COFIEC, THE WORLD OF BANKING

THE IMPRESSIVE COFIEC BUILDING IN QUITO
MY OFFICE WAS IN THE 11TH FLOOR

Dr. Correa was extremely happy to know I could start soon in his bank. He had no objection whatsoever to the fact that that I would still be holding the position of legal representative of Northwest in Ecuador until such day when all legal papers had been filed and sealed and the company had been legally dissolved. We set October 15, 1978, as the day I would start with COFIEC, however, before I officially took office, Dr. Correa wanted me to do a survey mainly in Guayaquil and Quito, regarding the availability of funding from nontraditional local sources of financing, basically knowing the regular banks had been happily absorbing (paying relatively low rates) the savings deriving from a booming economy in the country. I took off doing the study immediately and a month and a half later, on December 1, 1978, I delivered a hard copy of my study to Dr. Correa. I concluded in my study that the country was going through a period of very high consumer confidence, that there were a great number of sources from which our bank could absorb the savings of people and business entities whose banks were not paying them a competitive rate for their money. More than that, people were willing to start saving at pre-determined mid and long-term maturities, provided that the bank would give them a credible document to assure their savings and returns were paid back on time and as requested.

Correa loved my study, he sent it to his lawyers and asked them to think about the “document” through which we could implement my conclusions. The lawyers liked the idea too, and soon thereafter the bank requested and obtained the approval from the Superintendency of Banks for the issuing of the so called “Financial Certificates” through which COFIEC, which as an Industrial Bank was not allowed to take regular savings from the public, would fund itself, entering a market that otherwise it was not allowed to operate in. The Financial Certificates were an absolute success. In the first quarter after they hit the market, COFIEC funded itself so much that Dr. Correa decided to slow down the promotion of this paper. The secret to such a success was the “commitment to buy back” the certificate upon demand from the owner, at any time after the first 90 days after its issuance, giving it, in fact, an otherwise inexistent condition of almost immediate liquidity to the certificate. COFIEC was so well funded at still very good rates that its clients, large industrial corporations, immediately began to benefit from COFIEC loans at better than expected credit rates.

On January 20, 1979, I suffered a very serious car accident in Bogota, Colombia, as my friend Alejandro Gonzalez wrecked his car (in which I was a passenger) against a wall, late at night while he was intoxicated. I needed to go through a very serious “face repairing” operation which, in a matter of six weeks which included important post operation care, put me back in the world. This delayed by two months my taking office at COFIEC.

THE CARDINAL SPELLMAN SCHOOL IN QUITO WHERE MARIUXI ATTENDED HER KINDERGARTEN YEAR

Finally, I took office in COFIEC (literally a big corner office in the 11th floor of the most modern building in Quito) on February 15, 1979. I was the bank’s VP-Finance and had direct access to the CEO’s of all the banks in the country with which our bank was doing business (the 10 largest in the country). I enjoyed a great amount of confidence from our bank’s CEO himself, and the respect and friendship from most of the staff of our bank, as well as the envy, I suspect, from a few old time officers of the bank, who felt jealous due to my sudden (almost abrupt) rise in the ranks of the bank. I enjoyed my work at COFIEC, just as much as I enjoyed it at Arthur Andersen and Northwest. I adjusted just fine and quickly to my new responsibilities, which included business and personal contacts with the CEO’s and top finance officers of many of the largest companies in the country in Guayaquil and Quito. At this point I used to think of myself as having reached heights that I would have never imagined. Here, I used to think, it is the same humble little boy who used to carry morning bread from a bakery to the grocery stores in a tricycle only 20 years ago!. Who would have thought in those early days that I would be able to take on such tremendous responsibilities in one of the largest and most prestigious banks in the country?. I suspect not even my mother, who always thought that with effort and hard studying, anything was possible. I wished then, as I wish now, that she would be alive to see me, achieving what I had achieved while remaining basically the same humble man I had always been.


MARIUXI ¨GRADUATES¨ FROM KINDERGARTEN
AT THE CARDINAL SPELLMAN SCHOOL IN QUITO

Meanwhile, the Northwest branch’s dissolution was going much slower than expected, the Ecuadorian official entities are not known today for the efficiency with which they mind their business, but back then it was absolutely incredibly how slow they were and how little they cared for efficiently fulfilling their duties. By the end of 1979, a year after the start of the dissolution process, there were still several things that needed to be taken care of, before we could safely say we were done with it, so I called Glen Nelle in Houston and told him I was disappointed with the pace at which we were going and suggested that he found a replacement for me, to see if the process would speed up. At this point it had been already more than a year that I had been drawing two salaries: one from COFIEC and one from Northwest. Glen was emphatically against the idea and said that I should not be worried about the time the dissolution process was taken.

