THE UNITED STATES AND ARMS CONTROL

7+(81,7('67$7(6$1'$506&21752/$1*/2$0(5,&$1
&203(7,7,9(&223(5$7,21$77+(/21'211$9$/&21)(5(1&(
E\
'DYLG5RH
6XEPLWWHGLQSDUWLDOIXOILOPHQWRIWKHUHTXLUHPHQWV
IRUWKHGHJUHHRI0DVWHURI$UWV
DW
'DOKRXVLH8QLYHUVLW\
+DOLID[1RYD6FRWLD
$XJXVW
&RS\ULJKWE\'DYLG5RH
'$/+286,(81,9(56,7<
'(3$570(172)+,6725<
7KH XQGHUVLJQHG KHUHE\ FHUWLI\ WKDW WKH\ KDYH UHDG DQG UHFRPPHQG WR WKH )DFXOW\ RI
*UDGXDWH6WXGLHVIRUDFFHSWDQFHDWKHVLVHQWLWOHG³7+(81,7('67$7(6$1'$506
&21752/ $1*/2$0(5,&$1 &203(7,7,9( &223(5$7,21 $7 7+( /21'21 1$9$/ &21)(5(1&(´ E\ 'DYLG 5RH LQ SDUWLDO IXOILOPHQW RI WKH
UHTXLUHPHQWVIRUWKHGHJUHHRI0DVWHURI$UWV
'DWHG $XJXVW
6XSHUYLVRU
BBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBB
5HDGHUV
BBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBB
BBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBB
LL
'$/+286,(81,9(56,7<
'$7( $XJXVW
$87+25
'DYLG5RH
7,7/(
7+(81,7('67$7(6$1'$506&21752/$1*/2$0(5,&$1
&203(7,7,9(&223(5$7,21$77+(/21'211$9$/
&21)(5(1&(
'(3$570(17256&+22/
'HSDUWPHQWRI+LVWRU\
'(*5((
0$ &2192&$7,21 2FWREHU
<($5
3HUPLVVLRQ LV KHUHZLWK JUDQWHG WR 'DOKRXVLH 8QLYHUVLW\ WR FLUFXODWH DQG WR KDYH FRSLHG
IRU QRQFRPPHUFLDO SXUSRVHV DW LWV GLVFUHWLRQ WKH DERYH WLWOH XSRQ WKH UHTXHVW RI
LQGLYLGXDOVRULQVWLWXWLRQV,XQGHUVWDQGWKDWP\WKHVLVZLOOEHHOHFWURQLFDOO\DYDLODEOHWR
WKHSXEOLF
7KHDXWKRUUHVHUYHVRWKHUSXEOLFDWLRQULJKWVDQGQHLWKHUWKHWKHVLVQRUH[WHQVLYHH[WUDFWV
IURPLWPD\EHSULQWHGRURWKHUZLVHUHSURGXFHGZLWKRXWWKHDXWKRU¶VZULWWHQSHUPLVVLRQ
7KH DXWKRU DWWHVWV WKDW SHUPLVVLRQ KDV EHHQ REWDLQHG IRU WKH XVH RI DQ\ FRS\ULJKWHG
PDWHULDO DSSHDULQJ LQ WKH WKHVLV RWKHU WKDQ WKH EULHI H[FHUSWV UHTXLULQJ RQO\ SURSHU
DFNQRZOHGJHPHQWLQVFKRODUO\ZULWLQJDQGWKDWDOOVXFKXVHLVFOHDUO\DFNQRZOHGJHG
BBBBBBBBBBBBBBBBBBBBBBBBBBBBBBB
6LJQDWXUHRI$XWKRU
LLL
)RUP\SDUHQWV
LY
7$%/(2)&217(176
$%675$&7YL
