermine the

3 good faith because the standard is not perfection.

4 The standard is to show caution, to be careful

5 reasonably.

6 And also to look for a document of 1997 to

7 see who the legal representative was and to request

8 information to the Office of the Attorney General, and

9 there is no law requesting that is unreasonable in

10 Colombia and anywhere in the world.

11 Q. And --do you think it unreasonable to look

12 for the company Sierralta-

13 A. Clearly, they didn't need to conduct

14 enhanced due diligence in connection with Sierralta.

15 Sierralta was not a party. They were not clients.

16 They were just mentioned in the chain of title.

17 And I have indicated that, in connection

18 with the chain of title, we need to only find the

19 general information that we can find in that way.

20 Q. Please tell me something, Mr. Martínez. When

21 a request for information is submitted to the Office

22 of the Attorney General regarding a list of

[Page 1120]

1 individuals, please tell me if the individuals and

2 companies, does this mean that the Attorney General's

3 Office will only answer as regards these specific

4 persons and these specific names?

5 A. Yes. The answer is circumscribed by the

6 request

7 Q. So the Office of the Attorney General

8 doesn't have to carry out a corporate study?

9 A. No, not at all.

10 Q. Thank you. Just a second, please. May I

11 refer you now to Tab 9, and let me tell you the

12 binders that is in No. 1, Binder No. 1.

13 A. Did you say nine?

14 Q. Yes. Correct.

15 This is C-33bis.

16 A. Yes, I have it here in front of me.

17 Q. Thank you very much.

18 Would you please look, and just to offer

19 some context, this is an answer by Corficolombiana to

20 a request for information from Mr. Angel Samuel Seda,

21 dated July 26, 2017. Do you see it on top?

22 A. Yes, I do.

[Page 1121]

1 Q. Would you be so kind as to look at SP-0004,

2 almost towards the end. The second-to-last page.

3 A. Yes.

4 Q. And after the numbers that go up to 10, you

5 see a paragraph, "as it can be seen" and the next

6 paragraph says, "in the particular case of the

7 establishment of the trusts related to the Meritage

8 Project, it is important to note that it was not

9 Fiduciaria but the Trustor Newport which directly

10 negotiated the acquisition of the project plots with

11 the Company La Palma Argentina S.A.S. without

12 intervention of the Fiduciary in said pre-contractual

13 stage. Nor must we lose sight that according to

14 Decree 1023 of 2012, an external circular letter,

15 304-000001 of 19 February 2014 of the Superintendence

16 of Companies, Non financial companies operating in

17 Colombia are required to design and implement an

18 adequate internal system of self control and risk

19 management LA-FT, that includes but it is not limited

20 to, and this is important, that is to say, includes

21 but is not limited to due diligence and the knowledge

22 of customers or counterparts".

[Page 1122]

1 Newport is a non-financial company; correct?

2 A. Yes.

3 Q. But it is compelled to implement a system,

4 and here it says, or at least in the opinion of

5 Corficolombiana--

6 A. In a wrong opinion by Corficolombiana. It is

7 not obliged to do so.

8 Q. So, Corficolombiana was also wrong in that.

9 A. Well, if you're asking me for my expert

10 opinion, my expert opinion is that they were wrong,

11 and I can explain why, is that okay?

12 Q. I think that you already explained before.

13 A. If the Tribunal deems it adequate--

14 PRESIDENT SACHS: Why do you think it is

15 wrong that non-financial companies operating in

16 Colombia are required to design and implement an

17 internal system of "control management and risk

18 management, LA-FT" which includes but is not limited

19 to "due diligence and the knowledge of customers or

20 counterparts." Why do you think precisely that this

21 is wrong?

22 THE WITNESS: Not all of the corporations in

[Page 1123]

1 Colombia are compelled to have a money-laundering

2 prevention mechanism. Only some that meet two

3 requirements, the first one that they need to have the

4 oversight of the Superintendency of Corporations, and

5 the second requirement is that by 2013--that is to say

6 the previous year--they had revenue equal or higher

7 than 160,000 minimum salaries that, as I estimated,

8 would be about $41 million at current value.

9 In my opinion, based on my information,

10 Newport did not have that level of revenue, and they

11 did not have the oversight of the Superintendency of

12 Corporations. Therefore, this Circular did not apply

13 to Newport.

14 PRESIDENT SACHS: That was an explanation

15 that was clear, whether it's correct, we will see.

16 Please proceed.

17 BY MS. HERRERA

18 Q. Mr. Martínez, would you be so kind as to now

19 go to Tab 10, C-34bis.

20 A. Yes.

21 Q. This is--and I don't know if you have seen

22 this before, but let me tell you for your benefit,

[Page 1124]

1 this is a Presales Trust Agreement, Meritage Trust

2 Agreement, signed between Newport S.A.S. and

3 Corficolombiana S.A., which is on the first page.

4 Would you be so kind to go to Page 0012.

5 A. Yes.

6 Q. At Clause 11, it says "obligations of the

7 Trustor or rights of the Trustee.

8 Who is the trustor here?

9 A. I understand it is Newport.

10 Q. Thank you.

11 And if we read Subparagraph (d), it says to

12 comply with prevention rules that relate to the

13 laundering of assets for which the Trustor agrees to

14 update the information requested by the Trustee upon

15 request by the latter, and in any case at least once a

16 year.

17 And at (e) we read: To submit to the

18 Trustee within a term not to exceed 30 calendar days,

19 the "know your client" form duly filled out by each

20 one of the buying investors with their requisite

21 supporting documents so that the Trustee may carry out

22 the corresponding review, validation and analysis and

[Page 1125]

1 verification of the information provided and going

2 through the process of knowing the client by the

3 Fiduciaria. Is that correct?

4 A. That's what it says.

5 Q. So, that means that there are some

6 obligations?

7 A. Yes there are several obligations

8 Q. There are several obligations but I'm asking

9 you in connection with information and

10 money-laundering.

11 Who is in charge of the know the client?

12 Newport or Corficolombiana? I'm talking about knowing

13 the client of the other Party; right? La Palma,

14 Newport or Corficolombiana?

15 A. Whose client, ma'am?

16 Q. I'm asking in connection with this promise

17 to purchase, between Newport and La Palma. Who has to

18 do the due diligence on the other Party? That is to

19 say on the other contracting party.

20 A. Let's clarify a number of things. I think

21 your question is a little bit confusing. I'm going to

22 try and respond to your question.

[Page 1126]

1 We have a number of Parties in this

2 Agreement. So, we need to see who is the counterpart

3 of whom. Here, we have a contract linking two

4 parties: Corficolombiana and Newport. In accordance

5 with this Agreement, a fiduciary, Corficolombiana, has

6 a client, Newport. Who must do the client's due

7 diligence? Well, I'd say Corficolombiana has to do

8 the due diligence.

9 It has to do the due diligence in connection

10 with Newport because Newport is its client.

11 Now, if you're saying that there is a sales

12 agreement between Newport and La Palma--right?--that's

13 what you said.

14 We have to clarify something that's

15 important. One thing, is a promise to purchase

16 agreement and a different thing is a purchase

17 agreement. In the promise to purchase agreement, what

18 the Parties undertake to do is to sign or execute a

19 sales agreement in the future. The promise to

20 purchase agreement does not give any right to the

21 Parties to claim any in rem right over an asset. I

22 cannot demand for them to transfer the property or

[Page 1127]

1 just please sign the Contract.

2 Q. In the future. I understand the promise to

3 purchase agreement and the Purchase and Sale

4 Agreement.

5 A. Yeah, but I don't know if the Tribunal knows

6 about this.

7 Q. I think that they must know about it, but

8 I'm in the hands of the Tribunal.

9 PRESIDENT SACHS: Yes, we know it, we know it.

10 A. So, given the nature of this Contract,

11 Newport is a non-obligated subject; right? So,

12 Newport has no due diligence obligation at the time

13 because it is signing a promise to sell Contract. La

14 Palma is undertaking to later on in the future to

15 execute a Purchase and Sale Agreement with the final

16 holder of the property right. For this purpose, it

17 was Corficolombiana. It was a financial institution

18 that is supervised and it has the obligation to

19 conduct a due diligence as it did, indeed.

20 Q. Thank you, Mr. Martínez.

21 Supervised entities by the Superintendence

22 of Companies, don't they have to have some kind of

[Page 1128]

1 system for money-laundering?

2 A. Well, that depends on whether they meet the

3 requirements in the circular letter.

4 Q. Circular letter 304, says that supervised

5 companies by the Superintendency are not excluded from

6 the provision of the circular letter. Those that are

7 excluded from that one, they have to--they have to

8 abide by the applications of another circular letter.

9 MR. SOTO: Mr. President, do we have a

10 document you can show the Witness? We're just saying

11 a number to him.

12 PRESIDENT SACHS: What would be the other

13 document you were referring to, Ms. Herrera?

14 MS. HERRERA: Actually, I was referring to

15 the opinion with which you engaged with of Mr. Reyes.

16 MR. SOTO: Could you please direct him

17 somewhere? He's hearing a long string of numbers and

18 no documents.

19 BY MS. HERRERA:

20 Q. Can we please put it on the screen.

21 PRESIDENT SACHS: We had come before, the

22 requirements were stated by the Expert, and now you

[Page 1129]

1 seem to refer--I have an echo. You seem to refer to

2 another circular.

3 MS. HERRERA: Yes, that was referred to by

4 Mr. Reyes in his Report.

5 I should show it?

6 PRESIDENT SACHS: Well, if you intend to

7 pose a question, then yes, show it.

8 BY MS. HERRERA:

9 Q. Do you see it? I think it's being shown on

10 the screen.

11 A. No, I can't see anything.

12 Q. You know Mr. Reyes's Expert Report; correct?

13 A. Yes, I read it.

14 Q. Okay, thank you.

15 I'm making reference to the top paragraph,

16 and the reference made to a second circular, and the

17 provision--and I can't see the document, I'm sorry.

18 It says the external circular letter, and we saw that

19 it made reference to the response letter by

20 Corficolombiana, and it looks at the entity supervised

21 by the company's Superintendency that are not included

22 in this circular must abided by the provisions of

[Page 1130]

1 circular letter 100-004 of 2009. So, I understand--

2 and correct me if I'm wrong, that the ones that remain

3 - the ones that are not included are those that meet

4 the requirements that you just told us about minimum

5 wage numbers. Correct?

6 A. Yes, but this one, 100-004, doesn't really

7 impose the obligation of adopting systems for managing

8 and administering risks in connection with

9 money-laundering and financing of terrorism.

10 Q. And there are no recommendations or steps?

11 MR. SOTO: They're asking him a question

12 about Dr. Reyes' Expert Report, where he makes

13 reference to a document that I don't believe is an

14 exhibit. And as I, on a quick check, don't believe

15 that Dr. Martínez, in his report, made any reference

16 to Circular 100-004 of 2009. So, he's an expert and

17 he can certainly opine on the subject, but it would be

18 great if we could show him a document so that he can

19 see what he's being asked about, given that he did not

20 actually speak about this particular circular in his

21 Report.

22 MS. HERRERA: Thank you, counsel. I'm

[Page 1131]

1 referring to it because Mr. Martínez said there were

2 some exclusions. - but let see if we have it

3 Ah, one minute. It seems it is in the

4 record,

5 BY MS. HERRERA:

6 Q. Do you recognize the circular letter?

7 A. Can I look at the document, please? Where

8 is the document?

9 PRESIDENT SACHS: Can we also see it in

10 English.

11 THE WITNESS: I would like to manipulate it.

12 I would like to see it.

13 PRESIDENT SACHS: Thank you.

14 MS. HERRERA: Would it be possible to take a

15 break to bring the paper copies and then we can

16 continue?

17 PRESIDENT SACHS: We don't need paper

18 copies. We can look at it.

19 MS. HERRERA: But the expert asked for it.

20 PRESIDENT SACHS: Ah.

21 THE WITNESS: I rather look at the document

22 physically in hard copy.

[Page 1132]

1 PRESIDENT SACHS: No problem, but maybe

2 somebody of your team could copy it.

3 MS. HERRERA: They're doing it, but just

4 (inaudible).

5 PRESIDENT SACHS: You will move to another

6 subject, then.