At this time, Glen went even farther and said that he had been thinking of me in connection with some other international projects once I was done with Northwest in Quito. Specifically, he wanted me to think about moving to the US in the somewhat near future as he thought he might need me in connection with the company’s international business, particularly with those in Argentina.


CARDINAL SPELLMAN´S GIRLS, 30 YEARS
AFTER MARIUXI ATTENDED THIS SCHOOL

I discussed this with Fanny, as a family we were at a peak of a wave of wellbeing, we were enjoying an incredibly good social, economic and family life, I was making twice as much income as any comparable executive of my level in the whole country, our children were growing healthy and happy and were attending the finest private schools in the country. So, thinking of a change was a subject that needed to be given a lot of thought, we needed to compare what we had, which was as good as could be, with something we might have if things went fine. Fanny did not speak English, the kids were very young, and to make things a bit more wondering, Fanny was pregnant for the third time. So, my wife and I had a lot of material to work with before we made a decision on this new challenging proposal.




SALT LAKE CITY, OUR NEW DESTINY IN 1980

We decided that I needed to talk to Glen Nelle again, so as to find out some more specifics about his idea, and I also called and talked to Piero Ruffinengo (a young lawyer I had worked with while doing the economics of the gas project, who has been closely associated with the Ecuadorian project), in Salt Lake City. Glen thought that I could be transferred to Houston, were his office was located, while Piero thought that Salt Lake City would be a better place for my family, at least for some time, while the family adjusted to the US way of live. Talking about the subject went back and forth for a few months until April 1980, when the Northwest dissolution was finally over, and a decision was taken to locate me in Salt Lake City, that I needed to be in Salt lake by July 1980 and that, I would be assigned the possition of Finance Manager of Northwest Argentina, the Northwest Affiliate doing business in that country, mainly through another affiliate, APCO Argentina, which co owned a very productive oil field in the province of Neuquen, in the Argentine Patagonia. The other partner in this venture was Perez Companc, a large Argentine conglomerate.

In my next Posting: SALT LAKE CITY

OUR LIFE IN QUITO

WE WERE FOUR THEN AND EXPECTING
THE FIFTH MEMBER OF OUR FAMILY


Our life in Quito continued to be very pleasant and full of social activities within our own group of friends; we all had young families with common interests; children of the same age, with very similar economic and social backgrounds. Our children were happily growing within a social community which in fact was our extended family. We were surprised at our own lack of “homesickness” regarding our previous life in Guayaquil. There are many explanations for that: First and foremost, our lives in Guayaquil were basically around the “clan concept” of the family, which somehow restricted our social circle; we felt, therefore, more “independent” to make our own decisions without the intervention of the father or the mother, and, of course, we were away from our mothers in law! (what else can you ask?), our young children started to go to school almost simultaneously, they attended “top notch” private schools, as our incomes allowed, an indication that we were in fact going up in the social scale.



WE WERE A SOLID, UNITED GROUP OF
FAMILIES FROM GUAYAQUIL, LIVING IN QUITO


There was no weekend when we wouldn’t have met to play cards, to pick nick, to dance or just to listen and sing ourselves the romantic music of Julio Jaramillo, the famous Guayaquil singer, idol of millions of Ecuadorians (and Latin Americans) in those days. We loved our Quito life but we continued to love our past life (without missing it) in Guayaquil. We used to get together especially to celebrate the civic Guayaquil holidays, and we even lined up to sing the Guayaquil Hymn on the 9th of October, the Guayaquil Independence Day.

Back in Quito from the Milano fiasco, the instructions I received from my bosses were to go to Salt Lake City and start running the numbers for the construction of a gas pipeline from the Santa Clara Island (offshore the city of Machala in Southern Ecuador), to Guayaquil, since the company had decided to make a serious alternative proposal to the government of Ecuador. The alternative project consisted of producing and transporting the gas from the Santa Clara Field to Guayaquil (a distance of about 100 miles (30 miles underwater), to supply gas to the Guayaquil power plants, which at the time were fueled with bunker, a gasoline production byproduct. The beauty of this alternative was that Ecuador would free a considerable volume of oil for export, at a time when oil was being sold at a reasonably good price in the international markets, while at the same time the city of Guayaquil would benefit from the extraction of the gas in the Gulf, which otherwise would continue to be underground. The proposal also contemplated the possibility of supplying gas to all new areas of the city of Guayaquil for which a home delivered gas distribution system could be built. I was the man in charge of doing the numbers in coordination with the Northwest technicians and lawyers from Oklahoma City, Salt Lake City, Quito and Guayaquil. The Little America Hotel in Salt Lake City became my new domicile for several months.
At the beginning of 1978, a full proposal for the production of gas out of the Santa Clara Field, and the construction of the gas pipeline to Guayaquil, backed by technical, financial and economic data was delivered to the Ministry of Natural Resources and to CEPE. The proposal was a serious alternative presented by Northwest in its intent to go ahead with the production of gas in the Gulf of Guayaquil, given the economically unjustifiable plan to produce ammonia and urea as originally planned.

