Venezuela, Russia… Spain? Sovereign Immunity, Alter Egos & the Hunt for Assets

There is a tidy story we tell ourselves about who pays their debts. Rogue regimes and resource-rich autocracies default; mature European democracies, embedded in the rule of law and dependent on the confidence of the markets, do not. This episode is about what happens when that story breaks — when Spain, facing a wave of international arbitration awards arising from the retroactive cancellation of its clean-energy incentives, decides it would rather not pay, and finds itself the subject of frozen bank accounts and seized buildings across Europe.

Our guest, Ashley Messick, has spent fifteen years in the unusual profession that exists precisely for this moment. She is the person investors, law firms, and corporations call when a state goes rogue: when an arbitral award has been won and the debtor simply refuses to honor it. Her work sits at the intersection of law, private intelligence, and political risk — asset tracing, cross-border enforcement, and the patient, adversarial craft of forcing a sovereign to the negotiating table.

Transcript

SPEAKER_00 0:01

Yellow yellow yellow But I never money number me with a but I never money Play down call me on my blood Pay me what you want the bigger than the one give me a money Hi everyone and welcome back to Somewhere Anywhere podcast Of course I'm joined by my co-host Diego and we have a very special guest that Diego will now introduce.

SPEAKER_02 0:37

Yes, welcome everyone to another episode of our podcast. And you know, in the last few months, Spain has suffered several major legal defeats among different international jurisdictions. So it is now facing growing pressure over its refusal to compensate a big group of investors who were affected when some incentives were first given out and then retroactively taken back for those pouring in money into clean energy. So what happens when a state goes rogue? What happens when it decides to become a bad actor? When it doesn't want to settle its debts and it doesn't recognize those awards to which it is bound to by international treaties. That is something that Spain is doing right now. And that has led to several enforcement actions by the creditors. Because surely when you're sitting on, in this case, a 2.3 billion debt, you just don't sit on it. But you rather try and do everything within your control to get some sort of compensation and get that money back. So Spain has seen a bank account being frozen containing roughly 250 million, the seizure of a series of very valuable real estate properties, for instance, in the Netherlands. And uh who does that? Well, there's teams of experts, there's consultants, lawyers, advisors who are involved with the area of enforcement of international awards, in touch on arbitration, where you need rogue states, bad actors to actually sit at the table, negotiate, and settle, or just risk losing these assets and these properties. So our guest today is Ashley Mesick. She is the founder of Valida, and she spent 15 years doing this type of work, advising investors, law firms, companies, which are involved in very complex, difficult international disputes that often involve governments behaving badly. So her work shortly sits at the intersection of law, political risk, intelligence, cross-border enforcement. Ashley, welcome to the program. It's a pleasure to have you.

SPEAKER_03 2:41

Thank you both so much for having me. It's a pleasure to be here.

SPEAKER_02 2:45

So who are you?

SPEAKER_03 2:47

Who am I? Well, I'm the person you call what a state does go rogue. As you said, I've been involved for the last 15 years in intelligence and investigations. And a significant part of my practice is asset tracing and recovery and helping clients that are in hostile situations, specifically with states and state entities. And it's a challenging, challenging job. It's quite a fun one because, as you say, it does involve the intersection of politics, of intelligence, of the law, and it involves a lot of investigations and grunt work to try to identify how a debtor, how a state, sometimes how a corporate holds its assets and behaves. So when the state isn't paying, when the state's gone rogue, I guess I'd be the person that you'd reach out to to help alongside legal counsel in developing a global recovery strategy.

SPEAKER_00 3:43

How exactly does one get into this particular line of work? Because it's not the most straightforward choice of a career path.

SPEAKER_03 3:52

Well, in my case, I actually just I fell into it. I had studied political science and environmental earth sciences and was picked up by a headhunter and sort of thrown into the world of private intelligence. At the beginning of my career, I mostly focused on actually helping sovereigns and governments go after the proceeds of corruption. And then I quickly transitioned to more of the corporate side working for companies, particularly those in emerging markets, because that's where you see a lot of these large investments, large capex, you know, things like oil and gas, mining, infrastructure, and in jurisdictions where there is questions around political stability and rule of law and regulation. And so I sort of fell into the advisory side of helping clients and companies navigate some of these more challenging jurisdictions to better understand the sort of above-ground risks, the risks of the politics, the legal framework, the regulation, stability. And then when things went wrong or things turned a bit sour, as they have across multiple jurisdictions, when there has been change of governments or there's been issues of corruption or expropriation or resource nationalism, we've come in and helped them figure out what legal options they have and then what recovery options they have. And if, as you said, it's not a job that one sort of goes to university for.

SPEAKER_02 6:00

Political uncertainty, political risk, that is used broadly in the economic jargon, in the political jargon, in the financial press. But how do you assess political risk? How do you go along? How popular is this service? Walk us through your role as a political risk analyst. Because beyond being an expert on, of course, enforcement, you also do that preliminary background check that facilitates investors with a bit more clarity on whether to invest or not in a market.

