During 2021, most Colombian companies showed a rebound in revenue compared to 2020, and their economic indicators showed a clear recovery following periods of isolation and restrictions due to the pandemic.
However, the results reports also account for the so-called contingent liabilities that include possible accounts payable related to legal, regulatory and arbitration procedures, taxes and other claims derived from the performance of normal activities of the companies.
A review of the reports of conglomerates such as Bancolombia, Argos, Nutresa, EPM, ISA, Isagén, Une EPM Telecomunicaciones or Éxito, and companies such as Fabricato, Enka or Coltejer show items for more than $1.4 billion to meet these eventualities (see graph ).
The administrations of the companies ensure that these contingencies are evaluated taking into account the best estimates, and to respond to them, the necessary provisions are established for all these types of claims, validating the probability of occurrence, and even qualifying whether it is probable, possible or remote. .
Contingencies are provisioned and recorded when all available information indicates that their occurrence is feasible, and that the companies would be obliged in the future to make disbursements to cover this type of events that occurred in the past, and the amounts can be reasonably estimated.
In general, to make an adequate assessment of the probability and estimation of the amounts involved, companies take into account the opinions of internal and external experts.
In most cases, companies believe that such litigation will not materially affect their financial condition or solvency, even in the event of an unfavorable conclusion.
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The ranking of companies with the highest volume of provisions to deal with litigation is EPM, which recorded $543,480 million at the end of the previous year, a figure 81.1% higher than that reported in 2020, of $300,056 million.
The increase of $243,424 million was mainly caused by seven group actions once morest EPM and the future Ituango hydroelectric plant. This account does not include another item for $27,601 million originating from the update of the provision, which contemplates the non-compliance from November 2021 to September 2023, to the energy transporter Intercolombia for the months following the entry into operation of the connection infrastructure of Hidroituango (see They say of…).
The list is followed by Une EPM Telecomunicaciones (Tigo), which indicates that the total claims amount to $447,854 million, derived from lawsuits filed by Emcali, the Department of Antioquia, Comcel, and some requirements made by the Dian.
Other conglomerates
Grupo Argos explains that its subsidiaries are part of legal proceedings of a different nature, acting both as plaintiff and defendant, and that these processes for $256,036 million have been diligently attended by qualified lawyers who have been hired.
For these conflicts, which may be of a civil, administrative, criminal and fiscal nature, the infrastructure holding company considers that the estimated completion time ranges between approximately three and eight years.
For its part, ISA also acknowledges that it is immersed in litigation and lawsuits in Brazil, Colombia and Chile, in the order of $135,744 million.
One of them corresponds to a collection action filed by Eletrobras once morest ISA Cteep, in Brazil, in which the return of the value collected in excess of a contract is requested, and for which ISA has a provision for $27,993 million.
In turn, the Isagén generator established provisions worth $19,151 million at the end of 2021, to cover legal actions once morest it. Among them, two associated with alleged effects caused by the construction of the Sogamoso hydroelectric project in Santander.
Nor does Grupo Bancolombia escape this type of contingency, which provisioned $51,155 million. In this context, the financial entity is involved in a Popular Action in which it is considered that with the restructuring of the financial obligations of the Valle Department and the performance plan signed by the territorial entity, the collective rights of morality were allegedly violated. public and of the patrimony of the Department.
Bancolombia’s subsidiaries in Panama (Banistmo), El Salvador (Banco Agrícola) and Guatemala (Banco Agromercantil) also attend to the requirements of the various authorities that carry out various processes.
Another company of the so-called Grupo Empresarial Antioqueño, Nutresa, has a provision for $1,453 million for legal contingencies, although its annual report does not specify or detail them.
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The balance of Éxito provisions for Ch$17,595 million is aimed at attending to administrative, regulatory, civil and labor processes that might have adverse outcomes in Colombia, Argentina and Uruguay.
The supply made by Enka de Colombia for $7,317 million goes in the same direction, while the textile companies Fabricato and Coltejer report $6,207 million and $563 million, respectively, in those accounts.