In the first quarter of 1978, the Ministry of Natural Resources and CEPE communicated to Northwest that they did not agree with the proposed alternative. Both agencies insisted that Northwest should fulfill its commitment as written in the contract or “face the consequences”. At this point we were facing a complete deadlock. Seeing no point in continuing the negotiations, northwest officially announced to the two government agencies that it would rather pay the 1. 6 million dollars penalty contemplated in the contract and withdraw from the country, than invest over $300 million in the Industrial project that according to its projections would not be economically feasible.

Neither CEPE nor the Government of Ecuador had realized, to that point, that Northwest was dead serious about the proposal alternative and implicitly about facing the consequences for nor building the industrial complex the military government saw as so important for its political interest. The dice had been thrown on the table, Northwest would leave the country and therefore there would be no grandiose industrial project to calm down the political waves in Guayaquil. When the above happened, it was obvious that unless Northwest reversed its decision (which was totally unlikely), I would soon be without a job.




WHILE IN QUITO, OUR CHILDREN ENJOYED
FREQUENT VISITS FROM MY FATHER. THEY
LOVED HIM VERY MUCH




Glen Nelle, a great Gentleman, a Texan, and oilman of the guard, was the Northwest head of the Ecuadorian project, he approached me and asked me to stay during the process of dissolution of the contract, which he thought it would take between six month and a year, which I accepted, but, I told him that in the meantime, I would start looking for a job, a fact that was more that fine with him.

By August, 1978, the process of dissolution of the Northwest branch in Ecuador started; I personally delivered to the treasurer of CEPE an envelope containing the letter with a Citibank’s certificate check for 1.6 million dollars made to CEPE for the penalty for “not compliance” with the contract for the Exploration and Exploitation of Gas in the Gulf of Guayaquil. The process had started its countdown.

In September 1978, an international headhunter based in Miami approached me by phone; he had heard about me from his own sources of information, he knew I would be soon available in the job market and wanted to have a meeting with me within the next three to four weeks. Given the circumstances, I accepted the meeting. As we met, I knew this man was very well informed about me and my professional credentials, in fact, I had to answer only a very few questions about myself, he knew almost everything relevant to this interview. He had been hired to find the man to fill a very high ranking position in the then largest and very prestigious Industrial Bank in Ecuador, COFIEC. The position was for a VP in charge of the Finance area, but the emphasis would be on local “funding”, which appeared to be the bank’s Achilles heel in those days. Two weeks after I was sitting in front of the CEO and founder of the bank, a man whose resume was so impressive, the only thing missing in it was to have been the President of the Country. His name: Dr. Jose Antonio Correa.

My interview with Correa went very well, it lasted for about two hours and we talked about everything and anything, from politics to literature, the economy, labor to tax laws, from Homer the Greek, to Victor Hugo the great French, to Dostoevsky, passing through Cervantes and his Don Quixote. He was a man with an impressive universal culture. Interestingly enough, we didn’t talk much about banking, an area my experience was nil at. At the end of this interview he told me he was so impressed he wanted me to let him know when I would be able to start with his bank.

We hadn’t even talked much about the job itself. Correa said he had no question in his mind about the fact that I was qualified for the job, and that I would be more than satisfied with the compensation package he was offering. He said he had been looking for someone for this job for quite some time and that now that he had finally found “the man for the job”, he was not about to let him go. The compensation package, he said would be much to my satisfaction. My answer was not what he expected to hear, I told him I would not be available until after at least four months as I first had to finish my job with Northwest, something I believed it would take at least that time. Correa didn’t blink, he said “economista” (economist, as he started to call me for my degree in Economics), “I will wait for you for as long as it takes”.

Returning from my interview to my Northwest office, I immediately called Glen Nelle my boss in Texas and told him about it. Glen was very happy to hear what I had to say, he congratulated me and said “Rafael, for all that I know, you can go ahead and take that new job whenever you want, I will still keep you in our payroll for as long as it takes to complete the paperwork for the dissolution of our company down there, I just need you to keep an eye on our things so they don’t get stalled, and, in the meantime you can have the COFIEC job too”, and added “we will try not to interfere with your new job’s responsibilities, just keep your Northwest secretary and messenger in the payroll so they are ready all the time to do what they need to do”.