/,672)$%%5(9,$7,21686('YLL
$&.12:/('*(0(176YLLL
&+$37(5,1752'8&7,21
&+$37(5$181&(57$,1%(*,11,1*
&+$37(5$5(62/87,2172&223(5$7,21
&+$37(572:$5'6$3$&,),&$//,$1&(
&+$37(5&21&/86,21
%,%/,2*5$3+<
Y
$%675$&7
7KLVZRUNFRQVLGHUVWKHVWUDWHJLFYDOXHRIWKH/RQGRQ1DYDO&RQIHUHQFHWRWKH
8QLWHG6WDWHV1DY\DQGWKH$PHULFDQ*RYHUQPHQW,WDGGUHVVHVORQJVWDQGLQJ
KLVWRULRJUDSKLFDOGHEDWHVRQLQWHUZDU$PHULFDQIRUHLJQSROLF\LQFOXGLQJWKHQDWXUHRI
LVRODWLRQLVPXQGHUWKH5RRVHYHOW$GPLQLVWUDWLRQWKHGHJUHHRI$QJOR$PHULFDQ
FRRSHUDWLRQLQWKHVDQGWKHVWUDWHJLFYLVLRQRIWKH8QLWHG6WDWHV1DY\LQWKH3DFLILF
LQWKHLQWHUZDUSHULRG7DNLQJLQWRDFFRXQWLQHTXDOGHJUHHVWKHSHUVSHFWLYHVRIWKH
XQLIRUPHGQDYDORIILFHUVDQGWKHFLYLOLDQGLSORPDWVLQWKH6WDWH'HSDUWPHQWWKLVWKHVLV
ZLOODUJXHWKDW$PHULFDQSDUWLFLSDWLRQLQWKH/RQGRQ1DYDO&RQIHUHQFHVKRZVD
GHJUHHRILQWHUQDWLRQDOSDUWLFLSDWLRQDQGDFRPPLWPHQWWRWKHLQWHUQDWLRQDORUGHUWKDWLV
RIWHQRYHUORRNHGE\KLVWRULDQVLQWKLVILHOG
YL
&12
'5&
)2
*%
,-1
/1&
/17
21,
51
861
:1&
/,672)$%%5(9,$7,21686('
&KLHIRI1DYDO2SHUDWLRQV
'HIHQVH5HTXLUHPHQWV&RPPLWWHH
)RUHLJQ2IILFH
*HQHUDO%RDUG
,PSHULDO-DSDQHVH1DY\
/RQGRQ1DYDO&RQIHUHQFH
/RQGRQ1DYDO7UHDW\
2IILFHRI1DYDO,QWHOOLJHQFH
5R\DO1DY\
8QLWHG6WDWHV1DY\
:DVKLQJWRQ1DYDO&RQIHUHQFH
YLL
$&.12:/('*(0(176
,ZRXOGOLNHWRDFNQRZOHGJHWKHPDQ\SHRSOHZKRKDYHKHOSHGPHWRFRPSOHWH
WKLVSURMHFW)LUVWP\VXSHUYLVRU'U&KULVWRSKHU%HOOSURYLGHGLQYDOXDEOHVXSSRUWDQG
FRQVWDQWJXLGDQFHDORQJWKHZD\+LVIHHGEDFNZDVDOZD\VSURPSWDQGFRQVWUXFWLYHDQG
KLVPDVWHU\RIWKLVVXEMHFWDQGDOOLWVPDQ\GHWDLOVPDGHWKLVWKHVLVSRVVLEOH%H\RQGKLV
DFDGHPLFDGYLFH'U%HOOZDVDOZD\VZLOOLQJWRRIIHUDIULHQGO\HDUDQGKHOSIXODGYLFHWR
QXPHURXVDQGGLYHUVHVXEMHFWV
,ZRXOGDOVROLNHWRWKDQN'U3DGUDLJ5LOH\IRUKHOSLQJWRILOOLQWKHGHWDLOVLQ
$PHULFDQGRPHVWLFSROLF\WKDWDLGHGLPPHDVXUDEO\WRWKHFRPSOHWHQHVVRIWKLVWKHVLV
'HVSLWHDEXV\VFKHGXOHKHZDVDOZD\VWKHUHWRJLYHDVHFRQGRSLQLRQRQP\ZRUN
GLUHFWPHGRZQSDWKV,KDGQRWSUHYLRXVO\FRQVLGHUHGDQGH[SDQGP\XQGHUVWDQGLQJRI
