The law represents a victory for socialist President Rafael
Correa’s in his six-year battle with the country’s media during
which he has sued several media outlets for libel and insulted
reporters with epithets such as “wild beasts” and “rabid dogs.”

Opposition lawmakers, who wore gags during the debate, say
the law will allow the government to control media through
loosely defined regulations that require information be accurate
and balanced.

Government officials, however, said it will make
communications more democratic.

“This law is a milestone that separates the before and after
in the history of communication and access to information by all
Ecuadoreans,” Political Management Minister Betty Tola told
reporters.

Several rights groups including the Committee to Protect
Journalists and Amnesty International have expressed concern
that the Correa government might be trampling on freedom of
expression.

“One of this law’s main flaws is the creation of a new
mechanism for regulating the traditional media and their
websites. Another is its attempt to influence how the profession
of journalism is defined and practiced,” Reporters Without
Borders said on Friday.

The law calls for the creation of a watchdog that can impose
fines and force media outlets to issue public apologies if it
concludes that they defamed people or that the information
published could prompt a “violent” reaction from an audience.

LAW PROVISIONS

The law also calls for a redistribution of broadcast
frequencies and reserves 33 percent of frequencies for state
media, 33 percent for privately owned broadcasters and 34
percent for indigenous groups. But it will not take away
existing concessions to radio and TV networks.

“Such an allocation constitutes a powerful lever for media
pluralism,” said Reporters Without Borders.

The law enshrines some universal media rights, including the
right to withhold the name of a source, and prohibits public
officials from censoring media outlets.

Lawmakers had been discussing the media law on-and-off for
four years, but the ruling Alianza Pais party won almost
three-fourths of seats in Congress in February, and now it can
pass laws without having to negotiate with the opposition.

Correa’s government has launched TV and radio networks, as
well as a news agency to counteract privately owned media. He
also filed charges against journalists and newspaper owners for
libeling him, although he pardoned the defendants after they
were sentenced to jail or to pay hefty damages.

After taking office in 2007 Correa ushered in a period of
political stability. His government has not faced the kind of
widespread social protests that forced three presidents to step
down in the decade before he took office.

High state spending on infrastructure and social projects
propelled the U.S.-trained economist to a sweeping re-election
victory in February.

But Correa, 50, has been criticized for his strong-arm
governing style. He has quarreled with foreign oil investors,
local banks, telecommunications companies, the U.S. government
and the Catholic Church.

(Additional reporting by Alexandra Valencia and Patricio Vivas;
editing by Jackie Frank)

Ecuador’s mining industry is at its infancy, but the Andean
nation is largely unexplored and could potentially have big
copper, gold and silver deposits.

Socialist President Rafael Correa, who won a sweeping
re-election victory in February, is eager to attract investment
to reduce the economy’s dependence on oil exports and help
finance social spending – the key to his high popularity.

But the U.S.-trained economist wants the Ecuadorean state to
take the lion’s share of mining revenues. That prompted Kinross
Gold to halt the development of its Fruta del Norte gold
project on Monday because it considered the tax burden would
have made the project inviable.

Yet the new mining law, approved with 105 votes in favor, 14
votes against and 14 abstentions, has generally been applauded
by other investors.

“The law makes it very attractive to invest in small and
medium-size projects in Ecuador. Regarding large-scale mining,
the tax burden is still a big problem, especially the windfall
tax,” said the head of the Ecuadorean mining chamber Pablo
Acosta.

The law seeks to ease investment terms by delaying the
coming into force of the windfall tax until miners recover their
investments. It also sets a ceiling on mining royalties of 8
percent for exports of gold, copper and silver.

It states that small-size mines will have to pay 3 percent
in royalties, compared with 4 percent for medium-size and a
minimum of 5 percent for large-scale mines.

Meanwhile, small and medium-size miners can push ahead with
their projects signing more flexible “concession” deals, instead
of having to negotiate exploitation contracts with the
government.

The law also seeks to eliminate red tape so that investors
can push ahead faster with their projects.

It calls for tougher penalties on illegal miners and it
tightens environmental protection rules.

OTHER PROJECTS

Last year, Correa signed the nation’s first large-scale
mining contract, under which Chinese-owned Ecuacorriente is due
to invest $1.4 billion in the El Mirador copper project.

Kinross’ decision to put an end to Fruta del Norte is a blow
to the government’s plan to attract large mining investors, but
the mining chamber said there will be no shortage of companies
interested in taking over the project.

