Banking Board Resolution JB-2015-3418

Banking Board of Ecuador

RESOLUTION No. JB-2015-3418

THE BANKING BOARD

CONSIDERING:

THAT the second paragraph of the Third Transitional Provision of the Organic Monetary and Financial Code determines that the Banking Board will continue to act until it resolves all claims, appeals, and other administrative procedures it was handling on the date this Code came into force, within a period of one hundred and eighty days, extendable at the discretion of the Monetary and Financial Policy and Regulation Board;

THAT through Resolution No. 054-2015-F, dated March 5, 2015, published in the Official Register No. 467, on March 27, 2015, the aforementioned period was extended by an additional one hundred and eighty days;

THAT through a communication received by the Superintendence of Banks on October 1, 2013, Dr. Diego Chiriboga Pazmiño, General Legal Coordinator of the Ministry of Industries and Productivity, with the professional sponsorship of attorneys Emerson Curipallo Ulloa and Magdalena López, requested this control body to order Latina Seguros y Reaseguros C.A. to proceed with the immediate execution of the good use advance guarantee under public bond policy No. 0038856. The claim presented was admitted for processing by the Regional Intendancy of Guayaquil through letter No. IRG-DASSP5-2013-149, dated October 8, 2013, in which it also requested that Latina Seguros y Reaseguros C.A. provide explanations and documented information regarding the claim presented;

THAT through letter No. LAT-L-01-285-2013, dated October 10, 2013, Latina Seguros y Reaseguros C.A., with the professional sponsorship of attorney Ana Elena Rueda Guerrero, in response to the request from the control body contained in the preceding paragraph, stated the following:

• That upon the full right reception established in the Organic Law of the National Public Contracting System, the advance payment is fully accrued; and, therefore, there is no insurable object, so the enforcement of the requested guarantee is not appropriate;
• That subsequently to the above, the Ministry of Industries and Productivity carried out the unilateral termination of the contract, demanding the execution of the good use advance guarantee;
• That in the claim presented, the Ministry of Industries and Productivity did not provide the protocolization of the notification act of full right reception received on August 6, 2013, at 09H20;
• That full right reception is a valid institution determined in the Organic Law of the National Public Contracting System and its regulations, so that contractors, in the event of silence by the contracting entity,

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contractors can deliver the contracted object, whether work, good, or service, in due and legal form; and,

• That since there is no advance payment to be accrued, there is no insured sum; therefore, there is no guarantee to be executed;

THAT the Regional Intendancy of Guayaquil through letter No. IRG-DASSP5-2014-122, dated May 29, 2014, imposed on Mr. Antonio Arosemena Merino, General Manager of Latina Seguros y Reaseguros S.A., a fine of US$ 1,000.00 for the failure to execute the good use advance guarantee contained in public bond policy No. 0038856, as well as for the failure to send the settlement act duly signed by the Ministry of Industries and Productivity for the execution thereof;

THAT through a document entered in the Superintendence of Banks on June 11, 2014, Mr. Antonio José Arosemena Merino, General Manager of Latina Seguros y Reaseguros S.A., with the professional sponsorship of attorney Ana Elena Rueda Guerrero, filed an appeal against the administrative act contained in letter No. IRG-DASSP5-2014-122, dated May 29, 2014; and, with resolution No. SBS-IRG-DASSP5-2014-021, dated July 8, 2014, the then Regional Intendant of Guayaquil accepted the appeal for processing;

THAT due to the lack of attention to the constant requests made by the Regional Intendancy of Guayaquil within the processing of the claim presented by the Ministry of Industries and Productivity regarding the non-payment of the good use advance guarantee under public bond policy No. 0038856 by Latina Seguros y Reaseguros S.A., a fine of US$ 1,000.00 was imposed on Mr. Antonio José Arosemena Merino, General Manager of the insurer, under the provisions of Articles 37 and 40 of the General Insurance Law, which state as follows:

"Art. 37.- (...)

When in a controlled entity, its directors, administrators, or officials violate the laws or regulations governing their operation, or in cases where they infringe statutory provisions or norms and instructions issued by the Superintendence of Banks and Insurance, and especially when they fail to comply with the provisions of this Law; when they refuse to receive visits from auditors or officials duly accredited by the Superintendence of Banks and Insurance or refuse to supply the documents or data necessary for the practice of the audit; when they do not timely present the balance sheets, accounts, and other documents related to their business, or do not present the special reports requested of them; when they report deficiencies in reserves, investments, and solvency margin; if they do not pay the contribution for the maintenance of the Superintendence of Banks and Insurance within the period established, when

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they make investments not subject to legal norms; the Superintendence of Banks and Insurance, depending on the severity of the infringement, will impose one of the following sanctions:

(...)

b) To the directors and administrators of the private insurance system entity:

1. Reprimand.
2. Fine.
3. Removal.

In any case and without prejudice to what is established in this article, the Superintendent of Banks and Insurance will adopt measures aimed at restoring compliance with the violated norm. The fines imposed on directors and administrators will be paid from their own resources.

If a director, administrator, official, or employee, or even the external auditor of a controlled entity, is appointed or exercises their functions in contravention of what is provided in Article 17 of this Law, they will be removed from their functions by resolution issued by the Superintendent of Banks and Insurance, if the nominating body has not done so beforehand, or if they have not resigned."

