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October 30, 2000
Part II - Punta Banda the
story behind the story A Mexican land scandal. Payment to the Ejido and
second contract. By Patrick Osio, Jr. According to Carlos Teran
del Rio, his interest in entering into the land
deal calling for heavy investment at the Punta
Banda property was due to the invitation
originating, "… from a (government)
Public dependency, which I considered serious and
responsible, and because it had to do with
tourist related investment wherein our
enterprises were involved in investing."
This was in reference to the Secretary of
Agrarian Reform as the public entity, which had
extended the invitation to consider investing in
the Punta Banda property with assurances that the
land was part of the Ejido Coronel Esteban Cantu
land holdings. Thus, on August 26, 1986,
Teran's company, Grupo Koster, S.A. de C.V.,
entered into the first of two contracts covering
18 hectares (44.48 acres) of land within Punta
Banda. The contract included all the previous
assurances and documentation that the acreage was
part of and within the land granted to the Ejido.
In the contract a specific clause was included,
which specifically mentioned the Ejido's
warrantee that the land was free of any
encumbrances, land disputes or any other problems.
[The contract's fifth clause
called for Grupo Koster (Teran's company) to make
payments to the Ejido: a.
$35,379,700 viejos pesos to cover eventual costs
in transmitting, processing and obtaining land
use permits. b.
$60,000,000.00 viejos pesos due on the day of the
signing of the land trust in accordance to the
agreement approved by the Ejido general assembly. c.
$8,333.33 US dollars per month beginning the 1st
of September 1989. d.
$10,416.66 US dollars per month starting on the 1st
of September 1998. e.
$12,500.00 US dollars per month starting on the 1st
of September 2008. (Note: In 1993, the Viejos
Pesos were replaced with the Nuevo Peso. The
nuevo peso was simply the removal of the last
three digits. At the time of the change the peso
was $3000 pesos to $1 dollar. On January 1, 1993,
this was changed to $3 Nuevos pesos for $1 dollar.) The Third clause in the
contract stipulated the creation of a land use
trust for the period of 30 years. The holder of
the trust was named as the Instituto Nacional de
Credito with Grupo Koster as the beneficiary. (This
clause was necessary as it provided the master
trust, which would then allow Grupo Koster to
enter into similar arrangements with foreigners
who are prohibited from owning land along the
Mexican coast, and also necessary as the Ejido
lands could not be sold in any event.) This contract covered the
first phase of the planned development and
included the area where the abandoned half
finished hotel structures were located. Grupo
Koster was to repair the structure and finish the
hotel build-out, which would include a number of
tennis courts, cocktail lounges, restaurants and
recreational areas. The name of the development
was named "Baja Beach and Tennis Club." Part of the 44.48 acres
would include a housing subdivision with the
entire infrastructure providing lots ready to
build. An important element of the
marketing plan and part of the agreement was that
sales were to be solely for "the right of
use" for a period of 30 years to those
acquiring lots and would be provided facilities
for construction of the custom made homes. A second option would be the
purchase of long term "membership" to
use the hotel and its services. At the end of the thirty-year
period, the lots, houses, and hotel with all its
amenities would revert to the Ejido. (The economic benefit to the
Ejido on this first contract would amount to over
$3.6 million over the thirty year period, and
then would receive an asset that conservatively
can be estimated at no less than $50 million (hotel
and amenities, marina, plus several hundred
houses and/or lots.) Grupo Koster and Hotelera
Punta Estero, S.A. de C.V. incorporated on
December 14, 1987, entered into a second contract
in joint venture with the Ejido on April 10, 1988.
Carlos Teran del Rio was also designated as the
sole administrator of this enterprise. The Ejido's contribution to
the joint venture was the inclusion of 52
hectares (128.49 acres) from their ejido land
holdings. The land abuts on the north of the land
covered by the first contract. Grupo Koster would
provide its technical expertise, experience and
investment for the tourist related development.