“The state will have to put it up for tender, or it will
look for a partner to exploit it … But you can be sure that
this deposit will be exploited,” said Acosta as he hailed Fruta
del Norte’s potential to become a top-class gold mine.

David West, an analyst with Salman Partners in London said
Ecuador’s failure to sign a contract with Kinross is unlikely to
have a negative impact on negotiations with other mining
companies.

“My assumption is each negotiation is a one-off. There’s no
direct link between how one is going compared to another,” West
told Reuters, adding that even though Ecuador is trying to ease
investment terms for miners, the country remains “a difficult
place to do business.”

“I can’t see mining companies spending a large amount of
money in Ecuador over the next little while. And you could even
point directly to this as a reason why they wouldn’t,” he said.

Ecuador also plans to negotiate contracts with International
Minerals Corp over its Rio Blanco gold-silver project,
with Ecuacorriente over its Panantza-San Carlos copper deposit,
and with INV Metals Inc, which plans to develop the
Loma Larga gold-copper-silver mine.

Those three are in relatively advanced stages of
exploration, but junior miners have about 15 other exploration
projects under way.

Santos met with Venezuelan opposition leader Henrique Capriles earlier this week, triggering a furious reaction from Maduro, who accused Santos of “betrayal” and said he was in cahoots with Capriles to plot against him.

“It’s crazy to think that the Colombian government might be aware, or even worse, backing some kind of action to destabilize the Venezuelan government,” Santos said in a speech in southwestern Colombia.

He said that any misunderstanding between the countries should be resolved through diplomatic channels.

The South American nations have had patchy relations for the last decade due largely to ideological differences, but Santos’ diplomatic approach since taking office in 2010 led to a detente.

Capriles’ visit to Santos on Tuesday was part of a planned tour through Latin American countries to press his case that an election last month that Maduro won by just 1.5 percent of the vote was fraudulent.

Maduro, the political heir of late socialist president Hugo Chavez, said the meeting led him to put bilateral relations under review and withdraw his envoy to peace talks under way in Cuba between the Colombian government and Marxist rebels.

The head of Bogota’s negotiating team on Friday said he hoped Colombia and Venezuela would be able to patch up relations because the latter’s presence has been helpful for the talks, which are aimed at putting an end to five decades of war.

“The role played by Venezuela has been very important to facilitate the talks, very important. We hope this won’t be interrupted,” Humberto de la Calle said.

In the past, Maduro, a 50-year-old former bus driver and union leader, has accused the United States as well as former Colombian president Alvaro Uribe of plotting to assassinate him.

Then came charges that Salvadoran mercenaries were out to assassinate him and sabotage the power grid to sow chaos.

Such finger-pointing has been a mainstay of Venezuelan politics since Chavez was first elected president in 1998 and began pushing ahead with what he called a “socialist revolution” that pitted the government against the private sector and U.S. “imperialism.”

Chavez died in March after a long battle with cancer. Maduro, who lacks Chavez’s charisma and has proven less popular among the poor majority, went so far as to suggest Chavez’s illness might have been caused by enemies in the United States.

(Editing by Eric Walsh)

In a Reuters poll on Monday all 22 analysts expected
policymakers to maintain borrowing costs at 3.25 percent. It was
the first such poll in 12 months in which all economists
predicted the same monetary policy move.

The question mark for investors will be if the bank votes to
extend its dollar purchase program, for how long and at what
daily level.

Colombia has cut its key lending rate by 200 basis points
since July last year to counter weak international demand for
commodity exports and a slowdown in domestic demand in the $330
billion economy. In March the bank accelerated cuts, slashing 50
basis points to the current level.

“Doubts remain in Europe, but there are expectations for an
improved U.S. economy,” said Munir Jalil, economist at
Bogota-based Citigroup. “So on the international front, there is
light at the end of the tunnel for Colombia’s economy.”

The Andean economy grew more slowly in the first quarter of
this year against the same period a year ago but is expected to
speed up in the second quarter, the bank has said of GDP data
due in June. Last year, economic growth eased to 4 percent, much
lower than the 6.6 percent expansion in 2011.

Economists reckon the government’s recent measures to stoke
economic growth, which include accelerated state spending in
infrastructure and aid to the construction sector, will prove
effective and reduce the need for any more cuts this year.

The government measures are aimed at bringing economic
growth back up to potential of 4.8 percent, though most
economists, including those at the central bank, expect growth
of around 4.3 percent this year.