7 MS. HERRERA: Yes.

8 BY MS. HERRERA:

9 Q. Sir, you were explaining to us that there

10 was an important change, and that now the control of

11 the Precautionary Measures, the legality control

12 happens later, and it is done -by the Courts, correct?

13 And you said that this was positive, at least that's

14 what you say in your testimony.

15 A. Well, yes. In my presentation, I made

16 reference to the fact that Law 1708 enhanced the

17 standard of protection in connection with a good-faith

18 third party. So, I don't think I said anything in

19 connection with the legality control.

20 Q. But in your opinion, you do mention this--

21 (Overlapping speakers.)

22 A. Are you making reference to my original

[Page 1133]

1 Report?

2 Q. Your original Report.

3 A. Oh, okay.

4 Q. Sir, who can ask for illegality control when

5 Precautionary Measures are imposed?

6 A. The persons that have been affected by the

7 Precautionary Measures.

8 Q. And you say that Newport was affected by the

9 Precautionary Measures?

10 A. Yes, that's right.

11 Q. Do you know if Newport asked for a legality

12 oversight?

13 A. I understand it didn't.

14 Q. Why do you think that was like that?

15 A. I don't know.

16 Q. Okay. You don't know.

17 Only Corficolombiana has submitted one;

18 right?

19 A. Yes.

20 Q. Corficolombiana--

21 PRESIDENT SACHS: Excuse me, excuse me. Not

22 too fast, please.

[Page 1134]

1 BY MS. HERRERA:

2 Q. Corficolombiana did ask for a legality

3 control , and your Expert Opinion was included there?

4 A. Well, I don't know the whole file. I don't

5 know if that was the only one.

6 Q. I will represent to you that Corficolombiana

7 is the only one that did it. I ask you:

8 Corficolombiana, is it the spokesperson of the Trust

9 of the Meritage Lot ?

10 A. Yes. I understand that the Trustee is

11 Corficolombiana.

12 Q. So, Corficolombiana has to defend that

13 asset.

14 A. Yes, that's right.

15 Q. Thank you. And in that legality

16 oversight--and I represent to you because I know you

17 don't know this, but you don't know the file from A to

18 Z, but I just represent to you--that Newport did not

19 submit an legality control request but Corficolombiana

20 did so.

21 In that request, did Corficolombiana say

22 that what should have been done, and this is in line

[Page 1135]

1 with what you said, was to have the fiduciary right

2 seized?

3 A. Yes. That's right. That's what I recall.

4 Q. Can you show me where? You have the

5 document there.

6 This is Tab 16.

7 A. Yes, this is right here behind 16. Do you

8 want me to look at mine?

9 Q. Well, I was talking about Corficolombiana's.

10 A. Here what I have behind 16 is a document.

11 Q. Well, let us refer to your opinion. Do you

12 see--you say here that the measures should have not

13 been imposed on the Lot but on the fiduciary rights.

14 That's your opinion. Do you say that here?

15 A. I do not recall saying that here.

16 Q. But in this Arbitration that's your opinion;

17 right?

18 A. Yes.

19 Q. At that point in time, you didn't think of

20 that.

21 A. At that point in time that was not the

22 question. The question was whether the due diligence

[Page 1136]

1 was good or not.

2 Q. Yes, but you didn't analyze the particular

3 case of the Precautionary Measures.

4 A. I wasn't asked to opine on Precautionary

5 Measures. The opinion that Corficolombiana asked me

6 to provide had to do with the legal situation and the

7 risk of asset forfeiture.

8 Q. You said that this opinion was asked in

9 connection with illegality control of the

10 Precautionary Measures.

11 A. I never said that I was asked to issue an

12 opinion in connection with the legality control.

13 Corficolombiana asked that I provide an opinion where

14 they wanted to know impartially and precisely to

15 understand what risks they were running. They didn't

16 say bring an opinion so that we could attach it to the

17 legality.

18 Q. At Paragraph 10 of your First Expert Witness

19 Report, you say that you have been in this capacity as

20 an experts in matters of asset forfeiture and

21 money-laundering. In fact, Corficolombiana engaged me

22 to present an independent expert report on asset

[Page 1137]

1 forfeiture laws as part of the control of the legality

2 process of the Precautionary Measures of Meritage

3 Projects Lot. That's what you say.

4 A. Yes, what they understand and what they're

5 trying to understand is their legal status to assess

6 their legal options. If later on Corficolombiana

7 considered that some or parts of my opinion could help

8 in connection with the legality control , well, that's

9 fine. That's why they included that in there.

10 Q. Tab 11, please.

11 That's in the second binder.

12 A. Yes. I see it. It's right here.

13 Q. Okay, thank you.

14 In this document, Corficolombiana--and this

15 was prepared specifically by Mr. Francisco José

16 Sintura Varela as the attorney for Corficolombiana,

17 well, in this document, is there any kind of

18 representation in the sense that the measure that

19 should have been adopted was not an attachment measure

20 on the Lot but rather on the fiduciary rights?

21 A. In my understanding, no.

22 Q. So, it wasn't so obvious that that is what

[Page 1138]

1 the rule should be.

2 A. What do you mean that it should be obvious?

3 Q. In your opinion, sir, you say that what

4 should have been done is to attach the fiduciary

5 rights and not the Lot.

6 A. Of course. And let me explain why.

7 Article 112 of the Asset Forfeiture Law says

8 that measures need to be reasonable, necessary, and

9 proportional. In connection with proportionality, the

10 Attorney General's Office has to assess the impact

11 that the Precautionary Measures should have with

12 respect to third parties.

13 I think, here we had more than 100 people

14 that had invested their savings in this project. This

15 was known, as far as I know, by the Attorney General's

16 Office. The Attorney General's Office should have

17 assessed the impact of imposing a Precautionary

18 Measure on the Lot and the suspension of the

19 implementation of the Project, and to have deprived

20 the Investors of the possibility of having the right

21 that they were acquiring.

22 Additionally, something else that has to be

[Page 1139]

1 born in mind is that the fiduciary wouldn't have been

2 affected by the attachment of the fiduciary rights.

3 That is simply a legal measure, and the Attorney

4 General's Office orders the fiduciary to carry out the

5 Project and the Contract and to maintain the

6 situation. And the idea was for the fiduciary to keep

7 the profits and transfer them to the assets

8 administrator.

9 Q. Thank you, sir.

10 Your Expert Opinion, you're referring to the

11 elements that you talked about, reasonable. That is to

12 say that are elements of judgment only based on the

13 evidence gathered that would lead us to think that the

14 affected property is the subject of some asset

15 forfeiture cause, also necessary that the

16 Precautionary Measure is the only measure in order to

17 avoid that the pursued asset isn't lost, hidden,

18 transferred, destroyed, devalued, or, in general, put

19 outside the scope of profit, and, finally,

20 proportional...

21 PRESIDENT SACHS: We soon need a break.

22 MS. HERRERA: I'm almost done. That's my

[Page 1140]

1 last point.

2 BY MS. HERRERA:

3 Q. It's proportional, which means that the

4 order for Precautionary Measure does not cause any

5 harm to third parties that could be affected.

6 Where are these definitions? You do not

7 indicate that these definitions are in the Asset

8 Forfeiture Law?

9 A. They are not in the definitions of the Asset

10 Forfeiture Law. That they can be inferred from a

11 number of cases from the Constitutional Court. You

12 can look at C-357 of 2019. The Court refers to

13 proportionality, necessity and reasonableness.

14 Q. So, when you issue an opinion, you do not

15 cite your sources?

16 A. Yes. I usually do.

17 Q. But you didn't do it here.

18 A. Well, I don't have any problem in making

19 adjustments to my opinion in that regard, to my Expert

20 Witness Statement.

21 Q. Thank you very much. I have no further

22 questions.

[Page 1141]

1 PRESIDENT SACHS: Thank you.

2 We will have a break now. We will resume at

3 3:35.

4 And, Mr. Martínez, you are still under

5 testimony, witness testimony, so do not talk to

6 anybody during the break about the case. Thank you.

7 (Recess.)

8 PRESIDENT SACHS: Okay. Will there be

9 redirect?

10 MR. SOTO: Thank you, Mr. President. We

11 have only a couple of questions if that's okay?

12 PRESIDENT SACHS: Please go ahead.

13 MR. SOTO: Thank you.

14 REDIRECT EXAMINATION

15 BY MR. SOTO:

16 Q. Dr. Martínez, earlier today, you were asked

17 about prior court rulings that denied Newport

18 affected-party status, and I believe they were

19 referring to the Antioquia Court's Decision of

20 June 2019 on asset forfeiture. Do you recall that,

21 sir?

22 A. Yes, I do remember.

[Page 1142]

1 Q. And, Dr. Martínez, I think you testified

2 today that you believe that court got it wrong on the

3 issue of affected-party status; isn't that right, sir?

4 Do you recall that testimony?

5 A. That is what I said.

6 Q. Dr. Martínez, are you aware, sir, of a more

7 recent court decision regarding this status and, if

8 so, do you know, sir, what that court determined?

9 A. Yes. In my statement I made reference

10 to--in my statement, I made reference to a recent

11 decision from April of this year by the Chamber for

12 Asset Forfeiture of the Superior Tribunal of Bogotá

13 that was shared with me, and, on reading it, I

14 understand that there, the Tribunal had recognized

15 Newport as an affected party.

16 Q. So, just to confirm, Dr. Martínez, when you

17 testified earlier today that you thought the Court got

18 it wrong, in your analysis of that April 22nd

19 Decision, is that the same conclusion that the

20 Appellate Court reached, sir?

21 A. Yes, that is to say, in the arguments that I

22 put forward, where they coincide in large measure,

[Page 1143]

1 which work was presented to the Court in this case.

2 Q. Counsel for Colombia also asked you about a

3 particular document, and maybe I'll ask my colleague

4 if he could pull up the exhibit.

5 MR. SCHIMPER: We need the screen back, Mr.

6 Soto.

7 MR. SOTO: I apologize. If I could ask the

8 Centre for some help activating the projection

9 screens.

10 BY MR. SOTO:

11 Q. Dr. Martínez, I apologize for the

12 interruption.

13 There was a--you were asked earlier today

14 about this document. For the record, Exhibit

15 C-034bis. Do you recall those questions, sir?

16 A. Yes, I slightly remember them

17 Q. Dr. Martínez, let me--I think there may have

18 been a little bit of confusion around this issue. So

19 let me ask you one or two questions to see if we can...

20 Dr. Martínez, I apologize. I think we had a

21 bit of a technical translation issue. I'll just ask

22 very simply, do you recall that you were asked about

[Page 1144]

1 this document, sir?

2 A. Yes, I do.

3 Q. And, Dr. Martínez, I think there was a

4 little bit of confusion around this document, what it

5 was and the clause that you were shown, so I'm hoping

6 we can clarify that a little bit.

7 This document that you have in front of you

8 is titled "PRESALES TRUST AGREEMENT," and I believe

9 you also see the Spanish version on the screen; is

10 that right, sir?

11 A. Which tab?

12 Q. I don't have the tab number. It's C-34.

13 MS. HERRERA: 10.

14 MR. SOTO: Thank you.

15 THE WITNESS: Yes, I have it right here.

16 Q. Dr. Martínez, prior to this afternoon's

17 testimony, had you reviewed this particular Trust

18 Agreement, sir?

19 A. I did.

20 (Overlapping speakers.)

21 Q. I apologize, Doctor. Do you have something

22 else to say?

[Page 1145]

1 A. No.

2 Yes, I did read it.

3 Q. When it says "pre-sales," does this refer to

4 units, apartment sales, or something else? Do you

5 know, sir?

6 A. Yes. I understand that it makes reference

7 to the Trust that was created to receive the funds

8 paid by the Unit buyers.

9 Q. And, Dr. Martínez, if I may, I'd like to

10 take you to Page 12 of the document, which is the--and

11 the particular clause is (e), which I believe counsel

12 for Colombia asked you about.

13 Do you see the clause in front of you, sir?

14 A. Of course I do.

15 Q. Dr. Martínez, with this context that you

16 just provided that this relates to money being

17 received from the Unit buyers--I believe you just said

18 that--can you please help us understand what the

19 diligence obligation reflected in Clause (e) refers

20 to, sir?