SPEAKER_03 6:30

It's challenging because across different countries, you know, the politics changes, and with that comes all the trickle-down effects of things that will immediately impact investors. The regulation, the rule of law. Thinking about our work in the mining sector, for example. Uh a lot of clients are entering these hostile environments and they understand that they're risky and that there is, let's say, political instability. Maybe some of the legal frameworks and regulations are new, or there's a track record of the lack of adherence to those regulations, where there's issues of corruption and uh helping clients understand those risks and navigate them is a combination of understanding the current political landscape, coupled with a lot of on-the-ground investigative work, trying to talk to people that are involved in in ongoing companies that have had prior success or failures with the host government. Uh, and really just trying to give our clients more clarity so they can navigate and better assess is this the market I want to get into? And if so, how do I insulate myself? What should I be aware of? Um, and how do I yeah, how do I navigate some of these these complexities? One question, because I know we're gonna come to it, is you know, sort of the arbitration award space. And you know, unfortunately for investors, when they put their time, their effort, and and in many instances a significant amount of capital into a country and into an investment, um, they can try to insulate themselves, but you know, a change of government, um, a change of of regulation, a change of the laws could see their investment completely fail. And that's when having you know having the ability to bring a legal claim, you know, that that's a safety net and that's a security that investors look for. Because if if your assets are expropriated, if um it's you know it fails basically due to a complete overhaul of the landscape that you were promised, the investment and landscape you were promised, what else can you do but take the state or you know, or the state-owned entity to court? And so that's where my my work transitions on to the legal side of helping clients then understand you know what are my options, um, how how not only do I win the award against the state or the judgment or the claim, but how do I then enforce and how do I recover? And in some states, it's there's no question, uh a state will recognize an international arbitral award because they signed up to the contract, they participate in the legal dispute, and if they lose, they pay. And then in other instances, uh it's unfortunately a second hurdle for investors.

SPEAKER_00 9:15

So we're we're going to come to some of the examples of how to do enforcement when a state doesn't actually want to pay up front. But I am curious if you can explain at what stage do you come in? Because it's not obviously clear that of course, once the arbitrary warrant has been given and after X amount of time the state does not pay, like when are you typically engaged to start this kind of more enforcement process?

SPEAKER_03 9:43

Well, I mean, I'd love to say the earlier the better. You know, with some clients, it would have been a smoother ride if we had gotten involved earlier on. But it really actually depends. So we come in very early on when a client is considering do I actually bring an arbitration claim against, let's say, a state? And that's so that they can have a forward-looking view of if I win, will I get my money? And that's an important question to ask because international arbitration is time consuming and it costs money as well to bring these claims. So clients will have us come in quite early on to give them a bit of an assessment and an overview of what the prospects for recovery will look like and also what the timing and costs of that part of the battle would look like. There's also now a huge market, the litigation funding space. And these are investors that are uh basically investing in these legal claims. They're providing funding for companies that, you know, lost everything and the only asset they have now is the legal claim they could bring, but they also need the money to bring that legal claim. So for these litigation funders, we'll also come in very early on to help them assess is this a good investment? If you win the claim, will you be able to recover your money? Rasheed, when we turn to uh an actual company holding that piece of paper, holding that arbitral award that says, you know, Peru owes you 150 million, or um our lovely host Diego Sanchez owes you 150 million, we then come in and we'll do a much more thorough, robust piece of work. And uh often we're engaged sort of in the lead up to receiving that arbitral award because building a recovery strategy against a country like you know, Peru or Venezuela, or uh against individuals can take some time. And so our work needs to be, you know, we need the time to build up the strategy, get the holistic overview of the debtor, of the landscape, of the key decision makers, and then starts the legal process, which is also quite time consuming. You have to then have your awards recognized, uh, you have to look at the different jurisdictions where you want to seize assets. So, again, the earlier the better is when you should start considering this, but it's a constant process that needs to be updated throughout the the life cycle of the dispute, and then with much more intensity put towards the tail end when an award is rendered or in anticipation of an award being rendered.

SPEAKER_02 12:17

There is some data, Ashley, uh that the ICIT uh organization put out. ICIT, as you know, is the international center for the resolution of this sort of uh disputes between uh sovereign states and companies or individuals that may be suing them and looking for international arbitration solutions. So ICIT is actually linked to the World Bank and it issues arbitration awards just like the UN Citrale UN Convention does, just like Switzerland and other countries host this sort of legal uh solutions for uh states and individuals or companies to try and settle their differences, right? And uh the existing uh statistics, and I would like to talk to you about this, they do show that uh only 8% of cases do not get settled uh initially. So states misbehaving uh it's very much not the norm, which is something that I I think should be made clear. This doesn't mean that all that 92% goes down smoothly, but you ultimately settle. So the amount of awards that are still out there pending payment, these are really nasty cases. An obvious example is the Yukos case, 20 more than 20 years ago in Russia, that still represents the largest arbitration debt that is still to be settled, and that was Vladimir Putin's largest seizure of assets in the state, in this case the Yukos oil company, which was done for political reasons, obviously, because its owner was a seen as a fresh face that could perhaps be an alternative to him. Another large debt that is currently in the steel and recognition status, but some enforcement may be brought into place is the award linked to WPF, the large energy operator in Argentina, which was taken away from a Spanish investor, Repsol, and as a result of this nationalization, an award worth 16 billion was originated that is still pending. So walk me through these because on the one hand, it yes, it's true, 90% of the cases get settled. Not all of them are easy to settle, but but in many cases, states take the award and pay. In other cases, the fight is very nasty and uh it goes on for very long.