“Consumer and investor confidence surveys in the past two
months have shot upwards, that’s the threshold to a much more
dynamic economic activity. Therefore it’s working,” President
Juan Manuel Santos said on Thursday, referring to the stimulus
package.

PESO QUESTION

The government is fighting to boost industrial production,
which has fallen in the last five months as factories struggle
with a strong peso that pits them against cheaper imports and
increased labor costs.

Manufacturing slumped 11.5 percent in March, the sharpest
year-on-year drop since mid 2009. The drop could be due to the
earlier-than-usual Easter holiday, prompting fewer working days
than usual.

The currency has strengthened steadily over the last
decade – with a respite in 2008 – from about 2,800 pesos per
dollar at the end of 2003, prompting heavy lobbying by exporters
and industrialists. Last year alone it gained 9 percent, but a
potent dose of intervention, both verbal and actual, has brought
it down about 7 percent this year.

The currency closed on Thursday at 1,891 per dollar.

The bank buys at least $30 million daily on the spot market
in a program that ends on Friday. Of the 22 economists polled by
Reuters, seven see the board extending the program through
August, while three expect an extension until September and six
until the end of the year.

The remaining analysts predict the bank will halt the
program as monetary policy in the United States shows signs of
being less active in the foreign exchange market.

“The big question is what the bank decides to do with the
dollar purchasing program; if the rate decision is announced
late, it will be because they are debating that,” said Jalil.

Finance Minister Mauricio Cardenas last week said he planned
to ask the central bank’s board members to extend the program
until year-end.

In the last few days the currency has also moved closer to
the government’s “neutral range” of between 1,900 and 1,950
pesos per dollar.

“Cardenas has been very transparent about what he wants the
board to do. The kite has soared recently, now we need to see
how much more wind he wants to put under it,” said Jalil.

After years of near-zero interest rates, the United States is showing signs that an end to expansive monetary policies could occur in two or three years as its economy gains steam, Jose Dario Uribe told the Reuters Latin America Investment Summit.

“In the medium term, or maybe further down the line, probably the biggest challenge from the point of view of monetary policy is to be well prepared for a process to normalize monetary policy, in particular in the United States,” said Uribe, who heads the seven-member board at the central bank.

That could slow capital flows into emerging markets like Colombia, which made its currency among the strongest worldwide last year.

Colombia would be able to adjust its monetary policy easily if the United States chose to implement counter-cyclical policies, but the country may struggle if debt problems in Europe and higher inflation in industrialized countries lead to higher interest rates there, Uribe said.

“This type of interest rate hikes could of course be more traumatic and one must be permanently thinking about the possibility,” Uribe said.

The central bank last month ended a five-month cycle of interest rate cuts – leaving the benchmark interest rate at 3.25 percent – after the government unveiled measures to weaken the peso and bolster the slowing economy.

But with inflation near the bottom end of the bank’s 2 percent to 4 percent target range, policymakers may now opt to take a neutral approach to monetary policy in the short term, as they wait for the rate cuts to have effect.

“To be honest, I see that the Colombian economy is going to grow more than 4 percent this year and inflation is going to be around 3 percent. So I see that it’s really good,” Uribe said in an interview at his Bogota office.

“But what makes me a bit uneasy is that I look forward and I see shocks that could eventually happen and (I wonder) what’s the best way to prepare for those shocks.”

Uribe, who has been at the helm of the bank since 2005, also expressed concern that commodity prices may drop further. Colombia is a leading exporter of oil, coal and coffee. The value of the country’s exports has fallen for five straight months, slipping 20 percent from March 2012.

INCREASING RESERVES

Uribe hinted that the central bank’s cycle of expansive monetary policy may have slowed down, or stopped altogether.

“One is relaxed about the decrease in interest rates because the economy needs that decrease … but we also know that low interest rates for long periods of times could lead to high-risk decisions.”

The central bank has engaged in currency intervention, buying at least $30 million daily on the spot market in a bid to weaken the peso, which last year gained 9 percent, cutting into the revenues of exporters and manufacturers.

Actual, as well as verbal intervention by Uribe and Finance Minister Mauricio Cardenas, have weakened the peso by 5.4 percent this year.

“Foreign reserves have increased greatly. Last year, we bought almost $5 billion. … This year, we will be buying at least $3.5 billion. Let’s see what we do for the rest of the year. We already have foreign reserves that are close to $40 billion,” Uribe said.

He said high foreign reserves could help protect the Colombian economy from external shocks.