WHILE LIVING IN QUITO WE USED TO
GO TO THE BEACH QUITE FREQUENTLY



That was something I really did not expect, frankly, I was appalled, and I almost couldn’t believe what I had just heard from Glen Nelle, but it was true, it was amazingly true. Now I had to talk to Dr. Correa and get his view on what Glen had just suggested.

In my next posting: COFIEC, THE WORLD OF BANKING

NORTHWEST AND QUITO

BEAUTIFUL SNOW CAPPED MOUNTAINS
SURROUND THE CITY OF QUITO


Quito is the capital of Ecuador: The city was founded on December 6, 1534, by the Spanish Conquistadors on a site previously inhabited by native Indian tribes living for centuries in this beautiful part of the continent, before the Spanish people came to America. It is located in an Andean plateau about 9,000 feet high and it is surrounded by snow capped mountains on one side, and large and fertile valleys on the other. The Quito climate is generally very mild with temperatures oscillating between 40 and 75 degrees Fahrenheit. It’s been said many times that one can have four seasons in one day in Quito, and it is true. You can have a splendid sunny morning with 60 degrees Fahrenheit until eleven o’clock, then you can have three hours of a warm and still very sunny day with 75 degrees, only to find yourself a bit later in a cloudy, sometimes rainy cold and windy weather for one hour or two, and, at the end of the day you may be forced to get your umbrellas and coats to protect yourself from the cold and rainy weather. Nights are normally cool and even cold with temperatures dropping to the mid and low forties.



THE VALLEYS NEAR QUITO,
NATURE AT ITS BEST


The city is surrounded by large, some of them active, permanently snow capped volcanoes, of which, at least four can be seen at the distance in a clear day, adding beauty to the naturally beautiful landscape of the city. The population of the metropolitan area of the city today is approximately 1.7 million, and, by the time we came to Quito in 1976 it must have been around one half
When we moved to Quito, the city was enjoying an exceptionally good Municipal administration headed by Mayor Sixto Duran Ballen, a man who later on became President of the country and, therefore, we were able to witness the building of many of the public works that transformed the city from a backward, conservative, quasi ecclesiastic city, where the most important sites to visit were its colonial churches, built in the sixteenth and seventeenth centuries, into a modern, well planned metropolis, with modern buildings, good highways and long tunnels, nicely planned neighborhoods and good communications. It helped in this process the fact that Ecuador was going through a general time of prosperity fueled by the newly found oil wealth.


MONUMENT WHERE THE WORLD IS
DIVIDED IN TWO HEMISPHERES;
NORTH AND SOUTH, NEAR QUITO


We fell in love with Quito almost as soon as we moved there. To make things even better, we found ourselves forming a group of several young professionals (and their families) from Guayaquil who, just as us, had recently moved to Quito, in the wave of people who had to moved, following the rapid economic growth of the city fueled by the oil wealth. By the time we moved to Quito, Fanny was six months pregnant of our second child, Rafael Jr. who was born on March 12, 1976. Her pregnancy this time was relatively uneventful but she gained approximately forty pounds, so, again she was like a beautiful little walking ball. Fanny wanted our new baby to be born in Guayaquil, where she could count on the assistance of her mother and the rest of the family, shortly prior, during and right after the delivery.
Rafael Jr. (“Rafaelito”) was born on Saturday March 12, 1976 and he was a big, 1’9” tall, weighing 10.4 pounds. I was extremely happy to have now the blessing of two children, a girl and a boy, and having a good, well paid job, living in Quito, a beautiful city, and married to a beautiful wife whom I loved and was loved in return. What else could have I asked to my Creator?