SPEAKER_03 14:33

Yeah, no, you're absolutely right, Diego. I mean, uh states tend to pay. Uh good actor states tend to pay. Some of them may drive their feet. Um no one likes to pay their bills if they can get away with some delays. But as you pointed out, it is the minority. It's a group of outlier states that have really dug their heels in. The countries I've had to pursue have been the likes of the sort of, you know, the West African sort of rogue dictator, Venezuela, which has something like $20 billion of awards following all the expropriation that happened under, you know, Hugo Chavez. And you've named Russia, and I know we'll turn to uh a few other of these outlier rogue states, but it really is not the norm. And you know, these countries take a number of uh tactics. You know, some of them just have restructured their external commercial footprint to try to insulate themselves. You've seen this with Venezuela, who's moved its assets and its, you know, its national oil companies, subsidiaries and organizations from countries like Portugal and shifted them to Russia. They've taken steps to hide a lot of their foreign commercial assets from creditors through using frontmen and nominees and shell companies. You see other countries that just actually don't have much of a foreign commercial footprint. And so, you know, they're they're quite happy to dig their heels in and say they're not gonna pay. Uh, Congo Brazzaville has significant awards against it. And they've made it very hard for creditors because uh they've insulated their oil company by having a lot of that money flow through frontman and friends of the regime. And uh you've seen those that have just refused to pay and are taking steps to use legal mechanisms and legal tactics, like India, which has uh taken some really aggressive approaches towards uh award holders. They put them on Interpol lists and they've tried to uh you know create these racked up fake criminal cases against the directors and the business owners. So yes, the majority of states, you know, they sign up to these international agreements, they want to attract investment, they understand that there it needs to be confidence in the rule of law and that confidence that when an investor comes in, if they win a claim, an internationally recognized, you know, claim, such as ICIT at the World Bank, that that country will maybe with some delays, but will eventually pay its debts. And then there are the others that have just, as you said, gone rogue. And they are the likes of the Venezuelas and Russia's, and unfortunately, now Spain is in that category as well.

SPEAKER_00 17:16

I want to move to some of the case studies here, and I will actually get to Spain at the at the very end and we spend some more time on that. I want to start with the Perenco versus Ecuador case, which you've been involved in. Now, for some context listeners for this case, it was a case between Perenco, which is the essentially a subsidiary of the French oil group, and they had some investments in Ecuador, some oil fuel investments, and then around 2006, Ecuador passed a law to essentially raise the tax on the oil production revenue from the oil company from 50% then to 99%, and then Perenco essentially said this is too much money, this is actually essentially expropriating our participant interest since the entire project, and then they stopped paying, and then Ecuador sees the oil field operations and the whole blow-up, and of course, then Perenco invoked the threats Ecuador bilateral investment treaty, and then that is where the arbitration started because it went to the international court of settlement, like international disputes. But I believe this is where I'm curious, I believe Ecuador pulled out of this arbitration forum just after Perenco r registered the arbitration. So then, how did this play out over a 15-year period? It's a very long case. And then how will you evolve in that?

SPEAKER_03 18:43

Yeah, I mean there there's sort of been this trend, you know, in Latin America, uh, sort of again, that sort of nationalization movement between the 2000s and 2015, rough time frame. And you saw with a lot of these, you know, again, companies sort of being expropriated or being put under such commercial pressure, it was what I like to call death by a thousand cuts. It was expropriation, just not, you know, not the typical type of a military coming in and seizing your factory. And you saw a lot of these Latin America countries withdraw from their investment investment treaties. Fortunate for investors, there's sort of sunset clauses. You can't basically withdrawing from the treaties meant new investors coming in would not be not have these legal uh tools and recourses available. But for those that had already entered into an agreement with as a state, it allowed them to continue to pursue uh arbitration. In this instance, as you said, it was a long legal battle. And finally, uh, they won just over $400 million. And that was, again, bringing in the political landscape. They won that under um what was then President Lazzo. And you know, he, in terms of his sort of political leaning, I think open for business is one of his slogans. He came from a financial background and was really aiming to try and attract foreign direct investment, bring in more Western investors, make Ecuador appear more investment friendly. And so on the back end of that, to this point, Diego, I think Ecuador would have probably paid. They weren't gonna put up too much of a fight because it goes, you know, they again were trying to show that they were investment friendly and adhere to the rule of law. However, in this instance, the interest on the award was something like 1%. So with all of the other outstanding creditors, Parenko, uh, the $400 million was the cheapest debt they held. So, in terms of priorities, Parenko went to the bottom of the pile. Yes, they would have paid, they weren't going to go rogue, but it was going to probably be a really slow, long drawn-out process. So, in that instance, Rashid, we were brought in to develop the recovery strategy. And a way we do that is, you know, combination of asset tracing and investigations. So identifying where the state holds assets, and not only that, because in enforcement against sovereigns, there is some hurdles. It doesn't, they don't make it easy for us creditors. There's something called sovereign immunity, which means certain assets are off limits. We can't go seize a warship, we can't go seize an embassy, certain government assets are considered inherently sovereign. So we only can go after those assets considered commercial, national oil companies, uh, you know, sovereign wealth funds, investments, properties that are used for commercial purposes, et cetera, et cetera. So we identified where does Ecuador have its assets, where do they have their assets that are of a commercial nature? And then we had to map out how are they held. Are they held directly in the name of the state, or are they held through a state owned entity? Because as I think most people would acknowledge, most The states their commercial activity is done through state-owned companies that they create to manage things like their national oil companies or mining companies or similar. So for Perenco, we had to identify where are the assets, how are they held directly and indirectly? What type of asset? Was it high monetary value? Is it highly disruptive value? And in what jurisdiction? You know, they had assets in the US and Panama and Singapore. Different jurisdictions take different time and different costs to bring proceedings. So it becomes a bit of a sort of chess game of building up the global recovery landscape. And then we had to look and say, well, who is the debtor? You know, what is the state? What is the state under President Ladso? Who are the key decision makers? And what's going to make them get out of bed and want to come and negotiate and settle with us? And that's where, in this instance, it's actually one of my one of my favorite stories to talk about. While we started to go after all of these assets, L and G and receivables and bank accounts and vessels across the globe, we found out that they had a big upcoming coupon payment due out of Luxembourg. And again, part of the chess game, Luxembourg's a great jurisdiction where we can get our international arbitral award recognized quickly. And we knew that while we might lose the case potentially around if that money should go to our client, what we could do is disrupt. And by disrupt, I mean freezing those coupon payments so that bondholders all of a sudden were not getting the money owed. We did that with a media campaign so that people would be aware of what was happening. And of course, the risk was that Ecuador would go into default. And that played very, very strongly against the objectives of President Lazo wanting to attract foreign direct investment. So by disrupting those coupon payments, by launching a media campaign to bring it to the attention of the international financial markets, we had within 24 hours the Minister of Finance saying, of course we pay our debts, of course we will honor our obligations. And lo and behold, shortly after they did. So again, that that's an example where they would have paid Ecuador as a good actor. You know, the government wanted to be pro-investment, they were really concentrating on cleaning up their image. But with 1%, we were at the bottom of the pile. So with our enforcement moves, we were able to push it to the attention of the key decision makers and get our client basically paid within under a year, which is um quite um, I guess, quite a punchy time frame.