(Additional reporting by Luis Jaime Acosta; Writing by Eduardo Garcia; Editing by Peter Cooney)

The members of the nascent Pacific Alliance group also aim
to promote free market policies as the key to economic growth,
attract more foreign investment and integrate their capital
markets and energy networks.

At a meeting in the city of Cali, Colombia, the presidents
of the four member countries agreed to remove tariffs on 90
percent of the goods traded between them, and to eliminate
duties on the remaining 10 percent in the medium term.

The tariffs will be lifted in July, Colombia’s President
Juan Manuel Santos told a press conference after the summit.

“The door to our destiny is the construction of an area of
deep integration that will allow us to become part of the global
economy more successfully and more forcefully – particularly in
the Asia Pacific region,” Santos told reporters.

The cluster of nations includes some of Latin America’s
fastest-growing economies. They have a combined population of
210 million and their total gross domestic product accounts for
more than a third of Latin America’s GDP, said Santos, dubbing
the Alliance the “new economic and development motor” of the
region.

Latin America is broadly divided between the Pacific
countries that are free-trade advocates, and the Mercosur states
on the Atlantic side that have been more reluctant to drop
barriers to trade.

Robust economic growth, high commodity prices and explosive
domestic demand have lured high levels of capital to much of
Latin America in the past decade.

According to the United Nations, the region’s economy is
seen growing 3.5 percent this year, up from 3 percent in 2012,
boosted by strong growth in Brazil and Argentina, surging
domestic demand, as well as agriculture and investment.

However, the shaky global scenario, characterized by
persistent uncertainty and low growth, will likely dampen demand
for commodities produced in Latin America. Many countries in the
region, whose exports include soy, copper and oil, are dependent
on avid Chinese demand for their products.

MESH OF BLOCS

Despite recent moves by Latin American nations toward
“regional integration,” there are bitter internal differences
over trade policy.

The Pacific Alliance will aim to gain more clout in Latin
America by promoting free trade and focusing on fast-growing
Asian economies as an alternative to the protectionist policies
championed by Mercosur members such as Argentina and Venezuela.

Even though it is only a year old, the Pacific Alliance
seems to be gaining momentum. Costa Rica, Panama and Guatemala
have already expressed a desire to become members.

The group’s progress may be helped by the death of
Venezuelan President Hugo Chavez, who spearheaded a batch of
leftist nations that rejected U.S. “imperialism” and free trade.

His death in March after a long battle with cancer left
Latin America without one of its most influential presidents,
leading to a power vacuum that could be filled by more pragmatic
leaders.

(Additional reporting by Helen Murphy; Editing by Lisa
Shumaker)

Good crop weather, increased fertilization, and the progress of a coffee tree renovation program will lift Colombia’s production to 10 million bags in 2013, up about 30 percent from 2012, and pave the way for higher output in the future, Luis Genaro Munoz told the Reuters Latin American Investment Summit.

But some buyers and roasters are disappointed with Colombia after five years of below-average output, and they have turned to other suppliers in Central America, Peru and Brazil. Winning them back and finding new buyers in untapped markets will be Colombia’s biggest challenge in future years, Munoz said.

“Obviously we’re working to recoup those countries that traditionally were consumers of Colombian coffee and they changed their mix as a consequence of the drop in production.”

Although the majority of Colombia’s coffee is exported to Europe and the United States, Genaro said that in the past two years Colombian growers have begun selling their beans in 12 new markets including some in Asia and the former Soviet Union, as well as in Australia.

The growers federation, which represents some 570,000 producers in the rapidly-growing nation, is also betting on an ambitious expansion plan for its chain of coffee shops, Juan Valdez.

At present Juan Valdez has 172 shops in Colombia and 43 more overseas. The company plans to open 15 shops in Peru this year, and 15 more in 2014, as well as three stores in the Mexican capital and several more in Florida, in the United States, and in Ecuador.

“It depends on the lawyers, but the company also aspires to open shops in the second half in … Dubai and Kuwait, as a foothold in the Emirates. We’re also in China, selling through the Internet and studying the possibility of franchises as an expansion model there,” Munoz said.

Some 18,000 coffee growers are Juan Valdez shareholders, while producers earn a premium when they sell their beans to the chain. Although the volume of coffee the chain sells is small, it is helping to promote Colombian coffee around the world, and cementing the country’s reputation as the top producer of high-quality Arabica beans.

MARKET PRESENCE

Munoz said he thinks the coffee output of other arabica producers in Central and South America is likely to shrink as they struggle with a devastating crop fungus known as “roya”, and older and less-productive coffee plantations.