21 A. When this question came up, I mentioned that

22 one would have to clarify whose client it was because,

[Page 1146]

1 clearly, this tells us about a relationship which is

2 not the relationship between Newport and the Fiduciary

3 but, rather, between the Trust and the Investors, the

4 people who are going to turn over funds in order to

5 purchase areas.

6 So, what is being said here is that the

7 Trustor must send to the Fiduciary within maximum 30

8 days a know-your-client form to be filled out.

9 Now, what do I make of this? Well,

10 normally, in real-estate projects, there is a sales

11 room, the person who is interested goes there,

12 expresses their interest in buying a given property.

13 Normally, that sales room is directed by the

14 commercial area of the Project Manager, the person who

15 structured the project, the builder; it all depends on

16 who is behind it all, and the person who is there

17 states their interest and usually needs to fill out

18 paperwork in order to develop a link to the project,

19 and part of that is filling out the know-your-client

20 form.

21 This know-your-client form is a form that is

22 a standard form provided by the Fiduciary, which is

[Page 1147]

1 basically following the guidelines of the Legal Basic

2 Circular Letter, in which you have know your client in

3 order to be able to pick up any money-laundering. So

4 the person who has to fill out this form and the

5 Trustor in this case, the person who's in the sales

6 room receiving all this, must forward it to the

7 Fiduciary; and the Fiduciary, based on that

8 information that it receives and which is contained in

9 the forms, undertakes a process of diligence to take

10 stock of all these person, mindful that--in order to

11 avoid a person who tied up in illegal activities

12 becoming an investor in the project.

13 Q. That's a long answer, so let me make sure I

14 got the gist of it.

15 So, a potential Unit Buyer completes a form,

16 and then it's the responsibility of the sales team to

17 get that form out to the Fiduciary. Is that roughly

18 what you've explained, sir?

19 A. That's how it works.

20 Q. Thank you, Dr. Martínez.

21 MR. SOTO: Mr. President, we've got nothing

22 further.

[Page 1148]

1 PRESIDENT SACHS: Thank you.

2 QUESTIONS FROM THE TRIBUNAL

3 ARBITRATOR PEREZCANO: Thank you,

4 Mr. President, and thank you, Mr. Martínez.

5 I'd ask if you could help me understand a

6 few things relating to the standard of diligence that

7 we've been discussing today and this week. In your

8 statement, the first one at Paragraph 33, you refer to

9 a decision by the Constitutional Court. I suppose

10 it's a judgment in which it speaks of the concept of

11 good faith, and good faith exempt of fault, and the

12 Court describes it as good faith with superior

13 consequences or effects, and it says that, for that

14 reason it is called "qualified." Correct?

15 THE WITNESS: Correct, that is right, sir.

16 ARBITRATOR PEREZCANO: Further on, the

17 Constitutional Court in the next paragraph refers to

18 the aphorism error comunis facit ius that--basically

19 what it explains, as you indicated in your statement

20 this afternoon, in your testimony this afternoon,

21 there may be some error and, in this specific case, an

22 error because it has to do with a right or, perhaps

[Page 1149]

1 more precisely in the context of this case, an

2 apparent situation. And the Court said but where it

3 is impossible to discover falsehood--I think, in the

4 context of this case, it would be rather the

5 non-existence of such an apparent situation that we

6 find ourselves before the so-called--before so-called

7 "qualified good faith"; right?

8 A. Yes's that right.

9 THE WITNESS: Yes, that's right.

10 ARBITRATOR PEREZCANO: So this is where I

11 would ask you to help me out. This leads me to

12 understand that due diligence must be such that it is

13 impossible for any prudent person--and this is what

14 the Decision of the Court itself says--to discover the

15 non-existence of the apparent situation.

16 Let me ask if I understand this right. It

17 must be such that for any prudent person would find it

18 impossible to consider that there is, indeed, an

19 apparent situation.

20 (Lost interpretation.)

21 THE INTERPRETER: Okay. Apologies. The

22 interpreter is back.

[Page 1150]

1 PRESIDENT SACHS: I think we have to start

2 with the answer that you were trying to give, and then

3 you referred to where. Start again your answer.

4 THE WITNESS: Yes. I was saying that the

5 answer to the question---I could answer by saying that

6 you could well be right, but the term "impossible"

7 requires clarification or precision.

8 ARBITRATOR PEREZCANO: That's where I had

9 interrupted you because the term "impossible" is not

10 mine. That is in the Decision by the Constitutional

11 Court, where it says where it is "impossible" to

12 discover.

13 So, just to situate ourselves in--that it's

14 the Court that uses this word.

15 THE WITNESS: Yes. So, it's precisely

16 because of that that I raised the most recent judgment

17 by the Constitutional Court in this area, which is

18 Judgment C-327. Why? Well, if you read the beginning

19 of that judgment, you're going to realize that the

20 Court begins by saying that it considers it necessary

21 to specify certain concepts in relation to asset

22 forfeiture, and it says there are a number of

[Page 1151]

1 facts--I'd like to cite it textually, but there is one

2 part at the beginning of the Judgment where it says

3 there are different concepts that one finds scattered

4 throughout the Judgments of the Court that could lead

5 to misunderstandings. That is why in this Judgment we

6 want to spell out certain things.

7 That's what the court says in a paragraph at

8 the beginning of its Decision; and so, basically what

9 the Court is saying in that Decision is it's not a

10 question of requiring of the citizen everything which

11 in the abstract or hypothetically would be possible to

12 do. Would it be possible to go and get information

13 from 1920? Well, with a very lengthy and exhaustive

14 investigation, no.

15 ARBITRATOR PEREZCANO: I understand that and

16 you've explained that, but here the Court itself is

17 characterizing it, saying, first, it's not an abstract

18 matter. Second, the Court is referring to a prudent

19 person, so we're not talking about something which is

20 totally ethereal, and it's not just us but the Court.

21 So, I understand that.

22 So, let me put this in somewhat different

[Page 1152]

1 terms. If for a prudent person, a contrario of what

2 the Court says, if for a prudent person it is possible

3 to take note of such a situation, then the standard

4 wouldn't be met.

5 THE WITNESS: Of course. If you review this

6 standard of qualified good faith and--I should clarify

7 that's not just the Constitutional Court. There are

8 judgments on good faith.

9 ARBITRATOR PEREZCANO: No, excuse me. It

10 says here. Your testimony: "the Constitutional Court

11 described" and then the Court is quoted. So it is the

12 Constitutional Courts, no?

13 THE WITNESS: Yes, yes. I just want to

14 clarify for you that the concept of good faith in

15 Colombia goes back to civil case law, so the standard

16 most likely used is the standard that if a prudent man

17 or a prudent person in those same circumstances are

18 applying due diligence called for by the law had made

19 that mistake, then we can say it is a common mistake.

20 ARBITRATOR PEREZCANO: Fine.

21 And here we are at a higher level of

22 diligence because we're talking about qualified good

[Page 1153]

faith.

THE WITNESS: Yes.

And so, here we have look at what are the duties of diligence to each of the parties,

ARBITRATOR PEREZCANO: and we've already spoken about those.

Now, you also said--referred to this morning in your presentation, to the moment when good faith must be assessed, and you said more or less, to paraphrase what you said based on my notes, you said that good faith is evaluated based on the information available at the moment of entry into the transaction.

And my question for you is: What is that transaction? What is the relevant transaction? When does that arise?

THE WITNESS: That is the moment when the act or contract by which the property is transferred is perfected.

ARBITRATOR PEREZCANO: Well, that clarifies this for me. Thanks a lot.

Now, I was going to put a question to you about promise and purchase and sale, and I thank you

[Page 1154]

for your explanation because this clarifies what I was going to ask you, but continuing with that clear difference that you indicated, well, one thing is the promise of the Contract, and the other is the actual sales Contract. But here there was no purchase and sale; correct?

THE WITNESS: Mhm Mhm.

ARBITRATOR PEREZCANO: I've read the civil code--I think it's under Title VIII, if my memory serves me well-regulates the Contract for sale, the promise to enter into the Contract is at a different article.. There was no sales Contract here; correct?

THE WITNESS: No. There was no sales Contract, that's right. There was a Trust Agreement where there was a transfer of the property, and, in one of those, that's where the transfer is.

ARBITRATOR PEREZCANO: Agreed.

And you referred to one of those Trust Agreements in terms of the right--and correct me if I'm wrong, but it seems to me that you said the patrimonial right that arises on behalf of Newport,

THE WITNESS: That is right

[Page 1155]

ARBITRATOR PEREZCANO: --there are three to distinguish them: the pre-sales Contract, which is what the lawyer showed you a few moments ago; the property trust, which is with La Palma Argentina--I don't know if you have seen them.

THE WITNESS: Yes, I've seen them.

ARBITRATOR PEREZCANO: That has been called the Parqueo Trust, but it is the property itself.

And you were referring to the third one--right?--the development of the Project one; right?

So, here, if I understood your testimony, both your written statement and your statement this morning and this afternoon, that patrimonial right--and this is the focus of my question--if I understood properly, what you told us would come up because Newport at some point in the future could come to receive the assets in two situations: Either the Contract is not performed upon--you say that in your written statement, and you said that this morning--or rather that the Project is not carried out, or that the Project or the Trust is liquidated; right? And

[Page 1156]

that's what you say in your written testimony. I don't think you referred to it this morning, but that is where that property right arises. I have understood correctly?

THE WITNESS: Yes, you have.

ARBITRATOR PEREZCANO: Now, this patrimonial right--and here I would like to have some clarity on your opinion--is contingent on the property trust; correct?

THE WITNESS: Yes.

ARBITRATOR PEREZCANO: Because, first, even though contracts were entered into in a different chronological order, and to use the term that you used a couple of minutes ago, for them to be able to perfect the Contract first, we would need to transfer the property to the property trust, then there would be a need to transfer the property to the project development trust. Am I understanding it correctly?

THE WITNESS: I would understand--I would share the understanding with you.

ARBITRATOR PEREZCANO: And are you familiar with the three trust contracts?

[Page 1157]

THE WITNESS: I have read them.

ARBITRATOR PEREZCANO: Because the property title is transferred in the property trust in full, la Palma transfers the title in full that is over the whole lot, is this is your understanding?

THE WITNESS: Yes.

ARBITRATOR PEREZCANO: And then the Lot was subdivided, and it would be transferred little by little, depending on a series of future events. Is it true?

THE WITNESS: Yes.

ARBITRATOR PEREZCANO: And the only thing that happened is that a small portion was transferred that would be for Stages 1 and 6. This is a small portion of a larger lot, less than 10 percent; is that correct?

THE WITNESS: Yes.

ARBITRATOR PEREZCANO: And the rest would be little by little as other conditions were met in the future. So, am I correct?

THE WITNESS: Yes. That was the same understanding I had.

[Page 1158]

ARBITRATOR PEREZCANO: So a final question or there may be a line of additional questions. This afternoon, you were referring to the things that had to be complied with in the due diligence, the simple due diligence, and you said it briefly, but the law has the requirements A, B, C, and D. And in this case, Newport or Corficolombiana did A, B, C, and D, whatever was required by the law, and in consultation with the Office of the Attorney General; correct?

THE WITNESS: Yes.

ARBITRATOR PEREZCANO: Now, this consultation to the Office of the Attorney General happened in September 2013. However, the Property Trust was set up in November 2014, more than a year after. Then, the doubt I have is how is it that you freeze--and I don't know if you were here yesterday- it was referred to as if we were taking a snapshot today, and it is good forever, and I'm asking you because La Palma Argentina took another picture, another snapshot in 2007 before La Palma was acquired, so that leads me to a doubt: If La Palma had a snapshot in 2007, which is already good, what sense

[Page 1159]

does it make to take another snapshoot? That is, if I understand your opinion correctly, it would have to go from 2007 and 2013, but whatever happened before would be covered by the consultation of the Office of the Attorney General of 2007. And if it's sold later, you need to take from 2013 up to the date of sale and subsequently. That is not clear at all to me.