SPEAKER_02 24:47

It is. And indeed, it is true that the Lasso regime was picking up the tab from you know years and years of bad government in Ecuador. But uh he surely did not pay this debt instantly, nor would the Ecuadorian authorities would have paid this as quickly as they did had it not been for your role. But at the same time, this opened the door for a lot way more positive outlook on the Ecuadorian economy today. If you see what Ecuador is today, still has a long way to go, but uh certainly it's not down the toilet like it was when Lhasa was taking over from after many years of Bolivarian governance. So kudos for that, because I know that was a big win. I know you were involved as well with some of the dynamics with the Venezuelan regime. So it would be nice to hear a lot about that. We know that the current situation is a bit uncertain, but uh surely very intriguing and interesting, with Maduro being held in the US, Del C sort of being placed in tutelage by the Trump administration. But walk us through what your involvement has been or what your knowledge is of how debts and arbitration debts are being cleared or dealt with in the case of Venezuela, which is the second country with the largest number of awards, uh, bar for Spain, which is leading that chart.

SPEAKER_03 25:56

Yeah, Venezuela is a sad case because it should be such a wealthy country, and you know, not just you know, minerals and oil, uh, agriculture, tourism from back in the day, and so forth. And it's uh it's a real shame. I think there's something like 190 billion in outstanding debt owed to creditors, many of which are bondholders, but still around 20 or 20 plus billion owed to award holders. And you know, I've worked for a number of award holders over the years, and I mean those are quite sad stories. Long-running family businesses and the business was expropriated and they lost everything. And they went through the process of bringing an international arbitration claim against the state, and they were awarded a monetary value, and then they were left with the complicated uh question of how do I get paid? And Venezuela is one that has been, I'd say, you know, top of the rogueless for a long time. Um, and they've just refused outright to deal with any of these. And a combination of sanctions as well as insulating itself from creditors has meant that the country has gone, has become quite insular and also has taken significant steps to insulate itself from creditors. So it's been rather than a game of chess with Venezuela, it's been maybe more of cat and mouse. One step forward, one step back, we've had some success in going after oil that was held, not the tanker itself, but the oil held within uh VLCC that was moving through Dutch Caribbean waters. Uh Penevesa is the national oil company and used to be a significant amount of revenue before the corruption, the sanctions, and and the you know, the current state of play. Um, but still it's you know it's um a very tightly controlled state-owned entity. And so courts around the world have come to the conclusion that assets held by the national oil company, Petavesa, are assets held by the state, and they should be viewed as one as this, one of the same. And that's a very important distinction because it allows creditors to then go after assets that are not held in the name of the state who they have the award against, but against state owner, the national oil company and some other state-owned companies have been included as well. That sort of cat and mouse has come in with the way in which the Venezuelan state has acted. So while we were successful in seizing some oil cargoes, in recent years it's been more challenging. We've taken steps, but this government doesn't adhere to the rule of law. So, you know, for example, we had one uh instance where we had a bailiff get onto an oil tanker. Uh, they had a bill of lading showing that the cargo was in fact held by Petavesa, the National Oil Company, that we had the legal right to enforce. We had it recognized in the Netherlands and it was enforceable in the Dutch Caribbean, and they kept the bailiff off the boat for about an hour and a half while they rewrote all the paperwork. It's been very challenging with Venezuela because there's no scruples in terms of how they behave. And, you know, in terms of looking at some of their assets like oil and what used to be a very valuable fleet of oil tankers, they've re-labeled them, they've transferred them to, you know, shell companies, making our ability to go after assets that we know do belong to the state uh nearly impossible because of the legal hurdles. Venezuela is going to be, or you know, everyone's quite excited for the fact that it may be re-entering the international community, that there may be over the next couple of years a sort of a move towards normalcy with the change of government. And uh the biggest question that everyone's asking is how can the country move forward without settling these outstanding awards? And I work for a bunch of mining companies and some oil and gas companies that are all very interested in entering Venezuela at some point. But their biggest question is again, how can the country move forward with 190 plus billion in outstanding debt and 20 billion in outstanding um arbitral awards? So it'll be interesting to see how things play out because they'll either have to deal with the debt situation, and I think they will start with the bonds and then move on to the arbitral awards before they can begin to rebuild the economy. Because if not, there will be creditors waiting um if they want to enter the international uh community again, and if they want the investment into Petavisa and their oil sector, uh they will need to deal with these arbitral awards, or there'll be individuals like me representing creditors waiting to pounce when um they actually do start having cargoes and oil tankers and commercial activity in their own name um in foreign jurisdictions. So uh it's very interesting to see how it plays out, but um it's a sad story for many award holders.

