- 36 -
Until about the signing of the phase II restructuring
agreements in January 1984, Citibank continued to press the
Brazilians to reach a favorable resolution of the withholding
issue. Top employees of Citibank-Brazil utilized virtually every
opportunity available to them, outside of the BAC's meetings, to
lobby Brazilian Government officials and Central Bank officials on
the withholding issue.16 Other foreign lenders, including
Commercial Credit Corporation, also pressed the Brazilians to
resolve the withholding issue favorably to these foreign lenders.
On December 8, 1983, Citibank's in-house tax counsel met with
the general counsel of the Central Bank and presented Citibank's
position on the withholding issue. During the meeting, the Central
Bank's general counsel indicated that DARF's would be issued by the
Central Bank on its restructuring debt interest remittances but
refused to address whether the Central Bank would issue DARF's on
its 432 loan program net loan interest remittances.17
On January 22, 1984, the Brazilian Planning Minister, the
Central Bank's general counsel, and other Brazilian officials met
16 Job Maats, who functioned as Citibank-Brazil's
financial controller, served on the BAC's withholding issue
subcommittee and played a central role in Citibank's efforts to
obtain DARF's from the Central Bank, testified that Brazilian
officials were told that a favorable resolution of the
withholding issue would also benefit Brazil and be in Brazil's
interest, because it would improve the climate to conclude a
restructuring deal.
17 Citibank estimated that, for 1979 through 1983, a
potential foreign tax credit of $30 million could be claimed by
Citibank with respect to the Central Bank's 432 program net loan
interest remittances.
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