THE WITNESS: As to the persons that are obligated--so, we have a difference between obligated persons and persons that are not obligated. And if we are referring to obligated persons, and in this case a Fiduciary, the law provides for taking their own snapshot. You cannot trust in someone else's snapshot, you need to take your own snapshot. So we're talking about two different snapshots. Let's say that these are two snapshots with a different resolution. The snapshot that you are taking with your client, with your counterpart, has to be a high resolution snapshot, high resolution, clear, and that is the enhanced due diligence. But from that point backwards, you do not need to use the same quality. You can take a snapshot that includes everyone that

[Page 1160]

you can see their faces clearly, but you do not need to take a snapshot with a super expensive Canon camera to see whatever is behind them.

And this is what I was trying to explain. If we demanded the financial institutions, that level of diligence, to go back forever in the chain of title and to enhance the due diligence to include all of the companies in the chain of title, the truth of the matter is that the financial institutions would have to bear an excessive burden, which would not be proper for the financial system. That would have an impact on the real estate market. That would have an impact on the mortgage market. And in essence, the areas of compliance would not be able to work.

ARBITRATOR PEREZCANO: Thank you. Thank you, Mr. Martínez. These are my questions.

PRESIDENT SACHS: Just so that I'm also clear, you said earlier as regards the promise of a Purchase Agreement, that is C-19bis, so that's a promise of Purchase Agreement. If I understand it correctly, it leaves it--it leaves an option to Royal Realty to acquire all or part of the properties. It

[Page 1161]

assumes the obligation to set up a trust in a certain deadline, but is it your view that this promise is optional, meaning that for 60 months, according to paragraph--there is no number in the English translation--it was up to Royal Realty to decide whether or not to exercise the option.

THE WITNESS: No. The promise does not contain an option. The promise contains obligations but the obligations included in the promise of Purchase Agreement are different from the obligations included in the Purchase Agreement because in the promise of Purchase Agreement, the Parties buying to signing and performing a public document, a deed in which you transfer the property and another party receives it, but the promise as such does not include that transfer of the property. It is just a commitment to sign at some future date that document. And one could make a promise of purchase for someone else, and rather one could have a promise of purchase on an asset that is not your own. This is allowed under the Colombian law, and that is the difference in between both documents.

[Page 1162]

PRESIDENT SACHS: So, when you say the decisive moment to consider good faith is the perfection of the Contract. Just to be clear, we have seen it's a procedure in steps. There is first the promise of Purchase Agreement, and then there are subsequent agreements that ultimately lead to the trust arrangement, and they stretch over certain period of time. If I'm not mistaken, the third and final Trust Agreement was entered into in November 2014. So, we have a certain period of perfection, if I may say so. So, what would be the relevant point of time to consider that this Transaction has been perfected?

THE WITNESS: In my opinion, the decisive moment is when the Act, the Contract or public act is perfected when La Palma transferred the property to the Trust. At that point in time, that is when the legal contractual relationship between both parties materializes, and it is at that point in time when you need to assess the good faith of the acquiring party. In this case the Fiduciary. From that moment onwards, the following trust contracts to be signed are the

[Page 1163]

implementation of a project that had already been structured.

PRESIDENT SACHS: Okay. Thank you.

Thank you very much. Your expert testimony has been--

MR. MOLOO: May I--

PRESIDENT SACHS: You have further questions?

FURTHER REDIRECT EXAMINATION

BY MR. MOLOO:

Q. We've talked a lot about this April 22nd Decision, maybe we can pull it up, it's Exhibit C-46. If we go maybe to Page 31, Page 31 and 32. This is where the Court decides that Newport has affected-party status.

I guess one question I have for you is what is the Court's decision with respect to the date on which Newport's affected-party status was--came into effect?

A. Would you allow me to read this?

Q. Yes, please.

(Witness reviews document.)

[Page 1164]

A. What is your question again?

Q. So, what is the date of the agreement that gives rise to Newport's affected-party status, according to the Court?

A. I do not see that here. I do not see that quote here on the page, but it is the Trust Contract that transfers the property right from La Palma to the Trust.

ARBITRATOR PONCET: How should we understand the language at the bottom of Page 32, which says: "Therefore, the appellant is correct to base its claim on the 'Sales-Purchase Agreement'"?

BY MR. MOLOO:

Q. And if you look on Page 31, it says the date of the Sale-Purchase Agreement in the middle of the page.

A. I apologize.

What I understand here is that, clearly, there is a promise of purchase that was signed initially that Royal Realty, and I understand that as part of that promise of purchase, the right is acquired for La Palma to subsequently sign a sale

[Page 1165]

purchase agreement and transfer the property. What it says there is that there was an assignment from Royal Realty to Newport; and that, based on that assignment, Newport entered into the Trust Agreement, and it obtained the rights as a trustor to perform those rights.

But then this is the transfer to the Trust, and the Trust acquires the right over the Lot. That is my understanding.

MR. MOLOO: I have no questions.

PRESIDENT SACHS: You are now released.

THE WITNESS: Thank you very much.

(Witness steps down.)

PRESIDENT SACHS: Before we turn to the next expert, maybe we should say why we are interested in the moment of time where the Transaction in question has been perfected. We have seen that it went in steps, we had first the promise of the Purchase Agreement, then two first Trust Agreements in October 2013 and then later in November 2014 the third and final Trust Agreement. So, it is of interest to the Tribunal to better understand your perspective

[Page 1166]

views as to the relevant time to determine the good-faith issue of the acquirer because it may be that during this period, certain things have developed and happened that could trigger, so to say, a new due diligence aspects and efforts, and to that extent it would also be important to exactly know to which extent the contractual arrangements were already binding or optional. I think you will understand the context, and therefore we ask these questions.

So, we wanted to openly tell you why we are asking these questions so that you can reflect on them and then we can hear you on that. Okay?

MR. MOLOO: That's understood and helpful.

Thank you, Mr. President.

(Witness steps down.)

MS. BANIFATEMI: Mr. President, may I address a housekeeping matter for the remainder of the day?

PRESIDENT SACHS: Yes.

MS. BANIFATEMI: So, if we are to stop at 6:30, that leaves about two hours, so I just wanted to know how long our friends opposite are planning on

[Page 1167]

examining Professor Reyes, so that we tell CBRE to come or not come. This would be a matter of logistics.

MR. MOLOO: I think our expectation is probably--we will definitely get them done. I'm not sure--I would expect if we're going to 6:30, we may have some time remaining. I think we might be able to do their presentation today, for example, at the very least.

MS. BANIFATEMI: So, they should come, then? CBRE?

MR. MOLOO: Subject to the Tribunal's view, I think that would--

PRESIDENT SACHS: Yes, we should not sit much longer than 6:30 because it was a very stressful day again for all the participants.

MR. MOLOO: Yes, I would expect that we would definitely start them today.

MS. BANIFATEMI: Okay. We will do that.

Thank you.

PRESIDENT SACHS: Okay. Let's have five minutes to invite the new expert.

[Page 1168]

MR. MOLOO: JLL is going first; right? So I don't think we will get to CBRE, just to be clear.

Sorry.

(Brief recess.)

YESID REYES, RESPONDENT'S WITNESS, CALLED

PRESIDENT SACHS: So, good afternoon, Prof. Reyes.

THE WITNESS: Good afternoon.

PRESIDENT SACHS: In front of you is a declaration. Could you please read this declaration for the record.

THE WITNESS: I solemnly declare upon my honor and conscience that my statement shall be in accordance with my sincere belief.

PRESIDENT SACHS: Thank you very much.

And we now invite you to give us your presentation.

DIRECT PRESENTATION

THE WITNESS: Thank you very much.

In the 1980s and the 1990s of the last century, well, those were decades that were quite hard for Colombia in the drug war. At that time, Ernesto

[Page 1169]

Samper became President. His campaign was under suspicion of being financed with drug money. This created a lot of pressure within Colombia and also internationally, specifically by the United States.

They wanted to see what the determination was Mr. Samper going to have in this fight against drug-trafficking.

Amongst Mr. Samper's measures was to appoint, as Minister of Justice, Carlos Medellín with the purpose, amongst other things, of trying to solve one of the most complicated problems that existed in the fight against drug-trafficking at the time, which had to do with the fact that the assets of drug-traffickers could only be seized after they had been criminally convicted for their crimes.

And since criminal proceedings in Colombia are usually very long, this gave the drug-traffickers time to create new mechanisms to conceal their assets; so, when they were convicted, they did serve time, b they kept all or part of their assets, which were put in the name of third parties.

Mr. Samper and Mr. Medellín decided to

[Page 1170]

create a committee to draft a bill regarding asset forfeiture. Since the matter comprised both criminal aspects and civil-law aspects, a committee was created and presided over by two experts, a private law expert, William Namén and a criminal-law expert, myself. We presided over this committee that drafted the text of the first Asset Forfeiture Law in Colombia, Law 333 of 1996.

Let me quickly mention the main features of this law. Those are still current today.

First, an in rem action was created, independent from the criminal proceedings. At the time there was only one limitation: the in rem action could not be started if there were criminal proceedings pending against the holder of the property.

Jurisdiction in connection with this action was vested on prosecutors and criminal judges, and the procedure was inquisitorial in nature. This was the kind of procedure that was used in Colombia at the time. This was a very short law because, procedurally speaking, everything was remitted to the civil and

[Page 1171]

criminal procedure codes. There was a protection to bona fide third parties but no specifications were provided, and the statute of limitations for this action was 20 years.

At the time, the Prosecutor had the possibility--or, rather, the power of commencing the action, adopting Precautionary Measures, ordering and collecting evidence, hearing the submissions of the parties; and if they considered that the action was inadmissible, the Prosecutor could put an end to the proceedings; but, if they considered that the action was admissible, then they had to send a case to the Court for the Court to make a decision.

The original law was then replaced by, in 2002 law, and then again by another law of 2014. The original law had an independent action from the criminal proceedings, as I indicated, the new law removed this limitation, and the action may now be brought even though a criminal action may be pending against the holder of the property.

Reference is made in both laws to property rights, but in Law 1708, the rights of third parties

[Page 1172]

are more widely protected because it talks about faultless good-faith third parties, so we have qualified good faith. The jurisdiction is still assigned to criminal prosecutors and courts. Since these courts and prosecutors are trained in criminal law, and as a general rule not all of the courts and prosecutors know about the Asset Forfeiture Law, nor the proceedings, specific units of judges and prosecutors had to be created which were given special training.

Now, we went from an inquisitorial set of proceedings to an adversarial type of proceedings because, in 2004, a law was established implementing the adversarial system in Colombia. Also, the Asset Forfeiture action was no longer subject to a statute of limitations.

On the grounds for asset forfeiture, I would like to make an initial precision. Article 16 refers to three groups of grounds for asset forfeiture.

The first is to be found in Nos. 1 to 7, and it refers to assets whose origin is illicit, be it directly or indirectly.

[Page 1173]

The second group, comprised by numerals 8 and 9, refers to legal assets that fulfill one of two conditions (a) that are mixed with assets of illicit origin; or (b) that have been used to conceal illicit assets.

And, finally, there is a third group of causes, numerals 10 and 11, which refer to assets of legal origin but prosecuted as property equivalent to that of illicit origin. In relation to these assets, the protection of the rights of third parties is reinforced because it requires diligence regarding the lawful origin of the assets, but not regarding the conduct of those who transferred them, as indicated by the Constitutional Court in its Decision.

In general terms, Law 1708 refers to procedural subjects and intervening parties in the process. Procedural subjects are the Prosecutor's Office and the affected parties. In accordance with this law, the affected parties are those who claim to have a right in rem over the assets.

The Office of the Attorney General, very briefly, has the duty to investigate, secure the assets subject

[Page 1174]

to forfeiture, and file, or abstain from filing, a request for asset forfeiture before a judge. The intervening parties are parties who have the power but not the duty to intervene in the Asset Forfeiture Proceedings, and are the Office of the Inspector General, which is a control body in the Colombian State, and the Ministry of Justice.

A very general structure of Law 1708 shows two sections. First there is an initial stage, of which the Fiscalia is in charge, which is known as pre-procedural or preparatory phase and which is the stage in which the determination of the Claim is prepared; then there is a second stage, a trial stage, which is in the hands of a judge.

In the pre-procedural stage that prepares the case for the determination of the Claim, the Prosecutor investigates and collects evidence, orders Precautionary Measures, issues the provisional determination of the Claim, and may close the investigation or file a request to the Judge.