LPSRUWDQWDUHDVRIWKFHQWXU\$PHULFDQKLVWRU\+LVSHUVRQDOHQFRXUDJHPHQWZDV
DOZD\VZHOFRPHDQGHYHUIRUWKFRPLQJ
1H[W,ZRXOGOLNHWRH[WHQGP\DSSUHFLDWLRQWRWKHVWDIIVDWWKH1DWLRQDO$UFKLYHV
DQGWKH/LEUDU\RI&RQJUHVVLQ:DVKLQJWRQ'&7KH\ZHUHXQGHUVWDQGLQJKHOSIXODQG
H[WUHPHO\NQRZOHGJHDEOH7KHLUSDWLHQFHLQFDUWLQJER[HVIRUKRUGHVRIGHPDQGLQJ
JUDGXDWHVWXGHQWVDQGUHVHDUFKHUVZLOOQRWEHIRUJRWWHQ
)LQDOO\,PXVWWKDQNP\IDPLO\DQGIULHQGVIRUWKHLUXQG\LQJVXSSRUWDQGORYH
:LWKRXWWKHLUFKHHUIXOFRPSDQLRQVKLSDQGNLQGZRUGVWKLVWKHVLVZRXOGQRWKDYHEHHQ
SRVVLEOH6SHFLDOWKDQNVJRWRP\SDUHQWVZKRVXSSRUWHGPHLQHYHU\PDQQHUSRVVLEOH
DQGZKRSURYLGHGPHZLWKJUHDWLQVSLUDWLRQ
YLLL
&+$37(5,1752'8&7,21
7KH6HFRQG/RQGRQ1DYDO&RQIHUHQFHLVXVXDOO\UHPHPEHUHGDVWKHILQDOFKDSWHU
RILQWHUZDUQDYDODUPVFRQWURO7KHFRQIHUHQFHVDZWKHJUHDWH[SHULPHQWDWLRQRI
PXOWLODWHUDOOLPLWDWLRQRQDUPVFRQVWUXFWLRQHQGZLWKDZKLPSHU7KHWHUPVRIWKHWUHDW\
ZHUHDVKDGRZRIWKHDPELWLRXVSURJUDPLQLWLDOO\FRQFHLYHGLQDQGWZRRIWKHILYH
RULJLQDOSDUWLFLSDQWVLQDUPVFRQWUROUHIXVHGWRDGKHUHWRHYHQWKHVHOLPLWHGWHQHWV7KH
UHVXOWDQWIDLOXUHRIWKHVLJQDWRULHVWRDWWDLQZLGHUSDUWLFLSDWLRQLQWKHWUHDW\OHGWKHWKUHH
UHPDLQLQJSRZHUVWKH8QLWHG6WDWHV%ULWDLQDQG)UDQFHWRGHSDUWIURPWKHWUHDW\¶V
WHUPVZLWKLQD\HDURILWVUDWLILFDWLRQ$WILUVWJODQFHLWDSSHDUVWKDWWKHFRQIHUHQFH
ZDVWKHQDLOLQWKHFRIILQIRULQWHUZDUDUPVOLPLWDWLRQUHOHJDWLQJLWWRDEULHIPHQWLRQLQ
WKHFRQFOXVLRQVRIKLVWRULHVRQQDYDODUPVFRQWURO
7KLVLPSUHVVLRQLVFHUWDLQO\ERUQHRXWLQWKHKLVWRULRJUDSK\RIDUPVFRQWURO7KH
FRQIHUHQFHKDVEHHQQHJOHFWHGE\KLVWRULDQVLQDOOUHOHYDQWILHOGVKLVWRULHVRIDUPV
FRQWUROLQWHUZDUIRUHLJQSROLF\RULQWHUZDUQDYLHVWHQGWRPHQWLRQLWRQO\LQSDVVLQJRU
QRWDWDOO7KLVQHJOHFWVWHPVPRVWO\IURPKLVWRULFDOKLQGVLJKW7KHIDLOXUHRIWKH
FRQIHUHQFHVHHPVSUHGHWHUPLQHGE\WKHLQVWDELOLW\RIWKHJOREDOVFHQHLQWKHPLGV
DQGWKHLUUHFRQFLODEOHYLHZVRIWKH$PHULFDQV%ULWLVKDQG-DSDQHVHGHOHJDWLRQV$V
