Banking Board of Ecuador

RESOLUTION No. JB-2015-3316

THE BANKING BOARD

CONSIDERING:

THAT through memoranda Nos. INSS-DASS3-2014-0425 and INSS-DASS3-2014-0448 dated April 8 and 9, 2014, respectively, the Audit Directorate of Complementary Funds of the National Security Intendancy determined that the Closed Previsional Complementary Fund Association ASOPREP-FCPC did not submit the financial statements corresponding to the months of January and February 2014 within the eight-day period counted from the last business day of the month to be reported, as provided for in Article 3 of Resolution No. SBS-2013-0507 of July 11, 2013, containing the Chart of Accounts for use by Closed Previsional Complementary Funds;

THAT based on Article 7 of Chapter I "Norms for the application of monetary sanctions," of Title V "On sanctions," of Book III "General norms for the application of the Social Security Law," of the Compilation of Resolutions of the Superintendence of Banks and Insurance and the Banking Board, and based on the delegation conferred by the highest institutional authority to the National Security Intendancy, this official, through Resolution No. SBS-INSS-2014-00538 of June 24, 2014, sanctioned the economist María del Carmen Quevedo Tobar, Legal Representative of the Closed Previsional Complementary Fund Association ASOPREP-FCPC, with a fine, in a personal capacity, of US$ 2,628.68, for non-compliance with the article invoked in the preceding paragraph;

THAT through communications entered into the Superintendence of Banks and Insurance on July 4 and 10, 2014, the economist María del Carmen Quevedo Tobar, Legal Representative of the Closed Previsional Complementary Fund Association ASOPREP-FCPC, with the professional sponsorship of lawyer Luis Fabián Rivera Miranda, filed before the Banking Board an appeal for review of the administrative act contained in Resolution No. SBS-INSS-2014-00538 of June 24, 2014, supported by Articles 66, numeral 23, and 76, numeral 7, letter l), of the Constitution of the Republic of Ecuador, and Article 28 of the Law on State Modernization;

THAT through Office No. JB-2014-1864 of July 17, 2014, the Secretary of the Banking Board communicated to the Legal Representative of the Closed Previsional Complementary Fund Association ASOPREP-FCPC that the appeal for review has been accepted for processing and that additional documentation may be presented within the term of fifteen days from notification of that office;

THAT through communication of July 16, 2014, the economist María del Carmen Quevedo Tobar, Legal Representative of the Closed Previsional Complementary Fund Association ASOPREP-FCPC, presented additional information for defense, within the appeal for review filed;

THAT in the writing of the appeal for review filed, which contains reiterative assertions regarding the antecedents of the case, the appellant argues, fundamentally: that as a prior antecedent to Resolution No. SBS-INSS-2014-00538 of June 24, 2014, ASOPREP-FCPC presented Office No. 0432-FP-

Resolution No. JB-2015-3316

Page 2

2014 of April 2, 2014, in which it requested an extension that would allow them to comply with the renewal of the administrative structure; the modernization and updating of financial and computer systems; and, the attention to claims of former participants, pending resolution, a request that to the present date has not been answered; that through Office No. 1070 FP-2014 of May 30, 2014, ASOPREP-FCPC presented the financial statements as of January 31, 2014, with the justifications and the due excuses for the delay, which were not accepted by the National Security Intendancy;

THAT through memorandum INSS-2014-1231 of August 29, 2014, the engineer Rosa María Herbozo, National Security Intendancy, after exposing the antecedents of the case and analyzing the arguments of the appellant, issues its technical report and concludes:

"(...) that in communications s/n of July 4, 2014, entered in this Superintendence on the same day, month and year; and, the reach writing dated July 10, 2014, (...) no arguments of a technical and legal nature have been presented that clearly disprove the administrative act contained in Resolution No. SBS-INSS-2014-538 of June 24, 2014, nor in the additional documentation presented through writing of July 16, 2014, (...) this office ratifies the content of Resolution No. SBS-INSS-2014-538 of June 24, 2014;"

THAT through Resolution No. SBS-2013-507 of July 11, 2013, the Superintendence of Banks and Insurance issued the Chart of Accounts for Closed Previsional Complementary Funds, whose Articles 3 and 7 provide:

"ARTICLE 3.- Closed Previsional Complementary Funds must obligatorily remit to the Superintendence of Banks and Insurance the monthly financial statements of the fund as administrator, within the term of eight (8) days counting from the last business day of the month being reported."