THE COLONIAL QUITO, WHERE RELIGION,
HISTORY, ARCHITECTURE AND ART
ARE BEAUTIFULLY PUT TOGETHER

Our social life was very active and rotated mostly around our Guayaquil friends and their families. Without anything specifically agreed upon, we started meeting on Fridays and Saturdays at one of our places, at least twice a week on a rotating basis. Our entire families used to get together, the adults to play cards while the kids had their own ball with their toys displayed all over the place. The hosting family would be in charge of dinner and music for all. Our children, our wives and we, the heads of households, were about the same age, had about the same level of income, and shared most political and social views of the world around us, but more than anything else, together we felt like being back home in Guayaquil, even as being transplanted to Quito, a city in which there were still surviving prejudices against “the monkeys” as (thank God) ever fewer Quito people call the people from Guayaquil.
We never felt unwelcome to any place we went, that’s something I personally feel very happy to say when I talk about this time in Quito. Our group was so solidly united and so fun to belong to, that not long after, some Quito people joined us, and, of course we welcomed them wholeheartedly. We all looked forward to the weekends together, which sometimes included country gatherings and pick nicks in a place in the country side, only about a mile from the Equator line, which divides our planet in two equal hemispheric halves, North and South. In sum, our life in Quito was as happy as it could have been, we were all extremely surprised that we had little to miss from our lives in Guayaquil; in fact, we all decided that we wanted to stay in Quito and no one, but no one, ever wanted to return to Guayaquil. At the risk that I might forget some of the names of our friends in our group in Quito, I’ll mention Raul and Cecilia Ortiz (Texaco); Antonio and Leonor Sanchez (Gulf Oil), Winston and Elizabeth Izurieta (Nestle), Bolivar and Alicia Rivera (ITT) Alejandro and Fermina Gonzalez (Hilton) Francisco and Silvia Ascensio (Insurance); Alfonso and Martha Silva (Carbajal-Colombia) Francisco and Teresa Valarezo (Farming); Rene and Mirtha Saavedra and Eduardo and Cecilia Espinoza (MD). Each and every one of our friends became like brothers and sisters, each and all of us looked after one another just like we all belonged to a fraternity, and in fact, it was a fraternity. Those were wonderful days!
In the meantime, things started to move fast in connection with the Northwest project in the Gulf of Guayaquil. In accordance with the contract, the company needed to do additional exploration, including seismic studies and drilling in the area under the contract before starting the gas production and industrialization. A very experienced Geologist was brought in from Argentina and a few people were hired to work with him, the technical office was opened in Guayaquil where Alberto Angeleri, a very experienced Argentine geologist was the head of.

The CEPE people kept on insisting that the industrial complex to process the gas and produce ammonia and urea should be the project’s a priority, since there were already enough proven reserves of gas, in the so called Santa Clara Field, The company, on its part, insisted that the industrialization part of the project should be held back until such time when the return on the investment could be assured and that meant that the prices of ammonia and urea in the global market needed to improve materially, since at the current prices of $90/MT, the project was a no fly.
The Italian conglomerate Snamprogetti, based in Milano had been originally contacted by Northwest to be the designer and builder of the industrial project, and, to that extent, a group of Italian technicians came to Ecuador in order to discuss some specifics of the project. When these technicians reviewed the numbers that we had prepared, they all agreed that the project was a no goer, and that its implementation should wait for better times in the market of urea and ammonia.
That was not the position of the “patriotic” people of CEPE and the Ministry of Hydrocarbons of Ecuador. They wanted to have their toy built no matter what, and they wanted to have a meeting -in Milano- to discuss this matter in a more “discreet” environment. Though neither Snamprogetti nor Northwest saw any meaningful purpose in having a meeting in Milano, such idea was forced through by the general manager of CEPE, who, accompanied by a group of four department heads flew to Milano where they would meet with four executives of Northwest and a similar number of Italians from the host company. The little understanding the CEPE people had of the whole matter was never clearer than the day when the GM of that company, a General of the Ecuadorian Army, said in front of the executives of both Snamprogetti and Northwest, that the project had to be carried on because it was politically important for the government to calm down the growing disaffection the Guayaquil people was feeling for the military government. “We need to do something to get the waves controlled in Guayaquil”, the man said, and he showed no shame to do it. He just either did not know, or decided to forget, who would have to pay the bill for the white elephant he wanted to be built.





SEVERAL VIEWS OF QUITO, THE
BEAUTIFUL CAPITAL OF ECUADOR


That same night, the same man, after having a few drinks, invited the Northwest Chairman to have a private conversation, in which the General said he wanted a “contribution” of one million dollars to be more understanding of the situation, or he would press the construction of the industrial complex with Snamprogetti. This was a classic display of “patriotism” from this pathetic man whose understanding of the whole matter was extremely “basic” to say the least. That was the day when the Northwest people fully realized who their business partners in Ecuador were, and that same day was, perhaps, when the whole project, for all practical purposes was killed.