SPEAKER_00 31:05

So Ashley, I want to transition a bit now to Spain, given time we have. So interestingly, so similar to the question about Ecuador, where Ecuador was sued or uh entered the arbitration and then pulled out of that particular BIT, uh Spain is now faced with a substantial amount of arbitration filed against it based on particular uh renewable energy uh companies where Spain had a particular regime for alternative energy, and then under the Zapotero and later the Rajoy governments, they changed the economic incentives to alter the potentially the economic calculation of these uh companies and they went into arbitration against Spain. And then shortly after that, Spain actually decided to pull out of the energy charter treaty, similar to what Ecuador did uh with the France-Ecuador BIT. But as you mentioned in your response, it is a sunset clause where it has a 20-year provision for the for the treaty, even though you leave you left it afterwards. In any case, there is a strange parallel here, and I think people will be surprised that a country like Spain is not you know what you would consider a typical rogue state or rogue state actor in normal international forum, is actually behaving very similar to like Venezuela or Ecuador in these terms. Firstly, are you surprised by that um issue that Spain took for this kind of arbitration uh award? Okay, and then secondly, uh how how what was your involvement now in this particular case?

SPEAKER_03 32:45

Yeah, no, I mean very surprised. I I mean again, I'm normally chasing, I mean, some of the countries I've worked against, you know, they're the ones you expect to be hiding or not paying. It's the first campaign I've launched against a European country. So it's been interesting because I mean, on the one hand, most of my work, again, if I'm dealing with a rogue state, it's either they have very little, you know, they have very little assets abroad because they're in an insulated economy and they don't think they need to pay because they're insulated. Or, you know, it's a highly corrupt country where there's really no assets abroad because it's in the pockets of the ruling family. Or you have a country like Venezuela that's you know restructured and moved and hidden everything, and they've put it in places like Russia and India where we can't get it. Um, and then you have Spain, and Spain is wide open because it's a European country. So they have public disclosures and you know they they aren't trying to hide their assets. So for me, it's been um it's a shock that they haven't paid, and it's been a very interesting experience working on this case. And to your point, what is my involvement? Um, I've been representing a bunch of award holders, these renewable companies that you know invested a lot of money in Spain and then lost it all when the um laws changed. And as as they should, their only recourse and the right recourse was to take Spain to court, and they won their awards after, again, spending time and years and a lot of money on legal fees to go through that process. Um, and then Spain didn't pay. So I represent them, and my work has consisted of building a global recovery strategy, which again, as I was saying, is has been a very uh a deviation from my norm because normally I'm trying, you know, I'm it's it's hard to find the information and it's again corruption, rogue state, insular economy. And here we're dealing with a you know a very large open economy. So my work has consisted of identifying where does Spain hold its commercial assets and how does it hold them? Is it you know directly, is it through state companies, uh, and then in which jurisdictions? Because again, Spain is um a large economy and it's very intertwined with the international community. So it has significant commercial assets all over the world. So we've mapped out um you know real estate and bank accounts. Uh, we've looked at you know the things like aircrafts, we've looked at investments through the sovereign wealth fund, and we've even just recently been looking at uh, and apologies to any Spanish football fans out there, um, but we've been looking at some alternative assets like those associated with the upcoming World Cup. So um, yes, I'm surprised. Uh, and it's been a very interesting assignment simply because we're dealing with a country that has the ability to pay um and that has significant assets abroad, and yet they're dragging their feet and behaving um, you know, quite on par with the likes of some of the other bad actors I'm I'm normally uh tasked with chasing.

SPEAKER_02 36:04

I uh wanted to ask you about the uh different jurisdictions where you can actually uh get this strategy going. Because if I'm not mistaken, there have been very high court orders or final decisions that are no longer up to appeal, yeah, either one or the other. In countries such as the United States, the United Kingdom, uh, Singapore, Australia, Belgium, and the Netherlands. So if I'm not mistaken, Spain is facing, is is is therefore seen as a debtor state that owes these amounts of money. Yeah, we're we're speaking 2.3 billion, which surely is no small chunk of change, but at the same time, Spain can manage the payment of 2.3 billion way better than Venezuela can do the 20 billion, not just because its economy is much larger, but also because the amount is smaller. But like I said, if correct me if I'm wrong, these are the jurisdictions where in principle that strategy can be developed on the one hand. And also let me ask you about the interest accrued, because when you see that general figure, uh we're speaking 1.7 billion, that was the principal debt. But now we're speaking of 2.3 billion. So there's almost 600 million that have been built up as a result of legal costs and adverse legal costs and interest accrued and all these extra added costs of just trying not to pay. So trying not to pay comes in costly. And uh so I wanted to ask you about this.