In the trial phase or in the phase that corresponds to the judges, a trial is held and then a

[Page 1175]

ruling is handed down.

Now I want to briefly refer to the evidentiary standard. To open an investigation in a case of asset forfeiture, there need to be elements that allow to infer the probable existence of assets that could be subject of asset forfeiture. The requirement is solely probable existence.

To issue Precautionary Measures something else is needed: serious, well-founded reasons that allow the Precautionary Measure to be considered essential and necessary.

To proceed with the provisional determination of claim, the grounds for asset forfeiture need to exist ; and in order to render a judgement ordering the asset forfeiture, evidence is needed showing that the asset forfeiture must take place. As regards the burden of proof, there is a norm that states that the facts need to be proven by the party that is in the best position to do so.

Now, in connection with the provisional determination of the Claim, I have a few clarifications: First, this is an action that has to

[Page 1176]

be brought by a party; that is to say, no appeal can be made against this decision. A second precision is that with the provisional determination of the claim, the reserved or secret stage of the investigation ends. Up until that point, the investigation is secret. And, consequently, from that point on, the affected parties are allowed to formulate oppositions and submit evidence before the prosecutor. The prosecutor, based on the evidence that he or she have collected, and what the affected parties submit to them, makes a decision that may be: to request the judge to declare the inadmissibility of the asset forfeiture action, or to recognize the affected parties and to order the forfeiture of assets.

That request opens the trial stage. In the trial stage, the Court recognizes the affected parties. The affected parties may provide evidence or ask for evidence. Then the Court weighs the evidence as it deems pertinent. The parties--that is to say, the prosecution, the affected parties and the intervening parties submit their allegations, and then finally the Judge rules on the matter, and decides two

[Page 1177]

things:

First, if the a ground for asset forfeiture has been established; and second, if there are bona fide third parties without fault. This is the scope of the judgment handed down by the Judge.

In the pre-procedural stage, in preparation for the determination of the Claim, the prosecutor investigates and collects evidence. The law provides the scope of that investigation and evidence collection stage. First, they have to look for possible owners of in rem rights over the assets, and, second, they have to look for evidence that allows for the inference of lack of good faith without fault.

At the end of the investigative work that was ordered, the Prosecutor may decide to archive the investigation or file a request before the asset forfeiture judge. And I want to make some precisions about the archiving of the investigation.

The investigation can be archived at any time. After the investigation is opened, the prosecutor can archive the investigation at any point in time, but this archiving is provisional in nature. The decision

[Page 1178]

to archive the investigation must be communicated to the Office of the Inspector General, which is the control entity I referred to moments ago, and to the Ministry of Justice. Since this is a provisional archiving of the investigation, the investigation can be resumed at any time at the request of one of the parties or the intervening parties . If the prosecutor refuses to resume the investigation, the party making the request may ask for a legality review before the competent court to oblige the prosecutor to reopen the investigation. If the prosecutor decides to file a request before the Judge, then, as I mentioned, it can be a request for the purpose of declaring the asset forfeiture or declaring the inadmissibility of the asset forfeiture action.

In the pre-trial or preparatory stage of the determination of the claim, I stated that the prosecutor investigates and collects evidence, issues the provisional determination of claim, archives provisionally , if he so decides, or files a request to the Judge.

But, in addition, the prosecutor may order

[Page 1179]

exceptional precautionary measures before the provisional determination of the claim or may order ordinary precautionary measures after the provisional determination of the claim. These Precautionary Measures seek to prevent the assets from being transferred or traded and becoming part of the economic transit and being diluted in legal transactions, which implies that the State loses their possibility to forfeit these assets.

There is a legality control over the provisional measures before a supervisory judge. That legality control concerns two issues: the formal legality of the measure, and the material legality, which has to do with contents of the measure.

When is a precautionary measure illegal?

Article 112 of the law states that a precautionary measure is illegal for one of four reasons : because there is no sufficient reasoning; because it is based on illegal evidence; because there is no evidence of judgment that allow to consider the assets can be the subject matter of an asset forfeiture measure; or when the measure is not

[Page 1180]

necessary, reasonable and proportional vis-a-vis the aim pursued.

The Court's decision regarding legality control of the measure may be appealed before a Chamber of the Superior Court made up of three judges as a last judicial review matter.

Law 1708 was amended. When studies were being conducted for the amendment to the law--and I arrived at the Ministry of Justice in 2004--I found a draft bill to amend Law 1708; and, as minister, I had to close the National Department of Anti-narcotics, which was the agency in charge of handling the assets that were subject to asset forfeiture. This agency was closed because it was subject to great corruption, and I had to determine the creation of a new agency, which is the Special Assets Corporation (SAE) that controls, deals and administers the assets under asset forfeiture.

I retired from the Ministry of Justice in April 2016. I did not present the bill that led to the new law, to Law 1849. That was done by the

[Page 1181]

Minister of Justice who succeeded me, who presented it in October 2016 and which gave rise to the issuance of that law 1849 of 2017. That law changed the reference made to rights in rem under 1708, and referred to patrimionial rights, "derechos patrimoniales."

Now, this made necessary that a transition regime be put in place and this was provided for under Article 57 of that law. Article 57 draws a distinction between proceedings with Provisional determination of the forfeiture claim and proceeding without Provisional determination of the forfeiture claim.

In connection with the proceedings with Provisional determination of the asset forfeiture claim, Law 1708 of 2014 is still applicable. And for those proceedings, without Provisional determination of the forfeiture claim, Law 1849 of 2017 must be applied.

On the basis of this general structure as to how the law works, I wanted to refer to seven conclusions related to the case at hand.

First conclusion: The applicable law in

[Page 1182]

this case is 1708 of 2014, pursuant to the transitional provision of Law 1849 of 2017.

Second: The Precautionary Measures that were imposed were necessary, reasonable, and proportionate. They were issued by a prosecutor.

They were subject to the legality control by a judge who approved those measures. The Judge's decision was appealed, and ultimately upheld by three Superior Justices of the Superior Court of Bogotá. The Ministry of Justice was an intervening party, and it requested that the Precautionary Measures be maintained. The Inspector General's Office did not oppose the imposition nor the confirmation of the Precautionary Measures. So the necessity, reasonableness, and proportionality of the Precautionary Measures, were known and supported by seven public officials of a number of agencies such as the Attorney General's Office, the Judiciary, the Ministry of Justice, and the Office of the Inspector General, which is the supervising agency of the Government.

Third conclusion: Regarding tangible

[Page 1183]

property--that is to say, real estate and chattels, the affected parties are those who claim to have an in rem right over the property.

Fourth: The fact that Newport was not recognized as an affected party, is based on a Trial First Instance Court Decision which was appealed.

Fifth: The arguments advanced in this First Instance Court Decision were based on the analysis of the evidence gathered during the investigation and are developed within parameters of legal interpretation.

Sixth: In its Decision of April 22, 2022, the Superior Court of Bogotá, on appeal, repealed partially the Decision of the Trial Court. Well, there are three aspects that one needs to underscore:

First, it does not challenge the first instance court argument which was the loss of beneficiary status that Newport had, but it puts forth a new argument. The new argument is the existence of an assignment agreement of the sale promise agreement from Royal Realty to Newport over the asset subject to the forfeiture, it refers to the matter that was also analyzed by the Trial Court.

[Page 1184]

Third: The First Instance Court addressed this issue and rejected it fundamentally due to lack of legitimacy in the provision of evidence. The Appellate Court addressed it without questioning the validity of the evidence.

Seventh conclusion: The Trial Court Decision was appealed, but since in that Decision, evidence was also denied; the appeal stayed the proceedings until the Tribunal issued a decision on appeal.

Thank you very much. That's it.

PRESIDENT SACHS: Thank you very much.

Who would be in charge of the cross-examination?

MR. SOTO: I will be, Mr. President.

PRESIDENT SACHS: Please.

MR. SOTO: Could I ask for a brief five-minute break? I promise to keep it to five.

Thank you, sir.

(Brief recess.)

MR. SOTO: Okay. Mr. President, we're ready to proceed, if you like.

[Page 1185]

PRESIDENT SACHS: Please proceed.

MR. SOTO: Thank you, sir.

CROSS-EXAMINATION

BY MR. SOTO:

Q. Dr. Reyes, good afternoon.

THE INTERPRETER: No microphone on the expert.

THE WITNESS: Good afternoon.

BY MR. SOTO:

Q. Dr. Reyes, my name is Pedro Soto. I'm an attorney representing the Claimants in these proceedings, and if it's okay with you, sir, I'd like to ask you a few questions about the two Expert Reports that you submitted in this Arbitration.

Dr. Reyes, you're an expert on penal law matters in Colombia, aren't you, sir?

A. Yes.

Q. You've written extensively on issues of penal law; isn't that right?

A. Correct.

Q. Dr. Reyes, the law that was applicable--your presentation covered a series of statutes that have

[Page 1186]

been amended over time--the law that was applicable to the Meritage Asset Forfeiture Proceeding, that was Law 1708 of 2014, wasn't it, sir?

A. That's right.

Q. Were you involved in drafting that law?

A. No.

Q. You were not a member of the Drafting Committee for that one.

A. No.

Q. And I assume, then, that means you did not, for example, testify before Congress on the adoption of that statute; is that right?

A. Correct.

Q. Now, Dr. Reyes, this Tribunal is interested, has expressed interest, in knowing the relevant date that Newport's rights in this project crystallized, so I'd like to walk you through some of the materials that we have in this case and ask for your view on which of these would be the correct date. Is that all right?

A. That's fine.

Q. So, let's first turn to Exhibit 436.

[Page 1187]

And while it's getting pulled up, I will represent to you, sir, that it is a court decision issued on April 22nd of this year by the Superior Court of Bogotá.

Do you have it in front of you, sir?

A. Yes, now I have it.

Q. Let me draw your attention to Page 32, which should be towards the very back of the document. We also, Dr. Reyes, will put it up on the screen for your convenience if that's easier for you, but, of course, you're welcome to review the hard copy, if you prefer.

A. Page?

Q. 32.

A. Which page? 32?

Q. I apologize, Doctor. Let's go back to 31 for just a second. I want to make sure that you have the context.

See, this is why context is important. Very well wasn't the right page, either. It's 29. Let's try that one.

So, let's go to 29, and there is a paragraph in the English translation--it's the second paragraph

[Page 1188]

on the page, first full paragraph, that says: "With respect to the company Newport S.A.S."

And the Court here indicates that, on November 1st, 2012, the Company Royal Realty S.A.S, and the Company La Palma Argentina signed a document that we're calling the Sales-Purchase Agreement or "promesa de compraventa," in Spanish. Do you see that reference, sir?

A. Yes.

Q. And then now let's do go to Page 32.

And the last full paragraph on this page begins: "Therefore, the appellant is correct to base its claim for" affected-party status--and just for the record, I added the words "affected-party status--"the appellant is correct to base its claim on the Sales-Purchase Agreement (promesa de compraventa)."

Do you see that, sir?

A. Yes. It's on Page 31.

Q. It's on 32 in the English, so we might just have a slight discrepancy here.

But you see the text I'm referring to; right?

[Page 1189]

A. Yes.

Q. So, Dr. Reyes, what the Court here is saying, the basis on which it would recognize Newport's affected-party status was, in fact, anchored on the Sales-Purchase Agreement; isn't that correct, sir?

A. That's right.

Mr. President, if I could make a brief observation?

PRESIDENT SACHS: Brief, yes.

THE WITNESS: This is the issue I was referring to a moment ago where both the Judge and the Court saw this sales agreement that the Judge did not attribute value to it because the documents showing it or proving it were neither authentic nor original, and the law requires that such documentary evidence meet one of those two requirements. That's why the Judge did not take this document into account.

Now, the Court has a different opinion, and it does attribute value to the documents, and it reaches this conclusion.

BY MR. SOTO:

[Page 1190]

Q. Thank you for your clarification, Dr. Reyes.

So, to make sure I understood what you're saying is the lower court did not find that this Sale-Purchase Agreement was the anchor to affected-party status because it had an unofficial copy of that agreement in front of it and not a certified copy. Is that the distinction you're making?