"Art. 40.- The fines imposed by the Superintendent of Banks and Insurance in no case will be less than two hundred sixty-two and 89/100 United States dollars, nor more than two thousand one hundred three and 12/100 United States dollars; in cases where the damage caused by the infringement can be quantified, the amount of the fine must be related to it. The Superintendence of Banks and Insurance will issue the necessary norms for its application according to the gravity of the offense and the type of infringement.

The Superintendence of Banks and Insurance may exercise coercive jurisdiction for the collection of owed amounts.";

THAT Article 81 of the Organic Law of the National Public Contracting System, and Article 122 of its regulations, state as follows:

"Art. 81.- Classes of Reception.- In contracts for the acquisition of goods and provision of services, including consulting, there will be only one reception, which will occur in accordance with what is established in the contract and will have the effects of definitive reception. Upon reception, the guarantees granted will be returned, except for the technical guarantee.

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In contracts for the execution of work, as well as in fixed-price integral contracts, there will be a provisional reception and a definitive reception.

Without prejudice to what is stated in the preceding paragraphs, in contracting where works, goods, or services can be received in stages or successively, partial receptions may be carried out.

In cases where, upon the contractor's request, the Contracting Entity does not issue any pronouncement nor initiate reception within the periods determined in the Regulations of this Law, it will be considered that such reception has occurred by full right, for which effect a Civil Judge or a Public Notary, at the request of the contractor, will obligatorily notify that such reception occurred; the refusal of the official will be a cause for sanction by the Council of the Judiciary. The presumed definitive reception will produce as its sole effect the termination of the contract, leaving intact the rights of the parties to the corresponding technical-economic settlement.

The contracting entity will declare the presumed reception in its favor, regarding contractors of works, acquisition of goods or services, including consulting, in the case that they expressly refuse to sign the delivery-reception acts provided for, or if they do not sign them within ten days, counted from the formal request of the contracting entity. The presumed reception by the contracting entity will be carried out by the highest authority or its delegate through a reasoned resolution, which will be notified to the contractor in accordance with the procedure established in the Regulations of this Law."

"Art. 122.- Refusal to Receive.- The contracting entity may, within a term of 10 days counted from the contractor's request for reception, refuse to receive the work, good, or service, for justified reasons related to the fulfillment of contractual obligations assumed by the contractor. The refusal will be notified in writing to the contractor and a record will be made that it was practiced.

Upon expiration of the term provided in the first paragraph of this article without the contracting entity objecting to the reception request or making observations on the fulfillment of the contract, full right reception will operate, without further procedure, for which the contractor will notify through the intermediary of a Civil Judge or a Public Notary.";

THAT in line with the above, it is necessary to point out that the Ministry of Industries and Productivity through letter No. MIRPO-CGJ-2013-0216-OF, dated July 8, 2014, notified the consultant with the start of the process of unilateral termination of contract 13-129, and granted a term of 10 days for the presentation of the second addendum to the products that had to be delivered, as well as notified

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regarding the technical observations made to said products; and, that once the product is delivered to the entire satisfaction, it would be understood that the advance payment is fully accrued;

THAT from the review of the file, it has been verified that the products presented by the consultant were not to the entire satisfaction of the Ministry of Industries and Productivity, which is why the unilateral termination of the contract was carried out on August 6, 2013, due to the consultant's failure to fulfill their contractual obligations, as stated in the resolution issued by said public entity, which corresponds to the administrative knowledge of aspects related to the referred contract, including that related to the full right reception alleged by the insurer. On that same date, the insurance company was notified to proceed with the payment of the guarantees, which, since they are insurance policies for faithful performance of the contract and good use of the advance contracted for the benefit of an entity provided for in Art. 1 of the Organic Law of the National Public Contracting System, must be issued complying with the requirement that they be unconditional, irrevocable, and of immediate collection, so the insurer has the obligation to pay the value of the contracted insurance, within a term of forty-eight hours following the written request in which the insured requests the execution, as established in Art. 42 of the General Insurance Law;

THAT the sanction imposed by the Regional Intendancy of Guayaquil on Mr. Antonio José Arosemena Merino, General Manager of Latina Seguros y Reaseguros S.A., for non-compliance with the provisions issued by the control body, that is, the payment of the good use advance guarantee; and, for the failure to deliver the settlement act for the execution of the guarantee, is appropriate, according to the analysis performed;

THAT the National Legal Intendancy, through memorandum INJ-DNJ-SAL-2015-0276 of April 1, 2015, recommended to the Banking Board to reject the claim contained in the review appeal filed; and,

IN exercise of its legal powers,

RESOLVES:

ARTICLE ONE.- REJECT the appeal filed by Mr. Antonio José Arosemena Merino, General Manager of Latina Seguros y Reaseguros S.A.; and, consequently, CONFIRM the administrative act contained in letter No. IRG-DASSP5-2014-122, dated May 29, 2014, through which the Regional Intendancy of Guayaquil imposed on Mr. Antonio Arosemena Merino, General Manager of Latina Seguros y Reaseguros S.A., a fine of US$ 1,000.00 for the failure to execute the good use advance guarantee contained in public bond policy No. 0038856, as well as for the failure to send the settlement act duly signed by the Ministry of Industries and Productivity for the execution thereof.

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COMMUNICATE.- Given at the Superintendence of Banks, in Quito, Metropolitan District, on the thirteenth of May of two thousand fifteen.

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

I CERTIFY.- Quito, Metropolitan District, on the thirteenth of May of two thousand fifteen.

(Signature) Lcdo. Pablo Cobo Luna SECRETARY OF THE BANKING BOARD