SPEAKER_03 37:31

Yeah, I mean, absolutely. So I mean, to your point about the interests, uh so all of these awards come with interest, and most of them are you know, it's a large interest. I I was talking about Ecuador, the 1%. That that was sort of a shocking um and and so yes, these awards not being paid are just, you know, they're just accruing more and more debt for the Spanish state. Uh, but then the legal costs, just as much as it costs for you know my clients and and for various creditors to bring recovery and enforcement proceedings against states around the globe, the state has to fight back. Um, and Spain has been fighting back, you know, sort of tooth and nail in every jurisdiction where creditors have gone. And they've also been doing it in such a disjointed fashion with different law firms, lack of coordination. I mean, the the lawyers across these jurisdictions are licking their lips when they see Spain coming, um, because that it's, you know, they the amount of money they're willing to throw at fighting these is um, you know, is quite noteworthy. So yeah, the longer Spain doesn't pay, the the more the interest and the more the principle will be. And then to your other point about jurisdictions, yes, with asset tracing and recovery, it's not just about finding an asset. It's finding an asset in a jurisdiction where you can enforce. And that's one that needs to be a jurisdiction that has the legal framework. So where it will recognize your award, where it will recognize you know, the commercial assets are attachable. In some instances, will recognize that assets held by a state-owned entity can be liable for the debt of the state, like in the case of Petavesa being liable for the debt of the Venezuelan state. So there are jurisdictions around the world that are considered more favorable for this. And the creditors of Spain have gone to many of those already. And as you said, they've had to spend time and resources getting their award recognized in the first instance, which means that all these courts you mentioned, the Netherlands, Belgium, the US, the UK, Australia, Singapore, they they've recognized, they've looked at the awards, they've looked at the case, they've looked at the defense that Spain's tried putting up, and they've said, nope, we recognize this. This is final, this is binding, and yes, Spain owes you money. Uh, and so following that recognition proceeding, which um has taken place in number numerous jurisdictions, uh, creditors of Spain have been able to go and start seizing assets. And in some instances, you know, ask companies and banks for questions then for what we call discovery, which is saying, you know, we believe you might be uh helping or you know, have knowledge around Spain's, you know, fund flows and commercial activity. Um so yeah, Spain is recognized as a debtor across these jurisdictions. They've had assets frozen. And uh again, to my point about how exposed Spain is. I mean, Diego, you mentioned a few jurisdictions. There are you know dozens of more jurisdictions that that creditors could go to, which just means you know, more money spent on both sides and more foot dragging um by Spain, where again in reality, I'm wondering when when Spain will say enough is enough and actually meet its obligations.

SPEAKER_00 40:55

Which jurisdictions actually are actually the most convenient, are convenient or most convenient for you kind of uh workflow when it comes to actually attaching on debt for factory. Is it the US? Is it Singapore? somewhere else?

SPEAKER_03 41:11

Well, that's a that's a good question. And I'm I wish I could give you a one-off answer, but it's um each jurisdiction has its pros and cons. So the US is great once you get your award recognized. That can take time. Um, and the US also can be expensive in terms of legal fees, but the US opens up the power of discovery. And once you have recognized, you can go and you can ask a lot of questions, which means as an investigator, you know, I can find a lot of information, but there'll be information gaps, and this will allow us to try to fill those. For example, uh, because uh so much business is conducted in US dollars, that means all these transactions are going through the US banking system. Even if it's between, let's say, me sitting here in Dubai and someone sitting in um, I don't know, over in Argentina. If it's a US dollar transaction, it'll bounce through um one of the correspondent banks in New York. All of a sudden, with Discovery and the powers of the US Discovery, we can now go ask those banks for information about how um, you know, I transact with someone sitting in Argentina. So in in that respect, it's a great jurisdiction. Um, other jurisdictions, you know, Luxembourg's one where you can get your award automatically recognized, which means if there's a quick play, you can move um pretty much instantaneously. Other jurisdictions have have the ability to do pre-recognition attachments. Um, but it's yeah, there's a lot of a lot of countries out there that are now uh providing a more favorable landscape for creditors. It used to be much harder to go after assets that were not directly held, but now places like the Netherlands have been much more open and have a lot more precedent on recognizing that a the assets of a state-owned company should be or could be viewed as the assets of the state. So it's a changing landscape, but um I I think uh for the the positive the positive aspect for creditors is that there are plenty of jurisdictions out there, um and more and more you're seeing uh the legal regimes sort of change and swing to uh support creditor action.

SPEAKER_02 43:30

Uh Ashley, if I may, uh do you have any round figures of you know how many assets you've worked on or located, or is there anything else you could share on the asset tracing strategy for Spain? Surely there is confidentiality and practical reasons why you may not want to, but any more input on to how exposed is the Spanish state at this time, I think it's relevant.