"ARTICLE 7.- This resolution shall be of mandatory application from January 1, 2014."

THAT through Circular No. IG-INSS-2013-064 of August 26, 2013, the Superintendence of Banks and Insurance informed the Legal Representatives of Closed Previsional Complementary Funds about the workshops prepared to instruct on the application of Resolutions Nos. SBS-2013-504 of July 9, 2013 and SBS-2013-507 of July 11 of the same month and year, containing the Norms for the Constitution, Registration, Organization, Operation and Liquidation of Closed Previsional Complementary Funds; and, the Chart of Accounts for these Funds, respectively, to which representatives of ASOPREP-FCPC attended;

THAT through Circular Office No. IG-INSS-DASS3-2013-077 of October 10, 2013, the activities and directives of general and mandatory application for the Funds were established, whose paragraphs 10 and 13 state:

---

Banking Board of Ecuador

Resolution No. JB-2015-3316

Page 3

"10. By December 31, 2013, closed previsional complementary funds must carry out the comprehensive closing of results of the period in the two catalogs; issue a complete set of financial statements generated with the two accounting systems, and remit them to the National Security Intendancy by January 8, 2013, in an irrevocable manner."

"13. The Fund's accountant is responsible for carrying out the homologation and maintaining the accounting in the two catalogs, until the mandatory application of the chart of accounts according to Resolution SBS-2013-0507, from January 1, 2014. The legal representative will be responsible for ensuring that the instructions given in this circular are complied with within the established deadlines."

THAT regarding the argument that as a prior antecedent to Resolution No. SBS-INSS-2014-00538 of June 24, 2014, ASOPREP-FCPC presented Office No. 0432-FP-2014 of April 2, 2014, in which it requested an extension that would allow them to comply with the renewal of the administrative structure; the modernization and updating of financial and computer systems; and, the attention to claims of former participants, pending resolution, and that said request has not been answered to the present date, it must be indicated that, according to the technical report of the National Security Intendancy, said office constitutes one of the many communications sent by the economist María del Carmen Quevedo Tobar, Administrator and Legal Representative of the Closed Previsional Complementary Fund Association ASOPREP-FCPC, "(...) in which with a myriad of arguments it seeks to subordinate all its non-compliances to the lack of designation of new administrative authorities (electoral process extremely delayed in time), the consequent reform of Statutes and finally, the obsolescence and difficulty of operation of the computer system, (...)", office that was duly answered through Office No. INSS-DASS3-2014-0508 of May 30, 2014;

THAT regarding ASOPREP-FCPC presenting the financial statements as of January 31, 2014 with Office No. 1070 FP-2014 of May 30, 2014, with the justifications and the due excuses for the delay, which were not accepted by the National Security Intendancy, it is worth indicating, first, that said office was entered into the Superintendence of Banks and Insurance on June 26, 2014; and, second, that it merited the response contained in Office No. INSS-DASS3-2014-0641 of June 30, 2014, in which reference was made to the late submission of the financial statements, and to what was stated in Office No. INSS-DASS3-2014-0400 of May 7, 2014, with which in response to Office No. 0719-FP-2014 of the 6th of the same month and year, information that had been sent late and should have been delivered within the period of on-site supervision was returned to the Administrator and Legal Representative of ASOPREP-FCPC, for the second time;

THAT in the pertinent part of Office No. INSS-DASS3-2014-0400 of May 7, 2014, the National Security Intendancy stated:

