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This is what can be taken away from a recent study by the Uniciencia Bucaramanga, a Colombian university, entitled 'Mining and Energy Policy: Analysis of the Case of Pacific Rubiales'. The report's author, Mario Alejandro Valencia, states, "Despite the fact that the base of Pacific Rubiales' wealth comes from the extraction of Colombian oil and gas, a large portion of it comes from financial speculation, an activity which results in zero investment for Colombia."

The report describes an increase in the number of Pacific Rubiales stock shares in circulation. It holds that 'issuing stock represents an exlcusive right to produce wealth, which the State cannot control nor benefit economically from'. The study found that, through this practice, the company made $2.5 million -- roughly 4.5 billion Colombian Pesos -- between 2009 and 2012, while their net income only increased by $1.2 million, or roughly $2.2 billion Colombian Pesos.

Valencia adds, "Because Pacific Rubiales is registered on the Toronto Stock Exchange and is headquartered in Canada, Colombian regulators (the Superfinanciera de Colombia) say they are legally barred from monitoring and controlling the issuing of the company's stock."
What is more, the report indicates that Pacific Rubiales could be carrying out activities through related companies, outside of the control of the Colombian state, which limits the amount it has to pay in taxes. Some of these companies are owned by Pacific's own executives, like Ronald Pantin, Serafino Iacono, José Francisco Arata and Miguel Angel de la Campa. According to the Valencia, "Companies like Taribo Holdings,  Rose Holdings, Golden Loricera Holdings y Cua Cua Investment, appear to be 'letter-box companies', or businesses that have no real function other than to serve as a front for transactions between economic associates, a practice which the Colombian internal revenue agency (DIAN) has denounced."

Colombian pensions in the hands of Pacific Rubiales

The report also notes that Colombian pension plans hold large numbers of stock in Pacific Rubiales. According to Valencia, pension funds like the following hold more than 45 million shares in the company: Grupo Aval (Horizonte y Porvenir) = 18,917,301 shares, Grupo Empresarial Antioqueño (Protección) = 18,663,518, Colpatria (Colfondos) = 4,939,051 and Skandia = 3,264,921, making up a total value of nearly $1 billion.

The author notes, "For Colombian workers, this is a risky situation, given that part of their future pensions is held in the stock of a company whose primary source of wealth is in the Campo Rubiales oil fields, a concession which ends in 2016. If the Colombian government does not renew the contract, what will happen to the value of those shares? Is this a way for Pacific Rubiales to put pressure on the State, through the savings of Colombians, to renew the concession?"

Finally, the report suggests that 'the extraordinary growth of Pacific Rubiales cannot be attributed to its technical knowledge alone, but also to its financial flows, its political adeptness and a Colombian government that is submissive to foreign capital.' It goes on to state that the case of Pacific Rubiales demonstrates how a context of policies bent on generating 'investor confidence', have led large mining and energy companies to view Colombia as a type of haven in which they can do business under conditions that cannot be found anywhere else in the world.

Mario Alejandro Valencia is an economist with a Masters Degree in Government and Public Policy. He is an assistant professor at the Uniciencia Bucaramanga , economic analyst at Cedetrabajo and, along with academics like Diego Otero, Amylkar Acosta, Álvaro Pardo, Guillermo Rudas and José Roberto Acosta, created the Colombian Tax Justice Network (Red por la Justicia Tributaria), charged with monitoring taxes paid by foreign and national companies in Colombia.

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