Hotelera Punta Estero would provide national and
international promotion and marketing for the
project. As in the first contract,
the Ejido warranted that the land covered by new
joint venture contract was part of their overall
land holdings. The land covered by the
joint venture was for the purpose of subdividing
into individual lots and the construction of 143
condominiums. The lots and condominiums would be
sold under a 30-year trust with the right to
renew for an additional 30-year period (as
permitted by the laws for fideocomisios for
foreign trusts. The periods have since been
changed to 50 years with a renewal 50-year period.) The joint venture
participation provided the value of the Ejido's
land contribution to be worth 40 per cent, Grupo
Koster's investment to be worth 50 per cent, and
Hotelera Punto Estero to be at 10 per cent. This
second project was named Baja Beach Resort II. (No information is given in
the court papers as to the potential profits the
project could generate through the sale of ready
to build residential lots along a stretch of land
providing the Pacific Ocean on the west side, and
the Ensenada bay on the east side. It is
reasonable to assume that profits would exceed 30
million dollars from sales) All contracts concerning
usage of Ejido land had to be reviewed and
approved by the Secretary of Agrarian Reform, the
two contracts between the Teran companies and the
Ejido were no exceptions, and according to court
documents the two parties complied. On May 29, 1987, the
Director General for Agrarian Reform, a division
of the Secretary of Agrarian Reform suggested
some additions and modifications to the contracts
so as to be able to obtain the final approval. The suggested changes were
done, leading to Dr. Ulises Lanestosa Zurita, in
his capacity of Director General for Agrarian
Reform, a dependency of the Secretary of Agrarian
Reform issuing Official Document No. 555935,
dated July 2, 1987 in which he authorizes the
Ejido's participation in the two contracts. The conditions imposed
contained two significant clauses: 1. "…
at no time or under any circumstance shall there
be allowed any change as to the legal
jurisdiction of the lands being used for the
benefit of tourism and shall comply with articles
144 and 145 of Federal Law governing Agrarian
Reform, and both contracts shall be subject to
dictates this office may issue," and 2. :….
(the contracts) shall be registered in the
National Agrarian Registry." The conditions are telling
because by prohibiting any change of land
ownership away from the Ejido, and subjecting the
contracts and activities to the jurisdiction of
the federal office charged with the duty to
oversee and protect Ejido lands, is in itself an
admission and acknowledgment the subject land was
part of the Ejido holdings. And registering the
contacts in the National Agrarian Registry is
only mandated for Ejido lands. For the approval to enter
into force, both the Teran companies and the
Ejido had to comply with the conditions, which
Teran claims all parties did. This led to the
necessity of signing an additional agreement
containing the conditions. The new agreement was
signed on August 18, 1987. On December 8, 1987, the
Secretary of Agrarian Reform issued its Dictamen
approving the contracts and the August 10th
agreement. On behalf of the Secretary the
document was signed by the head of the department
charged with issuing such documents, Vicente
Santamaria Gutierrez; the head of the Legal
Department, Epifanion Bendolla Guzman; the head
of the Contracts department, Carlos Carrillo
Gomez; and the Visto Bueno (Approval) from the
Director of Promotion for the commercialization
of Agriculture, Rafael Escalante Lopez. On December 10, 1987,
Director General, Ulises Lanestosa Zurita
registered the contracts and agreement into the
National Agrarian Registry. The Carlos Teran court
documents have to this point in meticulous
detail, presented a case that he was led to
believe at all times both with verbal and written
assurances that the two parcels of land totaling
70 hectares (173 acres) were part of the 15,005
hectares making up the Ejido Coronel Esteban
Cantu land holdings. And that his enterprises had
entered into contracts in good faith, which
called for heavy commitment and significant
economic investment from him personally and his
investors. Teran provides the court
with detailed topographical and technical data
prepared by and signed by a civil engineer
approved and certified by the Secretary of
Agrarian Reform. Each corner of the property is
identified, and the final map showing the entire
70 hectares to be within the Ejido holdings were
then certified as accurate and became part of the
contracts. However, Teran notes to the
court that after the signing of the contracts,
rumors came to his attention regarding third
party claims to the property, which were by then
in full onsite and offsite infrastructure
development. Next: Part III -
Secretary of Agrarian Reform dismisses rumors and
provides assurances. |
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