---

Resolution No. JB-2015-3316

Page 4

"3. The absence of ASOPREP FCPC personnel, whose contingent is necessary to attend to several requirements formulated in an audit process, is a situation that must be anticipated by the Administration, which has the obligation to adopt the necessary measures so that a particular absence does not affect the normal functioning of an entity that, as you state, is '(...) the second fund at the national level (...) and, (...) the first pension fund (...)'. This is correct, since your responsibility as legal representative in this case is determined by what is provided in numeral 43.3 of Article 43 of Resolution No. SBS-2013-504 of July 9, 2013, published in Official Registry No. 53 of August 7, 2013 and containing the 'Norms for the Constitution, registration, organization, Operation and Liquidation of Closed Previsional Complementary Funds (...)' ;

THAT the National Security Intendancy concluded the response indicating that: "(...) excuses (...) presented with your Office No. 1070FP-2014, which is dated May 30, 2014 and is entered into the Superintendence of Banks and Insurance 26 days later, are not admitted; (...)", since, with the aforementioned office, the information of the financial statements corresponding to the month of January 2014 was sent;

THAT as a response to Office No. INSS-DASS3-2014-0641 of June 30, 2014, the Administrator and Legal Representative of ASOPREP-FCPC signed Office No. 1514-FP-2014 of July 10, 2014, in which it presented its defenses related to the limitations for the exercise of its responsibilities and alternative solution, and requested an additional prudent term of fifteen days for the submission of the financial statements;

THAT those defenses were reviewed, analyzed and answered by the National Security Intendancy with Office No. INSS-DASS3-2014-0834 of August 26, 2014, in which it indicated:

"3. The proposed alternative solution is correct, which could well have been adopted previously, for the months of November or December, in such a way that it does not affect the compliance with the provisions issued by the Control Body."

(...)

In the present case, the National Security Intendancy is not delegated with the faculty to grant extensions or make modifications for the compliance with express provisions issued by the highest authority of this Control Body, through resolution of general application and mandatory compliance. (...)

Furthermore, it was reminded "(...) that the last receipt of information received in this control entity corresponds to the financial statements of April 2014, entered on August 11, 2014 (...)");

---

Banking Board of Ecuador

Resolution No. JB-2015-3316

Page 5

THAT in the processing of the present appeal for review, it must be taken into account that the second paragraph of the Third Transitory Provision of the Organic Monetary and Financial Code, published in the Second Supplement of Official Registry No. 332 of September 12, 2014, determines that the Banking Board will continue to act until resolving all claims, appeals and other administrative procedures that it was hearing on the date of entry into force of that Code, within a term of one hundred and eighty days, extendable at the discretion of the Monetary and Financial Policy Board;

THAT the National Legal Intendancy, through memorandum INJ-DNJ-SAL-2014-0807 of October 22, 2014, recommended to the Banking Board to reject the claim contained in the appeal filed by the Administrator and Legal Representative of the Closed Previsional Complementary Fund Association ASOPREP-FCPC; and,

IN exercise of its legal attributes,

RESOLVES:

SINGLE ARTICLE.- REJECT the claim contained in the appeal for review filed by the economist María del Carmen Quevedo Tobar, Administrator and Legal Representative of the Closed Previsional Complementary Fund Association ASOPREP-FCPC; and, consequently, CONFIRM the administrative act contained in Resolution No. SBS-INSS-2014-00538 of June 24, 2014, through which the National Security Intendancy, acting in a substitute capacity, sanctioned the appellant with a fine, in a personal capacity, of US$ 2,628.68, for non-compliance with Article 3 of Resolution No. SBS-2013-0507 of July 11, 2013.

NOTIFY.- Given in the Superintendence of Banks and Insurance, in Quito, Metropolitan District, on the twenty-fifth of March of the two thousand fifteen.

Signature: Econ. Rodrigo Landeta Parra
GENERAL INTENDANT (S)
PRESIDENT OF THE BANKING BOARD SESSION (E)

I CERTIFY.- Quito, Metropolitan District, on the twenty-fifth of March of the two thousand fifteen.

Signature: Lcdo. Pablo Cobo Luna
SECRETARY OF THE BANKING BOARD