A. Yes, that's what the Judge says.

Q. Dr. Reyes, you've read the reports, of course, by Drs. Martínez and Medellín--right?--in this matter.

A. Correct.

Q. If I could draw your attention, sir, to Dr. Martínez's Second Report and, in particular, Paragraph 60(d), as in "David," which is on Page 17 of the Report; and again, we'll put it up on the screen for your convenience.

Do you have it in front of you, sir?

A. I see it on the screen.

Q. It should only be a couple of questions about it. So I think you can look at it on the screen

[Page 1191]

if you're comfortable with that.

In the third paragraph under the header of 60(d), Dr. Martínez is commenting on the date on which he believes this transaction, a legal transaction was conducted and, therefore, the relevant date for due diligence purposes, and I'll read to you from Paragraph 60(d) where he says, and I quote: "On this point, it is important to recall that a person's good faith must be assessed with the information available at the time the legal transaction is conducted, not on information that appears afterwards."

And he makes reference to October 13th, 2013. Do you know what that reference is to October 13th, 2013?

A. I believe to recall that is at the signature of a fiduciary agreement.

Q. Dr. Reyes, let's show you, just for your context, the immediately preceding paragraph.

MR. SOTO: Franz, if you have that.

BY MR. SOTO:

Q. And in that one, Dr. Martínez explains that date of October 13, 2013. Dr. Martínez says, and I

[Page 1192]

quote: "The commercial trust agreement for administration and payments that gave rise to the MERITAGE Trust was signed on October 13, 2013."

Do you see that one, sir?

A. Yes.

Q. Do you agree with Dr. Martínez that this was the date on which--by which Newport's rights had crystallized, sir?

A. Not for purposes of an evaluation of good faith.

Q. Let me show you Dr. Medellín's Second Report, and we will put it up on the screen as well, sir, and in particular I would direct you to Paragraph 86 of that second report.

And at the end there--

MR. SOTO: Pull up the Spanish version as well.

BY MR. SOTO:

Q. But at the end there, you can see that former Minister Medellín says: "Demanding that the Request for Information whose value is being discredited continued to be made subsequent to the

[Page 1193]

signing of the commercial trust agreement entered into the year"--"entered into in the Year 2013, is to demand that the person who already holds patrimonial rights to an asset indefinitely conduct due diligence over an asset over which it already has a legitimate interest. As I stated before, the analysis must be ex ante."

Do you see that reference on the screen, sir?

A. I do see it.

Q. Dr. Reyes, what Minister--what Dr. Medellín, also a Minister like yourself--what Dr. Medellín is saying is that once you've signed that commercial trust agreement, you've acquired some rights, patrimonial rights, and you already have a legitimate interest in the project. So we focus on what you did--due diligence you did ahead of that. Do you agree with that, sir?

A. No, and I wish to specify something. Had this been the only act for evaluating, then both experts might be right. But this was neither the only nor the last act that unfolded in this project.

[Page 1194]

In 2014, there was information about the possible illicit origin of the asset because of the dispossession of that asset of a drug-trafficker by the Oficina de Envigado; that means a new information that must be taken into account for due diligence analysis if in the future acts were going to be continued to be carried out with respect to the project, and I recall at least two related to the project in 2014.

First, the request to a curators' office in Envigado to authorize the division of this property, to divide it into lots; and, second, the signature of another trust contract. Those two acts took place in the second half of 2014 once there was already information about the possible illicit origin of the property, and that makes it obligatory for the persons to update their information about good faith.

Q. Thank you for your clarification, Dr. Reyes.

But there are always going to be subsequent acts that occur with this property; right? Eventually it goes to a Unit Buyer, an individual person who will pay for a unit. But for purposes of analyzing

[Page 1195]

diligence, for purpose of analyzing good faith, I believe you testified a minute ago that you thought the Superior Court of Bogotá was correct when it anchored the new--the affected party, standing as an affected party on the promise to Purchase Agreement of November 1st, 2012; isn't that correct, sir?

A. No, it's not correct. I said that the Court had analyzed the same evidence as the Judge and reached a different conclusion. I didn't say that it decided incorrectly.

Q. Just a simple question, then: So, when did Newport gain any rights here? 2012 or 2013?

A. Let me reformulate it in other terms. Each time a new act is to be carried out, the diligence must be updated. You cannot have a report from the Office of the Attorney General of 2007 and put it forward as valid in 2016 or 2017 when one has, for example, information that a drug-trafficker has--had contact with that asset and had--even had it taken from him by a recognized criminal organization in Colombia.

Q. Understood, sir.

[Page 1196]

So, let me take a step back here.

Newport, in 2012, identifies a piece of property that it wishes to purchase for a project.

Are you with me?

A. Yes.

Q. And before it moves forward with that, it signs a promise agreement and then conducts diligence because it wants to know the history of the title and the other requirements under Colombian law; is that right, sir?

A. Yes, I am continuing to follow you.

Q. At that point, Newport forms a state of mind, a perception as to whether the asset that it is interested in acquiring is tainted by illegality or not; right?

A. I continue following you.

Q. And if I understand your testimony, I've got to keep doing that exercise all the time; and so any time there's one more step being taken in the commercial project, which is a big project, you gotta do it again. So it's not just when I go to buy the lot that I'm trying to make sure that I'm not buying

[Page 1197]

it from dirty hands. I gotta do my diligence in 2012 and refresh it in '13, and refresh it in '14, maybe even refresh it in '15. Is that your testimony, sir?

A. If that person has information that changes their perception regarding good faith, then they're under an obligation to review their opinion regarding good faith.

Q. Dr. Reyes, let's maybe take a step back here. Basic principles.

When I do diligence, that diligence has to be based on materials, information; right?

A. Correct.

Q. And that information has to be both available, meaning the information exists, and accessible, meaning a reasonable person can reach that information, a potential buyer can reach this information. Surely, we can agree on that; right?

A. Right.

Q. Dr. Reyes, in its pleadings in this matter, Colombia has argued that Newport should have detected that a person who received the property in 2004, who was four purchasers removed from Newport--and I'm

[Page 1198]

referring to Mr. Varela Arboleda, commonly known as the "mango seller," lacked the means to buy the property.

MR. SOTO: And we can put it up. It's Colombia's Counter-Memorial, in Paragraph 161 in this Arbitration.

BY MR. SOTO:

Q. Are you familiar with what I'm describing, sir?

A. Yes.

Q. And at Paragraph 161, you see there that at the end of it, Colombia asserts that, after the police interviewed Mr. Varela, as part of a formal declaration that he gave, he declared, quote, "not knowing any of the parties in the transaction nor participated in the process and made plain that he lacked the funds to buy any type of property as for the last 30 years of his life he had worked as a street vendor of mangoes and declared to be associated with the SISBEN in Colombia which provides social programs to low-income people."

Do you see that, sir?

[Page 1199]

A. I don't see it in Spanish.

Q. You don't see it in Spanish?

A. I don't speak English.

Q. Of course. We don't have it at the moment, but I believe a moment ago you said you were familiar with the issue of the mango seller; right? And the fact that Colombia has asserted that he lacked the means to buy--

MS. HERRERA: I'm sorry, can you show him the paper?

MR. SOTO: We're absolutely working on it.

MS. HERRERA: Before you question him.

MR. SOTO: I'm sorry?

MS. HERRERA: Just before he can--

(Overlapping speakers.)

MS. HERRERA: Thank you.

MR. SOTO: Absolutely.

I'm just setting the stage that a minute ago he said he familiar with the argument, so we're, of course, happy to show him the text.

Oh, you know what? I apologize. There is no Spanish version of the Counter-Memorial. We can't

[Page 1200]

produce it even if we tried to so the--

PRESIDENT SACHS: Maybe somebody could translate it or--

(Overlapping speakers.)

MR. SOTO: There is an interpreter, and, of course, Dr. Reyes has now heard it in Spanish.

BY MR. SOTO:

Q. Dr. Reyes, let me just take a step back.

Are you aware, sir, whether the person that we've been discussing, Mr. Varela, was he a counter-party to Newport in this transaction, sir?

A. No.

Q. No, you're not aware or no, he was not a counter-party?

A. As far as I know, he was not a counter-party.

Q. You would agree with me, wouldn't you, sir, that a person's banking information, including how much money they have, is Confidential Information; right?

A. Right.

Q. I can't go to a bank and ask them how much

[Page 1201]

money does Mr. Varela have. I can't do that; right?

A. That's right.

Q. So, to be sure, Dr. Reyes, you would, of course, agree with me that, in 2013, when Newport is conducting diligence on the property, it can't possibly go to a bank and ask how much money did the fruit seller have in 2004? Can't be done; right?

A. Right. But as I already pointed out a couple of times, if the information that the person has changes, and this change means the appearance of evidence as to the possible illegal origin of the property, then they can no longer be content with the initial inquiries into good faith.

Q. Understood, and I certainly understand your position on that issue.

I'm just asking very simply that--whether you would agree and I believe your answer was yes--that in 2013, I had no way of going back to 2004 and figuring out how much money someone had in their bank account in 2004 who's not my counter-party. That person is not there for me to ask. We agree on that; right?

[Page 1202]

A. We agree on that, specifying that that is not--does not suffice, as I see it, to characterize the conduct of a person as good faith and no fault.

Q. Understood. Thank you, Dr. Reyes.

Now, Dr. Reyes, in your First Expert Report, you indicate that the response to the right of petition that the Attorney General provided to Corficolombiana--we've been calling it the "Attorney General's Certification," and if it's okay with you, I'm going to refer to it as that during this line of questions. You said that that document has what you have described as several limitations. Do you recall that, sir?

A. Yes.

Q. And let me show you one of them, Dr. Reyes. It's at Paragraph 57 of your Report, your First Report.

Now, in this section--and you have hard copy if you'd like, sir. It's at the very beginning of your binder. Or--actually, I apologize. It's the small binders in front of you are copies of your statement, if you'd like to review those in hard copy.

[Page 1203]

So, in this section, just to set the stage, you're talking about why it was unreasonable for Newport to have relied on this Corficolombiana certification. Is that--does that comport with your understanding of what you said?

A. Yes.

Q. And so, in this paragraph, you indicate--again, I'm reading from 57--"if the Attorney General's Office wants to maintain the reservation--and I would translate as confidentiality--the reservation or confidentiality of the actions of asset forfeiture," further down, "it should abstain from providing information through documents such as those that have been provided in the process of asset forfeiture over which this concept is issued."

Do you see that, sir?

A. (In Spanish.)

REALTIME STENOGRAPHER: I didn't get the interpretation.

A. After the coming to force of the 2014 Law, yes.

[Page 1204]

BY MR. SOTO:

Q. Understood, sir.

You further note, and I quote: "If the Attorney General's Office did not proceed in this way, it would be very easy to circumvent the reservation," or confidentiality, "mandate enshrined in Article 10 of Law 1708 of 2014."

Do you see that, sir?

A. Yes.

Q. So, Dr. Reyes, just to make sure we're all on the same page. You're saying that a limitation to relying on the Attorney General's Office certification is that there might have been a confidential investigation about which the Attorney General could not release information, given the Article of the Law that you mentioned. Is that a fair characterization of what you've said, sir?

A. There could not have been a confidential investigation. By mandate of Article 10 of that law, all asset forfeiture investigations are confidential, and I quote, "even for the procedural subjects or intervening parties, the parties of the procedure and

[Page 1205]

other intervening parties." So, a person who is familiar with that law during that initial phase should not send any request to the Prosecutor for information that the law classifies as confidential, even for Parties to the proceeding and the intervening parties, and I place emphasis on the intervening parties because that means that neither the Ministry of Justice, nor the Office of the Inspector General, which is an oversight agency of the State, can demand or request that information of a prosecutor in the Asset Forfeiture Unit.

Q. Understood.

So, we're talking about very Confidential Information, not even other prosecutors can know about it; is that fair, sir?

A. It is confidential.

Q. So, Dr. Reyes, when you say that a limitation on my ability to rely on the letter is that there might be hyper Confidential Information that not even other prosecutors could have access to, you're talking about information that I couldn't possibly have access to; right?

[Page 1206]

A. When you are saying "I," who were you referring?

Q. The purchaser in this transaction.

A. Agreed.

Q. But in any event, Dr. Reyes, what we're talking about in Paragraph 57 is a hypothetical concern; isn't it, sir? I mean, you've seen no evidence, have you, sir? That in this matter, there was some Confidential Information that was going on that the Attorney General's Office did not reveal that could have somehow affected our diligence. You haven't seen that evidence, have you?