The International Coffee Organization last month warned that an outbreak of the leaf rust fungus in the high elevations of Central America will have a more damaging impact on production than previously feared, forecasting 3 million 60-kg bags of coffee will be lost.

The leaf rust kills coffee leaves by sapping them of nutrients and drastically lowering bean yields and quality.

However, after renovating around 70 percent of its coffee plantations with varieties resistant to leaf rust that have been specifically developed for eight different regions, Colombia is now ready to take over the market, Munoz said, adding that a planned increased in fertilization will lead to higher yields.

“Without a doubt, we need to continue insisting on the need for fertilization in the country and we’re working toward that end. We want 2013 to be not only the year of (tree) renovation, but also the year of fertilization,” he said.

He said farmers are using about 350,000 tonnes of fertilizer a year and they want to lower the costs of buying fertilizer so that growers increase usage to 500,000 tonnes per year.

Genaro said some Central American countries have asked Colombian growers for the seeds they have developed, but that they currently do not have any available for export.

“The world is only starting to face the impacts of global warming on agriculture … that requires knowledge and investigation and luckily we’ve been developing varieties for 30 years that are better prepared for global warming.”

(Reporting by Eduardo Garcia; Editing by David Gregorio)

“The report presented by the OAS today is a vital piece in
the construction of a common way to fight this problem,”
Colombian President Juan Manuel Santos said during the
presentation of the 200-page report in Bogota.

Almost all the cocaine consumed in Western countries is
produced in Latin America, while violence linked to the drug
trade kills thousands every year as smugglers fight for control
of trafficking routes in Central America, Colombia and Mexico.

Drug consumption is ticking up in nations such as Argentina
and Brazil. According to the OAS, about 45 percent of cocaine
consumers, 50 percent of heroine users and 25 percent of
marijuana smokers live in North and South America.

The report for the OAS, which includes all 35 North and
South American nations, aims to start a debate among American
nations regarding anti-drug policies. It also advocates for
softer policies toward drug users.

“The decriminalization of drug consumption must be
considered the base of any public health strategies,” the report
says. “An addict is not a person with a chronic disease that
should be punished for his addiction.”

The report echoes comments by Helen Clark, the head of the
U.N. Development Program, who in March said she favored Latin
American governments treating drugs as a public health
problem.

It also calls for “a substantial reduction in penalties” to
drug addicts and urges countries in the region to opt for
rehabilitation programs instead. It suggests that countries in
the region should consider the option of legalizing or
decriminalizing marijuana consumption.

“Our report, however, did not find any significant support,
in any of the countries, toward the decriminalization or
legalization of any other illegal drug,” the OAS said.

The United States has sent billions of dollars to Colombia
to combat the cocaine trade but still there is limited
coordinated effort between countries in fighting drug
trafficking and usage. That prompted several member presidents
to ask the OAS to analyze the region’s anti-drug policies in
order to make them more effective.

The Open Society Foundations, a human-rights and
pro-democracy group, celebrated the report as a “game changing”
document that likely will broaden the debate on drug policy
reform.

“This is the beginning of an international conversation on a
new approach to drugs,” said David Holiday, the group’s senior
regional advocacy officer. “We can hope this will move policies
from those currently based in repression to strategies rooted in
public health and human rights.”

Many in Latin America feel a new approach is needed to the
drug war – and a shift away from hard-line policies – after
decades of violence in producer and trafficking nations such as
Colombia, Peru and Mexico.

Some regional leaders are pressuring the United States for
an overhaul of anti-drug policies. Presidents including Santos
have suggested they might be open to legalization of some
narcotics if that helped reduce violence.

(Reporting by Eduardo Garcia; Editing by Bill Trott)

Workers at Colombia’s top coal miner, Cerrejon, walked off
the job for more than a month in February, demanding better
wages and benefits. Weeks of tough negotiations led to the
signing of a three-year agreement in March, but Cerrejon said it
will likely miss its 2013 output goal of 34 million tonnes.

Loading at a coal port controlled by U.S.-based Drummond Ltd
, the country’s second largest coal miner, was
suspended by Colombia’s environmental regulator in February
after bad weather caused a coal spill from a barge into the
water.

“Among the reasons that led to this performance are the
stoppage at Cerrejon for 32 days and the suspension on loading
ships at Drummond’s port for 23 days,” the government-run
National Mining Agency said in a statement.

Meanwhile, transport on overnight trains at the country’s
main coal railway was halted for nearly a month over noise
concerns.

