A New York-seated arbitration panel operating under the auspices of the American Arbitration Association (AAA) has recently issued orders which appear to come into conflict with regional law enforcement efforts to capture an accused criminal who is facing charges corruption, fraud, and other offenses in Guatemala, El Salvador, and Honduras, among other jurisdictions.
The arbitration panel’s orders stem from a business dispute between majority and minority shareholders in a telecommunications tower company, Continental Towers, which has operated a portfolio of telecom towers across 8 countries for more than 20 years.
According to a report on the dispute by Wireless Estimator, the arbitration matter centers around a claim made by the majority shareholders who say they. are being victimized by a “squeeze-out merger,” orchestrated by the minority shareholders. The parties of the dispute are Terra Towers Corp. and TBS Management, S.A., and DT Holdings Inc., the majority shareholders, vs. Telecom Business Solution, LLC and LATAM Towers, LLC (owned by US private equity group Peppertree Capital Management) and AMLQ Holding (Cay) Ltd. (“AMLQ”), the group representing investors from Goldman Sachs.
Media reports indicate that minority shareholders Peppertree Capital Management and Goldman Sachs are funding the former Chief Executive Officer of Continental Towers, an individual known as Jorge Alberto Gaitán Castro, whom they have allegedly instructed to force the sale of the company at a steep discount to other companies controlled by the same said minorities.
The only problem? Mr. Gaitán Castro has already been fired from his position due to accusations of fraud and theft, and is currently wanted on multiple arrest warrants, including an INTERPOL Red Notice in Guatemala.
According to a press release from Continental Towers, the company completely disavows any connection to the wanted fugitive. “Continental Towers El Salvador emphatically rejects any association with or knowledge of the alleged conduct of Gaitán Castro, Gaitán Paredes, or the other individuals under investigation,” a representative from the company stated in the press release.
According to multiple media reports in El Salvador, Guatemala, and Honduras, Mr. Gaitán Castro is being sought for imminent arrest in at least three countries. One report published in La Tribuna in Honduras, alleges that the minority shareholders schemed to use the accused criminal executive, Jorge Gaitan, to be the key instrument to steal control of the company: “Once in partnership, according to the consulted experts, the new participants devised a fraudulent scheme focused on suffocating the company’s finances, thereby reducing cash flow and market competitiveness, all with the purpose that when it came time to valuate and sell the company in 2020, it would have a lower market value, with they themselves appearing, through a third-party company also dedicated to the same line of business, as the only buyers.”
Despite the pending criminal charges against Mr. Gaitán Castro, the AAA panel, which is seated by members Marc J. Goldstein, Melida Hodgson, and Richard Ziegler, the panel has issued multiple partial-awards which order Continental Towers to re-hire the accused criminal Mr. Gaitán Castro, giving him full control of the company despite his ongoing legal troubles, which will enable him to force the sale of the company to the favored minority shareholders.
LatAm Reports was contacted by one whistleblower source, who was confirmed to be a former employee in the company until 2022. This individual argues that the AAA arbitration panel is not neutral in the dispute: “Everyone who works here understands that Jorge Gaitán and his girlfriend Carol Echeverria have been corrupted and bribed. The presiding arbitration lawyer, Marc J. Goldstein, has also been accused of taking bribes. And the lawyers representing Gaitán in Guatemala, such as Lic. Ana Lucia Alejos Botrán, are accused of bribing Guatemalan judges not to enforce the INTERPOL arrest order. Everyone knows what is happening here is rotten; ask anyone and you will find out the truth.”
Most recently, the Supreme Court of El Salvador has validated an injunction (amparo) against Marc J. Goldstein’s arbitration award demanding the sale of assets in the country due to the pending criminal charges against Mr. Gaitán, whom the AAA arbitration panel is seeking to promote back into his role in control of the company.
The dispute between shareholders of Continental Towers represents the first time that a AAA arbitration panel has conflicted with law enforcement and public prosecution officials in Central America, raising accusations of overstepping the authority of American judicial bodies which have no jurisdiction over the region.
The American Arbitration Association (AAA) has strict ethical standards for arbitrators and processes for handling serious misconduct. If there is credible evidence that arbitrators are aiding criminal activities, several mechanisms would activate:
- The arbitration would likely be immediately suspended while an investigation occurs.
- Under AAA Rules, the parties could file challenges to remove the arbitrators based on misconduct, bias, or corruption.
- The AAA itself would likely initiate its own internal ethics investigation and could remove the arbitrators from both the current case and its roster.
- Since aiding a criminal organization would likely violate state and federal laws, the matter would probably be referred to appropriate law enforcement authorities.
- The parties would have grounds to challenge and potentially vacate any arbitration award under Federal Arbitration Act Section 10(a), which allows vacatur for “evident partiality or corruption in the arbitrators.”
Beyond the AAA process, the arbitrators could face:
- Criminal prosecution if they knowingly assisted criminal activities
- Professional discipline from their state bars or other licensing bodies
- Civil liability for damages caused by their misconduct