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Other Provisions
 12 Months Ended
Dec. 31, 2020
Text block [abstract]  
Provisions
22
OTHER PROVISIONS
As of December 31, this item includes:
 
 
  
Total
 
  
Current
 
  
Non-current
 
 
  
2019
 
  
2020
 
  
2019
 
  
2020
 
  
2019
 
  
2020
 
Legal claims
  
 
272,274
 
  
 
375,596
 
  
 
101,266
 
  
 
80,456
 
  
 
171,008
 
  
 
295,140
 
Tax claims
  
 
6,045
 
  
 
5,630
 
  
 
2,369
 
  
 
1,954
 
  
 
3,676
 
  
 
3,676
 
Provision for well closure
  
 
50,116
 
  
 
52,949
 
  
 
9,848
 
  
 
10,837
 
  
 
40,268
 
  
 
42,112
 
 
  
 
 
 
  
 
 
 
  
 
 
 
  
 
 
 
  
 
 
 
  
 
 
 
 
  
 
328,435
 
  
 
429,366
 
  
 
113,483
 
  
 
92,757
 
  
 
214,952
 
  
 
336,609
 
 
  
 
 
 
  
 
 
 
  
 
 
 
  
 
 
 
  
 
 
 
  
 
 
Additions for legal claims correspond to:
i) Civil compensation
As of December 31, 2020, corresponds to the legal contingency estimated by management for exposure of the Company and its subsidiaries to a probable compensation in relation to their participation as minority partners in certain entities that developed infrastructure projects in Peru with companies belonging to the Odebrecht group and projects related to “Club de la Construccion”. As of December 31, 2020, the present value of the estimated provision totals S/216.3 million (S/154 million as of December 31, 2019).
ii) Administrative process Indecopi
On March 9, 2021, Cumbra Peru S.A. was notified with the Final Instruction Report prepared by the Technical Secretariat, which is subject to review by the Commission for the Defense of Free Competition of INDECOPI, related to the sanctioning administrative procedure mentioned in Note 1.c). In this regard, Company and its legal advisors estimate that, based on the findings of the Final Investigation Report, the fine to be imposed on Cumbra Peru S.A. in this case should not exceed S/39 million and was recorded on December 31, 2020 the equivalent to the corresponding present value that results in S/24 million.
iii) Class Action
During the first quarter of 2017 two securities class actions have been filed against the Company, and certain former employees in the Eastern District of New York. Both complaints allege false and misleading statements during the class period. In particular, they allege that the Company failed to disclose, among other things, that a) the Company knew that its partner Odebrecht was engaged in illegal activities, and b) the Company profited from such activities in violation of its own corporate governance standards.
As of the date of this report, the Company has signed the definitive settlement agreement with plaintiffs’ counsel, whereby the parties agree to terminate the class action subject to Court approval and payment of the settlement amount by the Company. The amount stipulated for the termination of the class action is equivalent to US$20 million. As of December 31, 2019, the Company registered a provision of US$15 million (equivalent of S/49.8 million). As of December 31, 2020, the Company maintains a provision of US$14.7 million plus interest of US$0.2 million (equivalent to S/53.1 million and S/0.9 million, respectively). In 2020, a payment of US$0.3 million (equivalent to S/1.1 million) and US$5 million was made and covered by the Company and by the professional liability policy in accordance with the agreement signed with the insurer, respectively. The settlement terms stipulate that the remaining $14,650,000, plus interest of 5% per annum running from September 17, 2020, must be paid by the company by June 30, 2021. We have initiated discussions with the plaintiffs regarding a deferral of this payment,
 
iii) Other provisions
As of December 31, 2020 corresponds to legal claims of civil, labor, administrative processes and administrative litigation nature, for an estimated provision of S/76 million (S/68.5 million as of December 31, 2019). Legal claims of a civil nature, mainly includes claims received from clients for S/41.4 million, corresponding to the subsidiary Cumbra Peru S.A. (S/46 million as of December 31, 2019).
The gross movement of other provisions is as follows:
 
 
  
Legal
and tax
claims
 
  
Contingent
liabilities
resulting from
acquisitions
 
  
Provision
for well
closure
 
  
Total
 
At January 1, 2018
  
 
23,364
 
  
 
6,156
 
  
 
16,804
 
  
 
46,324
 
Additions
  
 
75,369
 
  
 
—  
 
  
 
3,578
 
  
 
78,947
 
Reversals of provisions
  
 
(4,875
) 
  
 
(1,343
) 
  
 
—  
 
  
 
(6,218
) 
Desconsolidation of subsidiaries
  
 
(2,340
) 
  
 
—  
 
  
 
—  
 
  
 
(2,340
) 
Payments
  
 
(6,615
) 
  
 
—  
 
  
 
—  
 
  
 
(6,615
) 
Translation adjustments
  
 
(175
) 
  
 
(315
) 
  
 
—  
 
  
 
(490
) 
 
  
 
 
 
  
 
 
 
  
 
 
 
  
 
 
 
At December 31, 2018
  
 
84,728
 
  
 
4,498
 
  
 
20,382
 
  
 
109,608
 
 
  
 
 
 
  
 
 
 
  
 
 
 
  
 
 
 
At January 1, 2019
  
 
84,728
 
  
 
4,498
 
  
 
20,382
 
  
 
109,608
 
Additions
  
 
197,721
 
  
 
—  
 
  
 
30,998
 
  
 
228,719
 
Reversals of provisions
  
 
(3,122
) 
  
 
(4,349
) 
  
 
—  
 
  
 
(7,471
) 
Payments
  
 
(914
) 
  
 
—  
 
  
 
(1,264
) 
  
 
(2,178
) 
Translation adjustments
  
 
(94
) 
  
 
(149
) 
  
 
—  
 
  
 
(243
) 
 
  
 
 
 
  
 
 
 
  
 
 
 
  
 
 
 
At December 31, 2019
  
 
278,319
 
  
 
—  
 
  
 
50,116
 
  
 
328,435
 
 
  
 
 
 
  
 
 
 
  
 
 
 
  
 
 
 
At January 1, 2020
  
 
278,319
 
  
 
—  
 
  
 
50,116
 
  
 
328,435
 
Additions
  
 
128,169
 
  
 
—  
 
  
 
4,632
 
  
 
132,801
 
Reversals of provisions
  
 
(33,264
) 
  
 
—  
 
  
 
—  
 
  
 
(33,264
) 
Reclasification
  
 
1,079
 
  
 
—  
 
  
 
—  
 
  
 
1,079
 
Payments
  
 
(7,252
) 
  
 
—  
 
  
 
(1,799
) 
  
 
(9,051
) 
Translation adjustments
  
 
9,366
 
  
 
—  
 
  
 
—  
 
  
 
9,366
 
 
  
 
 
 
  
 
 
 
  
 
 
 
  
 
 
 
At December 31, 2020
  
 
376,417
 
  
 
—  
 
  
 
52,949
 
  
 
429,366