Data released last week by the country’s statistics agency,
DANE, showed that the value of coal exports decreased by nearly
45 percent in the first quarter, which contributed to a 9.5
percent drop in the value of total exports for the period.

A drop in exports, as well as shrinking industrial output
and retail sales, are expected to drag down economic growth in
the first quarter. The Andean economy grew 4 percent in 2012, a
slowing down from 6.6 percent the previous year.

ONGOING PROBLEMS

Last year, coal miners were hit by a spate of labor
disputes, including a strike at the key coal railway and a
walkout at a Glencore-owned mine, as well as delays in
environmental permits and a rise in guerrilla attacks.

Coal production last year missed the government’s target by
nearly 9 million tonnes, even though national output rose 4
percent to 89.2 million tonnes.

The government forecasts this year’s coal output at 94
million tonnes.

The majority of Colombia’s coal goes to the United States
and Europe, but the industry has increasingly looked to
diversify into Latin American and Asian markets given the
planned shutdown of coal-fired plants in Northern Hemisphere
economies.

The country’s coal sector is dominated by major producers
such as Glencore, Drummond and Cerrejon, which is jointly owned
by BHP Billiton Plc, Anglo American Plc and
Xstrata Plc. Their output accounted for nearly 80
percent of all the coal produced in Colombia in the first three
months of the year.

All major producers are expanding mines and infrastructure,
and production is expected to increase to over 100 million
tonnes in the coming years.

Interbolsa, the largest brokerage in the fast-growing Andean
country, was intervened and dissolved in November following a
liquidity problem that left it unable to make $11 million in
scheduled bank payments.

A criminal investigation by the Attorney General’s office is
under way to establish whether there were possible conflicts of
interest, share price manipulation and “hiding” of information
by the brokerage.

But lawmaker Simon Gaviria on Wednesday went a step further,
accusing Interbolsa of laundering money from drug cartels, crime
gangs and the Revolutionary Armed Forces of Colombia, or FARC,
the Marxist group that has been waging war against the state for
five decades.

Gaviria, head of the Liberal Party and son of former
President Cesar Gaviria, said another 11 brokerages are being
investigated by United States authorities for money laundering.

Gaviria declined to name his sources, saying that he did not
want to harm the ongoing investigations.

“There is money with links to the FARC, (Mexican drug boss)
Chapo Guzman, the (criminal group) Oficina de Envigado, among
others. The investigations are ongoing, and we could see some
arrests that may lead to extraditions in relation to these
activities,” Gaviria said.

Interbolsa could have been used to launder money coming from
bribes paid in exchange for public contracts, Gaviria said,
claiming Interbolsa used subsidiaries outside Colombia as well
as ghost companies for the illicit operations.

Finance Minister Mauricio Cardenas, who attended the hearing
in Congress alongside Central Bank head Jose Dario Uribe, said
he was aware that Interbolsa had been accused of manipulating
share prices and channeling money to tax havens.

“But what we heard yesterday was another thing, it suggested
(Interbolsa) was a launderette to, among other groups, cartels
that won contracts,” Cardenas told local radio.

“The attorney’s office will have to clarify that … but
what strikes me the most is that every time you dig into this
Interbolsa thing, you find more and more irregularities.”

No one at Interbolsa’s headquarters in Bogota was available
for comment on Thursday afternoon. Reuters also tried to contact
a company lawyer, but he could not be reached.

ONGOING INVESTIGATIONS

The Inspector General’s Office is also gathering evidence to
see whether government bodies or ministries failed to properly
monitor the brokerage.

Cardenas said that most of the 1.8 trillion pesos ($983
million) worth of assets that Interbolsa managed had already
been returned to the brokerage’s clients. He said that
regulations in the stock market will be tightened to prevent
irregularities.

Rupert Stebbings, analyst at Valores Bancolombia in
Medellin, said the accusations were a bit extreme, but that they
should be understood as a warning sign for the market.

“This whole sorry episode needs to serve as a watershed
moment for a market, which in truth has much stricter regulation
than most others in Latin America, to fine tune procedures and
clamp down on various areas.”

Colombian regulators in November ordered the reorganization
of Interbolsa SA, the brokerage’s parent company, in a
bid to restore confidence in the country’s capital markets.

The brokerage had about 50,000 clients and accounted for
about one-third of daily operations on the stock market.

(Additional reporting by Carlos Vargas; Writing by Eduardo
Garcia; Editing by Helen Murphy and Andrea Ricci)