A. I am saying that it is not evidence of due diligence to request information that one knows one cannot obtain.

Q. Dr. Reyes, let's turn to Paragraph 58 of your First Report. It continues on your list of limitations.

And in this paragraph, while we pull it up, I will summarize for you that you noted that, in 1994, there was a scandal in Colombia because Cali Cartel members were obtaining certifications from the

[Page 1207]

Attorney General's Office and exhibiting them as certificates that no criminal investigations were under way against them. Do you remember this, sir?

We'll look at the specific text, but do you remember this generally?

A. I do.

Q. And in Paragraph 58, you explained, and I quote, that "since then, the Attorney General's Office has been very careful in the way that it responds to these rights of petition."

Do you see that, sir?

A. Yes.

Q. So, sir, the point is, after 1994, given this history, the Attorney General's Office is very careful when it responds to rights of petition. That's what you're saying; right?

A. Yes.

Q. And I dare ask the basic chronological question: The certification in this matter was well after 1994; isn't that right, sir?

A. Yes, and when I am referring to the careful nature of the certifications by the Office of the

[Page 1208]

Attorney General, I am referring to two things:

The first limitation is that certifications usually include a legend that indicates that the certification does not guarantee that, in the future, there could be or not investigations.

And second, that that certification does not show that any Office of Attorney General may have a proceeding underway about that person whose information is being requested.

Q. So, let's look at it, Dr. Reyes.

Do we have C-32 available, please.

Now, I'll represent to you, sir, I believe you've seen this before--I apologize. You don't still have it in hard copy. Please take a moment.

Do you have it in front of you, sir?

A. Yes, I see it, but I haven't finished reading it.

Q. Well, Dr. Reyes, this is not the certification. This, let me represent to you, is the letter from Dr. Sintura Varela, transmitting the certification to Corficolombiana and the certification itself, sir, begins on Page 2, so perhaps we can turn

[Page 1209]

to that one.

And the certification runs from Page 2 through Page 4.

Dr. Reyes, could you please show me where on this document it contains all the disclaimers that you've mentioned?

A. Yes. It is highlighted and in upper case where it says, "To date".

Q. Of course. Because if I asked someone to search a database for information, they can only tell me whether information actually exists as of that date. That's a pretty basic matter; right?

A. Yes, which means that, on the next day or the following month or the next year, that person may have an investigation underway, and the only way to know whether that is the case or not is by requesting a new certification.

Q. But you would agree with me, of course, that facts that have not yet happened can't be reasonably attributed to someone who's just asking a question today. If something's going to happen six months from now, I'm just asking about today. You would agree

[Page 1210]

with that; right?

A. I agree, except that in the future, a person might tell me I have been dispossessed of an asset by the Oficina de Envigado, and I will be presenting a complaint before the Office of the Attorney General, for the Office of the Attorney General to start an Asset Forfeiture Action. So, in that situation, I would have reasons to think two things: First, that the origin of the asset on which I'm developing the Project may be illegal; and second, that if that person did what they said they were going to do, certainly he or she may have presented a complaint before the office of the Attorney General, and a asset forfeiture procedure may have been started. If I have that information and if I want to be diligent, I should go back to the Office of the Attorney General and present a request for an update on the information.

Q. Dr. Reyes--I apologize. So, as I understood what you were saying, Dr. Reyes, you're saying I should be asking the Attorney General. I just need to do it every--what's the standard, is it every six

[Page 1211]

months I go back and ask? How about every year? Maybe every 18 months? What's the standard, sir?

A. Every time a drug dealer tells you that a criminal office has dispossessed you of an illicit asset, and that this fact will be informed to the Office of the Attorney General.

Q. Dr. Reyes, we were talking here about the language, the disclaimers, that the Attorney General's Office put on its certification.

And let me--let me just do a slight compare and contrast exercise here. Could we look at C-331.

Now, C-331, I'll represent to you, is a certification issued by the Attorney General's Office on September 30, 2020. Now, it relates to a right of request or a petition for information for a project called "Mayorquin." And I'll represent to you, Dr. Reyes, that Mayorquin is not related to the Meritage matter.

Do you see the document in front of you, sir?

A. I see first page.

Q. Let's go to Page 2. And the second-to-last

[Page 1212]

paragraph there says: "The foregoing does not mean that a process is or is not being carried out within the Directorate. It simply states that it is NOT possible to agree to provide information of any kind on the cited legal grounds."

Do you see that text, sir?

A. Yes.

Q. Dr. Reyes, that language, that specific disclaimer, that's not in the Meritage certification, is it, sir?

A. No.

Q. And let's look at the last paragraph. The last paragraph says, and I quote: "Per the above terms, your request is deemed to be answered, and you are reminded that this document," and now this part is in all caps as you can see, sir, "DOES NOT CONSTITUTE CERTIFICATION, nor is it an obstacle to an extinction process being brought forward in the future, in the event that any of the causes of the extinction of ownership code coincide."

Do you see that language in front of you, sir?

[Page 1213]

A. Yes.

Q. Dr. Reyes, that language was not in the Meritage one either, was it, sir?

A. Correct. That is a good example of the thoughtfulness of the Office of the Attorney General later on for issuing certification. Here they are saying that, first, this is not a certification. This is the response to a Right of Petition, and that it does not guarantee that in the future no Asset Forfeiture Proceedings may not be initiated.

So, if in the future, there were any news reports, evidence that there could be an Asset Forfeiture Action initiated against an asset, I think it would be necessary to request a certification again.

This is not related to timing, whether to do it monthly, quarterly, or every six months. It is only whenever the conditions change.

Q. See, Dr. Reyes, I knew by the end of the day we would agree on a lot of things. Because I certainly agree with you that this is a very good example of how much more careful the Fiscalía has

[Page 1214]

become in responding to these. I agree with you, sir.

Dr. Reyes, I would like to draw your attention to Paragraph 8 of your First Expert Report.

In it, you state--and I apologize it's a long paragraph, so it will be a little bit challenging to find the exact reference, but in it you state: "When the conditions set out in the law are met, the Attorney General's Office is obliged to initiate the action for asset forfeiture." And that's the first sentence, first and second lines.

Do you see that, sir?

A. Yes.

Q. And I would note that you bolded and italicized the word "obligation."

Do you see that?

A. Yes.

Q. Dr. Reyes, it's your position that if the Attorney General's Office thinks the facts are there, that the grounds are met for asset forfeiture, it has to--it is legally required--to initiate an Asset Forfeiture Proceeding; isn't that right, sir?

A. No, it is not true because those conditions

[Page 1215]

do not need to be met.

(Overlapping interpretation with speaker.)

A. That's the reason why in my presentation I referenced the evidentiary threshold, and I also indicated that for initiating an investigation it is sufficient to be able to infer the likely existence of assets that could be subject to asset forfeiture.

Q. So, Dr. Reyes, would it be your testimony, then, that if I can reasonably infer the probable existence of grounds for asset forfeiture, then the Fiscalía is obligated--your word, not mine, "obligated"--to move forward, is that fair, sir?

A. Can we look at the law? I think it is in the binder.

Q. Sir, in the interest of time, I'm going to move on. I think we can all read the bolded italicized "obligation" that you have identified. And if counsel for Colombia would like the opportunity for him to clarify, there is a period of redirect that is set aside in the Procedural Schedule for just that. I don't have a question pending.

Dr. Reyes, I'd like to turn your attention--

[Page 1216]

A. Just to be specific, if the President authorizes it.

PRESIDENT SACHS: All right.

THE WITNESS: As far as I recall, the law establishes that if there is evidence that allows inferring the likely existence of assets that could be subject to asset forfeiture, the Judge "shall," and this is imperative of the verb, that there is an obligation.

BY MR. SOTO:

Q. That sounds like a very long way to say, "yes," in other words, they shall, they are obligated to start the obligation; isn't that correct, sir?

A. It is a way to specify that it is not me the one who says it is an obligation but it is the law.

Q. Understood, Dr. Reyes.

Dr. Reyes, I would like to turn your attention to the recent decision by the Constitutional Court of Colombia regarding the constitutional challenge to certain provisions of the Asset Forfeiture Code, it's Decision 327 of 2020, which has been designated by Claimants as

[Page 1217]

Exhibit C-329 in this Arbitration. We don't have to look at the Decision just yet. I was just identifying it for you, sir.

Let's turn first to your Second Expert Report. In it, you address this Decision; is that right?

A. True.

Q. Dr. Reyes, in Paragraph 7(x) and 7(y) of your Second Report, for example, you explain, although you certainly do it at more than one paragraph, you explain that you do not believe that the holding of this Court Decision applies to the facts of this case.

Do you recall that, sir?

A. Yes.

Q. Dr. Reyes, Article 16 of Law 1708 lays out the grounds for Asset Forfeiture Actions; isn't that right, sir?

A. That is correct.

Q. And, in this Decision, the Court was reviewing a challenge to the constitutionality of Grounds No. 10 and 11 identified in Article 16; isn't that right, sir?

[Page 1218]

A. That is correct.

Q. So, let's look at those grounds. The exhibit is C-3. Article 16. I believe you have it in front of you, sir. Article 10 says that the Attorney General's Office may attempt to forfeit, to seek in forfeiture "assets of legal origin whose value is equivalent to any of the assets described in the proceeding numbers whenever the action is inadmissible due to the recognition of the rights of a third party acting in good faith without fault."

Do you see that, sir?

A. Yes.

Q. So, let's make sure I understand Ground No. 10.

It talks about the State's ability to seize a legal asset if it's unable to seize an illegal asset because that asset is now in the hands of a good-faith third-party buyer. That's what it says, in a nutshell; right?

A. To be more specific, it says that whenever it is inadmissible because of the recognitions of the rights of a third party acting in good faith without

[Page 1219]

fault.

Q. So, let's take an example. If I sell you a vehicle and the--and I purchased the vehicle with tainted assets--I'm a drug dealer--and you do your diligence and you have no idea that I'm a drug dealer and you bought the car from me. What Ground No. 10 says is the Government can't take the car away from you. You're a good-faith third party buyer, so what they have to do is go seize my other assets, even if they are of legal origin, that are in the equivalent value of the car. That's roughly what we're doing here; right?

A. No, you said, and you said now again that this applies when the State cannot go after that asset, and I told you that what it says there is that equivalent assets could be pursued whenever it is inadmissible because of the recognition of the rights of a good-faith third party without fault.

Why is it important to be this specific?

Because the only one that can recognize rights of a good-faith third party is the fault in the Judge in the Judgment. So whenever there is a final judgment

[Page 1220]

that says that it is not possible to forfeit an asset because it is in the hands of a good-faith third party without fault, that proceeding comes to an end, and the Office of the Attorney General may initiate another one, another proceeding to pursue assets of equivalent value.

Q. So, Dr. Reyes, you've argued--and I will show you the paragraph in your statement just to refresh your recollection--you've argued that the Court, in this Constitutional Court Decision--go back to C-329, please--is setting out a different standard of diligence for assets of legal origin versus those of illegal original. And I'll direct you to Paragraph 7(z), "Z" as in "Zulu," of your Second Report. Thank you.

In Paragraph 7(z), you say: "The parameters for assessing good faith without fault of a third party differ if they refer to assets directly or indirectly linked to illegal activities, or if they refer to assets whose origin is lawful."

Do you see that, sir?

A. Yes, I do see it.

[Page 1221]

Q. Dr. Reyes, diligence has to occur before a purchase; right?

A. Before any legal act, not necessarily a purchase.

Q. And, of course, the entire purpose of doing diligence is to determine whether the asset that I'm acquiring is legal or illegal; right?

A. Yes.

Q. And yet, under your interpretation, sir, the Court has set out a different standard that I need to apply if it's legal versus illegal; isn't that right?

A. In part.

Q. Please clarify.

A. It has to do with a 44-page long decision. And I mentioned this because the Judgment or the Decision is made in the last 10-and-a-half pages. What does the Court do in the other 30 pages? It addresses the key issue of the debate, which was whether the Court had already said that all of the grounds for asset forfeiture enshrined in the law were in keeping with the Constitution.