In my next posting: PROPOSING ALTERNATIVES

OFF TO QUITO

THE FAMILY FAREWELL JUST
BEFORE WE MOVED TO QUITO



Northwest was negotiating the gas production contract with the National Petroleum Corporation of Ecuador, known then by its Spanish acronym “CEPE”. Under the terms of this contract, Northwest was to commit itself to explore and produce gas out of an offshore gas field in the Gulf of Guayaquil,known as The Santa Clara Field, which had already been discovered some years back by a prior contractor, and to produce ammonia and urea in an industrial complex to be built in an undetermined place near the Gulf of Guayaquil.
Ecuador was under the government of a military junta since 1972, and, therefore, the military had an absolute control of the oil and gas industries in Ecuador, because they thought they were “the anointed ones to guard the wealth and the honor of the country” or so was the grandiose speech of the new “liberators”, the leftist armed followers of Che Guevara and Fidel Castro in the southern part of this continent. CEPE was under the control of the military and, up to that point, nobody was neither politically nor economically challenging them.
As it has been a tradition in Ecuadorian politics, most of the “democracy lovers” whose speech was against dictatorships when the country was living in democracy, suddenly shut their mouths and kept their pens and pencils safely in boxes under three keys as soon as they got a government job from the dictatorship. Many of them became ministers, vice ministers, ambassadors, department directors, ministers’ secretaries, or simply well paid employees,among whose benefits were the flying first class in government paid entourages to exotic places and fancy dinners with foreign businessmen visiting the country and looking for opportunities in the expanding Ecuadorian economy. That was enough to make them forget their “democratic political principles”, if they ever had them any way. The Ecuadorian military had never been known to be academically very well prepared. It was of little surprise for anyone, therefore, that the national oil company was poorly managed, to say the least. A series of mid level managers of CEPE, young engineers or economists recently graduated from poorly managed universities, and with little or no experience in the field (and whose only merit was to be politically left leaning or newly converts), were the men in charge of “advising” the upper management (men in uniform) in all matters of importance. It was a marriage of convenience between ignorance and arrogance.
Conscious of their importance under the circumstances, these young men usually adopted attitudes comparable to those of Middle East Sheiks, when negotiating with private companies in matters concerning the oil and gas industries; some of them even grew Arab like beards just like the Middle East Sheiks do, to emphasize their grip on oil matters, however, they could barely hide their ignorance and incompetence, but more than anything, their lack of honesty when they saw a chance.
It is under this atmosphere and with those men that Northwest had to seat down and negotiate details of its contract. The head of the CEPE group of lawyers was an honest (exception which oly confirmed the rule), competent communist, Stalinist of the old guard; he had recently returned from Moscow where he had been the Ecuadorian ambassador to the Soviet Union. This man was convinced that negotiating with a US multinational corporation was a good opportunity to squeeze the hell out of the “Gringos” balls. All considered, it was not the best of the environments to negotiate a rational, well thought of contract.
On the other hand, the group of Northwest lawyers was made up of a mix of young and experienced corporate lawyers headed by a very competent and experienced Argentine attorney who had a small percentage of financial participation in the project. It was with these people and under this environment that Northwest had to deal when negotiating their contract. Not an easy task, however, they finally came to an agreement and signed the “Contract for the Exploration and Exploitation of Gas in The Gulf of Guayaquil” and soon they had to start running to make it effective.





MARIUXI (1) AND HER DAD BEFORE WE MOVED TO QUITO


As an Arthur Andersen officer in the tax area, I was involved in the process of advising the Northwest lawyers regarding the tax effects arising from the contract and helping running the numbers to determine the economic viability of the project.
At the time of the negotiations with the government, the prices of ammonia and urea in the international markets were running around $360 per metric tone (“MT”). With such prices, our projected cash flows clearly indicated that the project was not only feasible, but very profitable as well, and the projected investment of approximately $300 million would be recovered within the first five years. The Internal rate of return of the project was in the range of 35%. It was definitely an attractive investment for Northwest.
The ink of the signatures on the contract had not dried up yet when the prices of ammonia and urea, the products Northwest had committed to produce with the gas to be extracted from the gas field in the Gulf of Guayaquil, began to drastically drop in the international markets and our projected cash flows immediately started to show red flashing lights. At an average of $90/MT market price for both, urea and ammonia, the project was no longer profitable , and , therefore, it was economically non feasible. Northwest was not going to invest $300 million knowing that such investment could not be recovered. The government of Ecuador and the CEPE management in particular were deaf and blind to the facts, and they insisted that the industrial complex to process the gas should go ahead. For them, “the economic non viability of the project was irrelevant to the country”, therefore, “the industrial complex should be built no matter what”.