SPEAKER_03 43:55

Um I mean billions. I mean, there's you know, there's the the annoying. Uh assets like those attached to the World You know, World Cup, but um billions are out there. Some of the assets um held through the Sovereign Wealth Fund um expose uh Spain significantly to severe monetary damage. Um, there's also contracts that again hold significant value and fund flows that could really disrupt the way in which the government's able to conduct some of its commercial activity. So again, the outlier is not the fact, for me, the outlier is the fact that I'm having to chase the assets of a European country, but the outlier is also the fact of how exposed they are. So it's not gonna be, you know, it's not gonna be an issue of can we find the money, it's just how long are we gonna have to go through the legal process of forcing them and seizing assets? And I think to that point, Diego, maybe watch this space. Um, if if the government doesn't come to the negotiating table, there's some um some high value assets that are very much on um my radar.

SPEAKER_02 45:02

So and Rashid, before you jump back in, I also wanted to question you a little bit more about this discovery order process because uh some of our listeners are probably not very familiar with it. But uh, if I'm not mistaken, once you have your award, your international award, which is final and cannot be appealed, which is a point on which we find roughly 30 cases right now worldwide affecting Spain in the US, you can take this to a court of justice and you can ask for uh just open information from anyone engaging with activities with that particular entity that is not paying these debts. So that in your case has led, uh this was announced by uh one of the lawyers representing the investors, Matthew McGill, that this has led to a series of subpoenas that essentially execute that discovery order and challenge or ask, not challenge, ask the Federal Reserve and the clearinghouse to facilitate information about Spain's flow of payments. So you were making this reference, of course, under our international monetary system. The routing payments often are redirected through the US, or at least that there is a financial knowledge of these activities going on. So could you walk us through this particular strategy? Because obviously you have your background check on Spain, but now you're learning a lot more from these discovery orders, I believe.

SPEAKER_03 46:24

That's that's why I mean that's why I love the US, the power of discovery. You described it perfectly. It's basically it's a sort of a carte blanche to go ask third parties for information. So, for example, we we know that Spain conducts a lot of business in US dollars. So we were gonna we will receive details from all the financial institutions of uh transactions involving a number of parties that we presented and requested as part of discovery. So, you know, the Kingdom of Spain, uh CEPI, the Sovereign Wealth Fund, um Nivantia, one of the big, you know, shipbuilding, et cetera, et cetera. We've requested information from the banks. So the banks, again, the wonderful power of discovery, the US financial institutions will, by court order, release information that shows where money's coming from, where money's going to, uh, that involve a lot of these Spanish entities. So that is a treasure chest of information. That's, you know, it's that will give us hundreds more leads that we can follow to see where the money is coming, where is it, where is it coming from, and where is it going. Um, it also allows us to, as you said, subpoena and request discovery from other third parties. So from companies, a company that has a large contract with, you know, with Spain. We can now request information about the payment terms, the contractual terms. Um we can request FIFA to give us information about how they're gonna pay uh the Kingdom of Spain and the Spanish Federation for the upcoming World Cup. And it goes on, the list goes on and on. So it's a it's a very powerful tool and it's one that uh the lawyers working for a number of the creditors have very tactfully deployed. And um it's uh it's again, Rashid, one of the reasons why the US is, although sometimes a bit slow in the courts, uh, one of my favorite jurisdictions for recovery.

SPEAKER_00 48:26

Given this deep bell of payment information you have, is there anything particularly surprising you've learned about the payment flows of Spain that you know you can share publicly?

SPEAKER_03 48:39

Um no, no, nothing, nothing really surprising. Um there is, let's say, maybe some some political use of state assets that maybe raises some eyebrows. Um then again, I'm I'm used to working with the rogue states, so it doesn't really raise my eyebrow too much. But I I I think um I yeah, I think the use of of some um government and quasi-government uh agents uh with some state assets has been a bit questionable. But I'll I'll I'll leave it at that.

SPEAKER_02 49:15

Uh in in in order to be a bit precise about the asset uh assets that have been um at this point taken from Spain, at least preliminarily, uh the British courts have authorized, uh to begin with, a 8% interest accrued from now on on all of these debt. So that should be a perhaps in conversation, I guess. But then also very tangible things going on in in Belgium and and the Netherlands, because in Belgium the Eurocontrol payments, EuroControl is the air control uh navigator system which uh pays out monthly to the different European member states, which each have their own government-owned entity which collects these payments and channels the funds related to air traffic control. So, in principle, this has nothing to do with the energy renewable investments, but ultimately it is a flow of payment, in this case a flow of income that the the Kingdom of Spain will not receive because it's being frozen. Correct me if I'm wrong, and it's now sitting on a bank account, uh and probably perhaps going uh to go finally for the investors, and this is a 250 million asset freeze. And then there is also this building, this cultural entity building that is sitting on one of the most valuable streets in Utrecht in the Netherlands. And that building now formally has taken away from Spain and now formally belongs to the creditor. So could you elaborate on these two cases?

SPEAKER_03 50:39

Yeah, sure. I mean Euro Control is a great one. Uh and for those that don't know, uh basically uh every time let's say Emirates Air flies over um, you know, the the Kingdom of Spain's airspace and uses its, you know, its airports, it pays a fee for that. Um Eurocontrol collects those fees from private planes, commercial aircrafts, et cetera, et cetera. And they hold on to it. And as you say, Diego, it accrues and then they pay it out to um, in this instance, it's called INAIR, which is a state-owned entity fully owned by the state that uh that collects those fees. And it's again, it's been I forget how many months since the C first seizure. You said it circa 200 million. I'd be surprised I'd be surprised if it hasn't accrued to more. Um, because the asset and the bank account is frozen, which means, you know, the more, you know, it went all the way up to 800 million.