So, through Pages 28 to 30 of that decision,

[Page 1222]

the Court states that there is only one topic that has not been addressed, one subject matter that has not been addressed by the Court. And it has to do with the assets, equivalent assets, of licit origin, and they offer an example.

If a drug dealer or a criminal also has a licit job from which a salary is received and that salary is used to pay a loan, to pay off a loan, that is an asset of a licit origin that may only be pursued as equivalent asset if it is in the hands of the person that carried out the illicit conduct.

So, the Constitutional Court is just referring to one of the specificities of the last grounds for asset forfeiture that is pursuing equivalent assets whenever they are of licit origin.

Q. Thank you, Dr. Reyes. I'm not sure that responded to my question, but let's again, basic principles here: Do you believe the Constitutional Court in this Decision set out a different standard of diligence for assets of legal origin versus illegal origin?

A. Yes.

[Page 1223]

Q. Dr. Reyes--

A. Let me sum up what I just said because about all of the other aspects it had already addressed, so the only constitutional possibility that the Court had was to address a subject matter that it had not addressed before.

And once it makes a decision about something that it has not addressed before, it establishes a new rule. It have never addressed that.

Q. Thank you, Dr. Reyes. And I will apologize, sir, that's not just the question I'm asking.

You have said that you believe there is a different standard of diligence for assets of legal origin versus illegal origin, and I guess I just have one question: If, before buying the asset and I'm trying to decide what diligence I need to do, I knew that the asset was illicit, I couldn't buy it at all, could I, Dr. Reyes? There is no amount of diligence in the world I could do that would allow me to knowingly buy an illicit asset, and yet your analysis seems to suggest that, before I buy it, I need to know that it's legal or illegal to then decide what

[Page 1224]

standard of diligence to do?

A. If you are referring to the Judgment of the Constitutional Court, it has to be with examples, that first, where the proceeding is pursuing equivalent assets; that is to say, proceedings that start after an asset forfeiture judge has said that that asset is not pursuable because there is a good-faith third party.

And second, they need to be equivalent assets of absolutely licit origin.

Q. Dr. Reyes, before we wrap up, I just want to ask one final concept here to clarify.

Is it your position, sir--let me rephrase.

The position I have heard from you today, sir, is that I have to redo diligence, every time I sign a new contract for the same conflicts real estate Development Project, every unit sale, every Mortgage Agreement, every subdivision, every time somebody tries to extort me, I need to run diligence again; is that right, sir?

A. Only if the circumstances have changed, and that the change in circumstances would lead a good

[Page 1225]

pater familias, or a good average citizen, to see that the no fault good-faith third party circumstances could have changed. That is what the good faith third-party without fault concept refers to. You cannot have a conduct that is different from whatever individual in your place would have adopted. One could wonder what would a person have done if it wanted to develop real estate, and if a drug-trafficker comes to that person and says, look, a criminal group in Medellín dispossessed me of my property and I am going to let the Prosecutor's Office know about this. Could they do nothing? Well, my opinion is that diligence must be conducted again to verify that that piece of property does not have an illicit origin.

Q. So Dr. Reyes, is there ever a point that I will have certainty that I can keep my investment?

A. When there are no circumstances that change the conditions on which the first good faith assessment was drawn, in that case, yes.

Q. 20 years down the line, a new circumstance arises as you said that changes my understanding of

[Page 1226]

the initial diligence, I still can't have legal certainty, then?

A. If you are referring to an Asset Forfeiture Action, you're right. The law indicates that the Asset Forfeiture Action cannot be time-barred. You mentioned that period of 20 years. So, within that period, the person should be conducting new actions, if new actions are going to be conducted (in relation to the property), and the person has information that the circumstances have changed, then an update is in order.

Q. Thank you, Dr. Reyes. Appreciate your time and your availability.

MR. SOTO: Mr. President, we have no further questions at this time.

MS. HERRERA: Mr. President, just very quickly.

REDIRECT EXAMINATION

BY MS. HERRERA:

Q. Sir, mention was made of the promise of sale of the Lot. Does Newport have to date rights in rem over the Meritage Lot?

[Page 1227]

A. Not that I know of.

MS. HERRERA: No further questions. Thank you.

QUESTIONS FROM THE TRIBUNAL

PRESIDENT SACHS: I have a question that is not yet clear to me.

Assume I buy a property in Colombia and there is no problem, nothing turns out, I do a due diligence that you would consider sufficient, and 10 years later I learned that a relative of Escobar was involved in the initial-at the origin of the property.

Now, does this affect my property rights?

THE WITNESS: Absolutely not.

PRESIDENT SACHS: Okay. If I want to resell the property in the year thereafter, so the new circumstance has arisen, and I want to sell my property, and now it is known that there was at the origin an illicit circumstance: Would I be able to sell the property to somebody else? Would that somebody else be a good-faith purchaser? Because he would know, wouldn't he-probably he would know-of that illicit origin.

[Page 1228]

THE WITNESS: Yes, you can sell it.

PRESIDENT SACHS: Thank you.

ARBITRATOR PONCET: Picking up on the President's question, Dr. Reyes, could you give us a specific example of the kind of circumstance that would require one to go over the books again, so to speak? I was thinking, as I was listening to you answering questions of my counsel, I was thinking of an obvious thing. If you're selling units in your property and suddenly three people turn up with suitcases of cash. Obviously that will call for very great attention, but that would be limited to the facts, to the immediate fact, who are these people who want to purchase with cash? Other than that, can you give me a specific example of something that would be a reason for going back several years, particularly in view of the answer you have just given to the President because you've stated in effect that learning X years later that there was tainted money in the beginning is no reason to affect one's good faith, one's status as a good faith owner.

So, could you please give me an example?

[Page 1229]

THE WITNESS: Before giving you an example, sir, I wanted to clarify something. The facts that I have had the opportunity to know are a good example because they show a continuous negotiation in which the Project continues to have actions that require that good faith be assessed. That is why I don't think that that stage has been closed.

In the example given to me by the President, the negotiation ended. He bought the piece of property as a no fault good-faith third party, and the only thing that the Fiscalía could eventually do is to go and prosecute an equivalent asset of the person that committed the illegal act.

But in this specific case, a number of actions continued taking place. I understand that the Project is still pending, it hasn't been finished. That is why there is this obligation of reviewing good faith on that project or a new one, of course, if the circumstances change.

ARBITRATOR PONCET: So, that would mean, in effect, wouldn't it, that mentioning taking up again, picking up again my example of units sold, if I sell a

[Page 1230]

unit to some Fellow who is going to pay with installments over five years, every time I get an installment, I have to conduct a new due diligence?

THE WITNESS: As described in the example, I would say that you could be committing a crime of money-laundering.

ARBITRATOR PONCET: What is the money-laundering in this case? It's the fact that the 24^th installment might be paid up-paid for with bad money? So, every time my purchaser gives me $3,000 for the weekly or the monthly installment, I have to conduct a new due diligence?

THE WITNESS: If I'm understanding your example correctly, a person who has origin sorry, who is aware of the illicit origin of some money, sells a property and receives that money of illicit origin. Did I understand correctly?

ARBITRATOR PONCET: No, no.

THE WITNESS: Excuse me then

ARBITRATOR PONCET I am, by hypothesis, a perfectly honest operator. Okay?

(Pause.)

[Page 1231]

ARBITRATOR PONCET: By hypothesis, assume I am a perfectly honest operator. I sell a unit for USD 200,000 payable over three years in monthly installments. If I read you--if I understand you correctly, this is a relationship that extends over time, so the consequence would be every time I get an installment, I have to carry out a new due diligence?

THE WITNESS: What I don't see in your example, sir, is the relationship that exists with the illicit property.

ARBITRATOR PONCET: The illicit property or the illicit asset in this case is not mine, by hypothesis, because we're in the hypothesis that the President mentioned before. But the Fellow who's purchasing might make the first three purchases with legitimate money, and then start a relationship with a drug dealer of some kind and pay me five, six, ten, twenty installments with dirty money. So, that means considering that the suspicion would be lingering, I would have to carry out a new due diligence every time?

THE WITNESS: No, I fail to see the

[Page 1232]

relationship with the property. Here, you would have an illicit source of the resources you intend to use to buy the property, and that could be a different situation of acts of laundering or illicit use of a frontman. But this does not impair the condition of the property.

ARBITRATOR PONCET: But you will agree with me that using dirty money to purchase real estate is a classical, classical, money-laundering scheme.

THE WITNESS: Definitely.

ARBITRATOR PONCET: So, if somebody starts borrowing half my property or one-tenth of it, I do have to conduct a due diligence, I have to be careful to whom I am selling. KYC, "know your client"; right?

THE WITNESS: Yes.

ARBITRATOR PONCET: But if that client is paying in installments, according to what you've just explained to counsel, I have to do a new due diligence every time I get an installment. And that doesn't make any sense.

THE WITNESS: If I become aware during the installment payments that the conditions have changed,

[Page 1233]

yes.

Let me explain: if for the first installment, there was nothing to indicate the illicit origin of the money, if due diligence was conducted on that money, there would be no problem. But if for the third, fourth, or fifth installment a person sees on television that the buyer was captured, prosecuted for drug-trafficking , and that the money product from these illicit activities is being used to buy assets, I think the information on the diligence should be updated.

ARBITRATOR PONCET: I agree with you.

That's clearly a case where one would have to check again. But that means, does it not, that the duty of "new due diligence" is limited to new facts becoming suddenly known. It doesn't require a constant effort of my part to go and investigate everything because otherwise all I will be doing is to investigate my purchasers. We agree on that?

THE WITNESS: Fully agree.

ARBITRATOR PONCET: Okay. Thank you very much.

[Page 1234]

PRESIDENT SACHS: Thank you, Dr. or Professor Reyes for your expert testimony.

We will have a short break now. Who is next?

MS. BANIFATEMI: Except that it's 6:15.

THE WITNESS: May I step down, Mr. President?

PRESIDENT SACHS: Sorry?

THE WITNESS: May I step down, Mr. President?

PRESIDENT SACHS: Yes. You are released.

Thank you very much.

(Witness steps down.)

MS. BANIFATEMI: Maybe to make progress we could have--I mean, David it's your call.

PRESIDENT SACHS: There will be another presentation.

MS. BANIFATEMI: I think there's another presentation.

MR. MOLOO: Two points. One is the presentation is meant to be 30 minutes.

PRESIDENT SACHS: Yes.

[Page 1235]

MR. MOLOO: And given that cross-examination is going to be immediately thereafter, for two reason, I think it's cruel and unusual punishment to keep someone in purdah overnight.

But the second, is also I think it would be beneficial to have the presentation directly before the cross-examination, for two reasons, one is that it's fresh in your gentlemen's mind, but second of all, just for fairness, that's the position we're going to be in is have a presentation directly before the cross-examination for their experts. Since we only have 15 minutes left--14 minutes now, I would suggest we just wait until tomorrow morning. It looks like we're going to end up here Saturday morning, unfortunately, in any event. So, I just don't see, although I see some surprise.

(Comments off microphone.)

ARBITRATOR PONCET: Off the record, David.

(Pause.)

PRESIDENT SACHS: Let's try our best for tomorrow, but we shouldn't feel under time pressure.

MS. BANIFATEMI: The proposal of starting at

[Page 1236]

9:00, we're fine if the Tribunal is fine, and if David is fine.

THE INTERPRETER: The Interpreters are also on board?

PRESIDENT SACHS: It will be fine for us, yes? No problem for the Tribunal. Interpreters?

THE INTERPRETER: The Interpreters are fine, Mr. President. Thank you.

PRESIDENT SACHS: Thank you very much. Then see you tomorrow. Have a nice evening.

(Whereupon, at 6:15 p.m., the Hearing was adjourned until 9:00 a.m. the following day.)

[Page 1237]

CERTIFICATE OF REPORTER

I, David A. Kasdan, RDR-CRR, Court Reporter, do hereby certify that the foregoing proceedings were stenographically recorded by me and thereafter reduced to typewritten form by computer-assisted transcription under my direction and supervision; and that the foregoing transcript is a true and accurate record of the proceedings.

I further certify that I am neither counsel for, related to, nor employed by any of the parties to this action in this proceeding, nor financially or otherwise interested in the outcome of this litigation.

Signature

DAVID A. KASDAN