FANNY IN 1975 AS SHE WAS WAITING FOR
RAFAELITO, OUR SECOND CHILD

It was under these circumstances that by the end of October 1975, I was approached by the Northwest management in Salt Lake City with the proposal that I take charge of their office in Quito, replacing an American officer whose wife did not like living in Quito and told her husband to choose between living in Quito without her or going back to Utah to save their marriage. The man chose to save his marriage.
In a matter of three weeks, I was invited to come to Salt Lake City and discuss with the Northwest upper management about the Ecuador project and their proposal to work for them. Frankly, their proposal was one of those that “you can’t say no” to. It was late November 1975, I was in my low thirties and wasn’t about to make a sudden change in my life without my wife’s full participation and agreement. I came back to Guayaquil and immediately and openly discussed everything with my wife, who suddenly became my most trusted job counselor since Pepe García, my great tutor and counselor was no longer near me to draw advise from.
I discussed the issue openly with Fanny, who was pregnant again, and was a bit reluctant to go along with the idea at the beginning, mainly because we would have to go to Quito, away from her mom, her relatives and her friends, but she became a full supporter after we made a complete analysis of the pros and cons of the move. In a matter of a week we have made up our minds, I accepted Northwest’s offer and I would resign from Arthur Andersen effective December 31, 1975. We would move to Quito at the beginning of 1976 and become the Manager in charge of the Northwest office in Quito. The dice were thrown the first week of December 1976, when I submitted my resignation to my position as Manager in Charge of the Tax Division of Arthur Andersen in Ecuador. Bill, the new managing partner of the Firm in Ecuador did what he could to convince me that I should stay and take charge of the Firm’s office in Quito, his efforts included a material salary increase, a company owned car for my personal use and an increased housing allowance, but that was not enough to make me change my mind. I stood by my word to the Northwest people. On December 27, 1975, Fanny, Mariuxi (our 18 month daughter) and I moved to Quito, in the first of a series of domicile moves that we made in the following ten years and which were necessary due to my job obligations.





RAFAEL, IN A CONFERENCE AT THE CHAMBER
OF INDUSTRIES IN GUAYAQUIL IN 1976


Moving to Quito was indeed a challenge for everyone in the family, even for young Mariuxi who was most of the time, but especially on weekends, surrounded by the large family members who came to see her as the “star of the show” in every family gathering there was. They would miss her very much, she would miss them, and, of course we would miss everyone too. A family gathering which included three generations of Romeros took place as a fare well party , days before we took off to Quito. My father, my six brothers and sisters accompanied by their children and grand children attended the gathering, it was one of the very few occasions in which the whole family was all together.
Off we went to Quito and to a totally different environment. Quito and Guayaquil, in spite of being only about 250 miles away in the same small country, used to be (and in many respects they still are) two completely different cities, particularly in climate, altitude, ways of doing business, people’s attitude toward life in general and people’s attitude toward work in particular. I’m not saying either one is better or worse, I’m just saying they were, and still are in many ways, different. Over the last forty years, however, things have changed much in a very positive way, in many respects, and that is mainly due to a much better communication between the two cities, to national TV and radio and to special efforts trying to reach a higher level of integration.



MARIUXI AND RAFAEL JR. AFTER WE
MOVED TO QUITO IN 1976

Though Guayaquil continues to be the largest city in the country with over 2.5 million inhabitants and is a magnet for a massive continuous immigration from all over the country, Quito, as the capital of the country, with about 1.7 million inhabitants, has become a very important economic and industrial center also attracting a lot of immigration from the rest of the country.

In my next posting: NORTHWEST AND QUITO

QUITO IN SIGHT

MARIUXI (1) IN HER FIRST "STUDIO" FOTO


Life was a completely different game for us once we had a family, our world had a new axis, it was Mariuxi. Everything in our lives had to run around her and her well being. We lived in a small but very comfortable apartment, not very far from Fanny’s mother and my sister Lilita who, for all practical purposes continued to be my “adopting mom”.
Mariuxi was a very healthy baby and we did not have to worry very much about doctors except for the regular check ups, until one day when she was about nine months old.
I had gone to Cuenca for work and had been absent for a full week when Mariuxi had fallen very ill, she was urgently ordered to a hospital by her doctor and had been there for two days before I got back home on a Saturday at noon. I was anxious to see my baby when I arrived home only to be informed that Fanny and Mariuxi were in the hospital. I was about to faint, I was so scarred I could not drive and asked Carlos, my brother in law, to take me to the hospital. When I arrived, my baby was lying in bed with all kinds of serum going through her little veins, she was pale, she couldn’t move, she couldn’t open her eyes. She had been diagnosed gastroenteritis, the same disease that had killed three children in my family when they were just as young as my little Mariuxi.
I was devastated, I talked to the doctor in charge of her case, I told him how scared I was, but he calmed me down, he told me the worst was over, he expected my baby to be back at home in two days. I couldn’t sleep for those entire two days, but thank God Mariuxi was well by Monday morning and we took her back home. She had lost at least four pounds but she recovered them in no time. Two months later, when she was eleven months old, I made her walk for the first time; I’ll never forget how she did it. As I used to do every day after work, I took her to play with me, I made her lean her back on the main door of our apartment, and left her standing loose while calling her to come to me, I was about three feet away, she tried a couple of times to walk toward me but she pulled back. Finally, in her third intent, she gathered all the will she needed and walked toward me as I pulled myself back a bit to allow more space for her walk, she had walked about four steps by herself, I couldn’t believe she had done it!. I repeatedly hugged and kissed her and she laughed as out of satisfaction for a work well done. Then, I made her try it again and again and she was soon an expert in the art of walking! By the time she was one year old, she was running around our apartment at will. I loved it…