SPEAKER_02 51:35

Okay. And then the Spanish kingdom recently uh sort of kneeled down and gave a bond to pay out a bond. That's why the number is not, but it was almost 900 million.

SPEAKER_03 51:46

So there you go. I was gonna be surprised that I I know people are still um Spain's still a popular destination. It's a lot of air traffic. So uh well, again, that's uh so great example. So what happened there? We had the the um funds accruing, and at some point, Spain said, okay, well, we want that money, we need that money. So they posted a bond to cover one of the awards, the $250 million award. And lo and behold, another creditor jumped in and slapped a freeze and has started accruing more funds now. So that's gonna continue to accrue, and creditors are gonna continue to jump in line in Belgium until all of them either have bonds posted or have been paid out. And in the Netherlands, uh yeah, a beautiful building. Um, it was used by the Institute Cervantes, a sort of cultural organization that's part of Spain, uh for language lessons, but also for um commercial purposes. So uh the Dutch council was able to demonstrate that uh Spain used that building for non-culture related events, they rented it out to third parties, and so it opened it up to attachment. And again, as you said, that's now um, you know, now an asset that is no longer uh the Spanish state. And you know, to that point, when I had mentioned that they're exposed, that's a $10 million property. And again, owned by Spain, used by the Institute Cervantes. Very publicly, you can go on and see what buildings does the Institute Cervantes use around the world and what are they, what which ones are owned by them or which ones are owned by Spain? I mean, in Morocco alone, there's something like seven or ten beautiful buildings and properties. Um go down to Brazil, there's you know dozens as well. There's one sitting in New York, one sitting in DC. Uh again, just to put into perspective, that was a nice $10 million property um that that uh we went after. But just looking at these cultural buildings and these you know lovely areas, um, sorry, lovely buildings across the globe, uh if we just started going and picking off those, that would certainly settle a big chunk of debt.

SPEAKER_00 53:59

Uh so actually coming to the end here, uh, I want to give get some your final thoughts on, you know, given your position in this kind of global nexus of, you know, regulatory intelligence, political risk, asset tracing, these kind of uh tangential fields. I'm curious that you have any particular trend insight you can share when it comes to last few years of these settlements and like usually to over sovereign states in Latin America, Africa, and now uh Europe, ironically.

SPEAKER_03 54:32

Yeah, ironically. Um trends, I guess the one thing that has been a trend sort of I I probably over the last 10 years has been the investment in uh the legal space. And it's really allowed for some of these uh arbitration awards to even, you know, uh the claims to come forward. Before litigation funding, you know, you'd have some of these companies, they lost everything, and then they're being told, well, you need to cough up, you know, five, ten million dollars in legal fees to bring a claim. And so that kind of David Goliath um position that states once had over smaller investors, you know, not the likes of a Chevron or a you know um Google that, you know, has deep pockets for disputes, that allowed for a lot of awards against states to even take place. And so I think we're seeing a lot of those come come to fruition. Um and similarly, investors that have provided funding for the second part, which is recovery. So for that small kind of 8% where you have the rogue state, you finally win your award, and now again, you're being told you need to spend a couple of years and potentially a couple million to recover. Um, you are seeing the investors come in and support the recovery. So litigation funding has been a big game changer for my space. I think also, um, as I touched on before, the fact that courts around the world are now becoming more aware of enforcement. Um, they've had, you know, for example, I testified in court in Portugal to demonstrate that a state-owned company should be considered the same as the state so that we could go after those assets. Uh, it's called alter ego theory. And it's something that really no one had ever tried in Portugal. So there was no precedent. And with a lot of these countries around the world now, they're hearing more enforcement claims. And so they these jurisdictions are becoming more open for creditors, so that we don't need to necessarily just go to the US, the UK, Netherlands, Belgium, but countries are really opening up and providing a more favorable enforcement landscape for those like myself that need to have the courts as well be competent and supportive of our enforcement action. So I think that's on the positive. And um uh I guess on the sort of maybe the negative. I don't know if I start seeing other European countries follow in Spain's footsteps, I I guess I need to hire more people. Negative for the creditors and maybe uh positive for me and my profession.

SPEAKER_02 57:16

Well, Ashley it was a treat to have you with us for these last uh 60 minutes or so. Uh we here at the Somewhere Anywhere podcasts are always looking to bring you the best content. And with everything that is going on uh in Latin America, with governments trying to come back to credit or markets where you know confidence has been lost due to so many uh bad decisions that have taken place in the past. And the case of Argentina is notorious for having dealt with arbitration debt after arbitration debt. It got to a point in which President Kirchner could not fly the government airline had to fly commercial because uh if she landed on a uh state plane anywhere, it it would get frozen, right? So God knows if we'll see that happen to Pedro Sanchez. But in any case, we see how Miley is fighting and trying to pull through with the debt that he's inherited in Argentina. We see how Ecuador has seemingly found a way to become a more reliable state, but still dealing with the consequences of so many uh scenarios of unpayment. And of course, we see how this is damaging Spain's credibility and how you don't want to be in the same club as Russia, 100% same case with a Venezuela where we hope better things are coming. But uh it was fascinating to have this conversation with you, Ashley. So we thank you very much for joining our podcast today. And uh I will be uh joining you all with Rashid in the next installment of the Somewhere Anywhere podcast.

SPEAKER_01 58:40

You should know me well enough, but I have my money. Please don't call me on my blood, pay me what you want it.