Brookfield Asset Management Inc. is taking Peru to arbitration, alleging the nation has illegally expropriated a series of toll roads the firm operates in its capital city.
The conflict between Brookfield, which operates the Rutas de Lima tolls, and the city government is longstanding. But the new arbitration is a significant escalation, demanding US$2.7 billion in damages over measures the city has taken to stop it from collecting toll payments. Brookfield said the action is being taken under the umbrella of the free trade agreement between Peru and Canada.
“The announcement today comes after years of arbitrary actions on the part of the city of Lima and other state entities, like the constitutional tribunal, that have deprived Rutas from its capacity to collect tolls,” Brookfield said in a statement.
The city of Lima has already been ordered to pay $200 million in previous arbitration and court cases, Brookfield said, but has refused to pay up.
In a statement, the city of Lima said it “lamented” that Brookfield had started the arbitration, adding one of the tolls where payments had been suspended was “inhuman and harmful” to residents.
The city has countered with its own lawsuit in US federal court, alleging the toll road concession was obtained through bribery before Brookfield came to own the asset. The toll road was originally owned by Odebrecht, a Brazilian conglomerate that became infamous for bribing its way through Latin America, including Peru. Brookfield denies any corruption during its ownership of the toll company.
The arbitration will put further pressure on Lima Mayor Rafael Lopez Aliaga, who has made it his signature promise to cancel Brookfield’s toll collections. Lopez Aliaga, a conservative, is a former presidential candidate and seen as considering to run again in next year’s election.
With assistance from Layan Odeh.
Marcelo Rochabrun, Bloomberg News
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