MARIUXI IN HER FIRST BD, WITH HER MOM AND GRANNY


Notwithstanding the great happiness she brought to our lives almost every day after she was born, it was not until after 25 years, in April of 2000, when Mariuxi, then 26, obtained her degree as a Master of International Business, from the University of Thunderbird, the number one in the world in this field, that I felt as happy for and as proud of her as the day she walked by herself for the first time.
Mariuxi is now a mother of two adorable little boys, Carlito and Matteo, she has made us the happiest grandparents anyone can think of, she lives in Dubai, one of the most dynamic and modern states in the world, she likes it there, she is an important officer of one of the most important companies in the world, she enjoys her work and she also enjoys her family. Fanny and I visit her at least once a year and we are now excitedly expecting her and her family to visit us for the year-end holidays of 2010. This will be the first time our grand children come to visit their maternal grandparent’s home in Ecuador.



MARIUXI WITH HER DAD AND MOM, POSING FOR
THE ARTHUR ANDERSEN BOOK IN 1975



Going back to my professional life, in the summer of 1975, I was promoted to the Manager level in our Firm,and, with the new level came new responsibilities and with them, more traveling and less time for the family. A combination of good and bad news came soon after: Pepe Garcia had been promoted to the level of Partner in the Firm, but he was going to be transferred to the Miami office. My friend, my mentor, my adviser, and my most respected supervisor was going to leave. In spite of the fact that I had developed a very successful career within the Firm over the previous six years, I felt that things were going to change and I was somehow concerned about the coming changes. Though Pepe’s replacement William (“Bill”) Lindbergh, an American partner coming from the headquarters in Chicago introduced himself as a man who would continue Pepe´s successful policies and procedures and practices, I still felt that there were going to be changes affecting me. In fact, only two months after Bill took over, he called me to his office and had a long chat with me. He told me I had been highly recommended by Pepe and that among his plans was the opening of an office in Quito, given the fact that our Firm’s business had developed faster than expected in that city, particularly in the tax area, which was under my responsibility. Then he mentioned that he would like me to be the head of the Quito office, which would require me to move to that city.
Instead of giving him a definite answer, I told Bill that I’d like to take a couple of days to respond, which was more than fine with him. I talked to Fanny about it and, though she was kind of mama’s girl and going to Quito would put a physical distance between her and her mom, she left the decision to me. There were a few things I needed to analyze before making a decision, not the last of them was a necessary hike in my compensation, a housing allowance, a compensation for the fact that Fanny was working and she would not do so in Quito, and a few other things associated to the move to a different city and to new and higher responsibilities. When I came back to talk to Bill, at the end of September 1975, he was willing to meet all my requests, so, for all practical purposes, I was going to be transferred to Quito, effective January 1, 1976. Little did I know that in the following three months, things were going to take a totally unexpected and positive turn in my life and the lives of the rest of the members of my close family!
One of our most important clients in the country was, in those days, Northwest Energy Co., the parent company of Northwest Pipeline Corp. (“Northwest”), a giant in the business of gas production and transmission, based in Salt Lake City, Utah, and providing gas to large gas distribution companies in the states of Montana, Idaho, Wyoming, Utah, Arizona and New Mexico. Northwest had just incorporated a subsidiary in Ecuador under the name of Northwest Ecuador Co., and was in the process of negotiating a contract with the Government of Ecuador for the exploration and exploitation of gas in the Gulf of Guayaquil, for which they needed local expert tax advice in relation to its future activities in the country. Northwest, an old client of Arthur Andersen’s in the US, requested our Firm in Ecuador for the help they needed in the tax area and I was assigned to the job.
In my next posting: OFF TO QUITO