VXFKLWLVXVXDOO\VHHQHLWKHUDVWKHHQGRIDUPVFRQWURORUWKHEHJLQQLQJRIWKH
EUHDNGRZQLQWKH3DFLILF<HWLIWKHFRQIHUHQFHLVH[DPLQHGZLWKRXWJODQFLQJIRUZDUGLW
LVFOHDUWKDW$PHULFDQDQG%ULWLVKSROLF\PDNHUVVWLOOKHOGKRSHWKDWDUPVFRQWUROFRXOG
VWHPWKHULVLQJWLGHRIPLOLWDULVPDFURVVWKHJOREH7KH\LQYHVWHGDJUHDWGHDORIWLPHDQG
HIIRUWLQWRWKHFRQIHUHQFHLQVSLWHRIZKDWPXVWKDYHVHHPHGRYHUZKHOPLQJRGGV7KH
$PHULFDQVSURYHGUHVLOLHQWLQWKHLUKRSHIRUDUPVFRQWUROHYHQDIWHUWKH-DSDQHVH
ZLWKGUHZLQDQDWWHPSWWRVWUHQJWKHQWKHOLEHUDOLQWHUQDWLRQDORUGHUDQGHQWLFLQJWKHQRQ
VLJQDWRULHVEDFNLQWRWKHIROG(YHQLIWKH\ZHUHQRWVXFFHVVIXOWKHVHULRXVDWWHPSWE\
:HVWHUQSROLF\PDNHUVDWWKHFRQIHUHQFHVKHGVOLJKWRQWKHLUGHVLUHVJRDOVDQG
ZRUOGYLVLRQLQWKHPLGV
,QSDUWLFXODUWKHVHFRQG/1&LVFULWLFDOO\LPSRUWDQWIRUXQGHUVWDQGLQJWKH
LQWHUZDUIRUHLJQSROLF\RIWKH8QLWHG6WDWHV7KHKLVWRULRJUDSK\LVQRWVHWWOHGRQWKH
PDWWHU)RUPXFKRIWKHSRVWZDUHUDKLVWRULDQVKDYHFRQFOXGHGWKDWWKH8QLWHG6WDWHV
EHFDPHGHHSO\LVRODWLRQLVWEHWZHHQWKHZDUVUHMHFWLQJSDUWLFLSDWLRQLQLQWHUQDWLRQDO
LQVWLWXWLRQVDQGVK\LQJDZD\IURPDOOLDQFHVZLWKOLNHPLQGHGVWDWHV,QUHFHQW\HDUVWKLV
GRPLQDQWLQWHUSUHWDWLRQKDVFRPHXQGHUDWWDFNIURPKLVWRULDQVZKRKDYHDUJXHGWKDWWKH
8QLWHG6WDWHVZDVDFWXDOO\UHDVRQDEO\DFWLYHLQZRUOGDIIDLUVEXWWKDWLWVSDUWLFLSDWLRQZDV
VLPSO\OLPLWHGWRLWVHFRQRPLFLQIOXHQFHUDWKHUWKDQPRUHFRQYHQWLRQDOPHDQVRISRZHU
$QH[DPLQDWLRQRIWKHVHFRQG/1&FDQDGGXVHIXOO\WRWKLVGHEDWHE\HVWDEOLVKLQJWKH
ZD\VLQZKLFK$PHULFDQSROLF\PDNHUVZHUHDOVRZLOOLQJWRXVHPLOLWDU\SRZHUWRVKDSH
WKHZRUOGRUGHUDQGWRIXUWKHUWKH8QLWHG6WDWHV¶LQWHUHVWVDEURDG7KHGHWHUPLQDWLRQRI
86SROLF\PDNHUVWRSURGXFHDWUHDW\DWWKHFRQIHUHQFHGHPRQVWUDWHVDGXUDEOH
FRPPLWPHQWWRDOLEHUDOLQWHUQDWLRQDORUGHUDGHGLFDWLRQWRPDLQWDLQLQJDQDY\VHFRQGWR
QRQHDQGDZLOOLQJQHVVWRFRRSHUDWHZLWKIRUHLJQSRZHUVWRIXUWKHUPXWXDOLQWHUHVWV
)LUVWLWLVQHFHVVDU\WRSURYLGHDQRYHUYLHZRIWKHLQWHUZDUQDYDODUPVFRQWURO
V\VWHPZKLFKVSDQQHGIRXUFRQIHUHQFHVDQGWKUHHWUHDWLHVEHWZHHQDQG7KLV
VXEMHFWKDVEHHQFRYHUHGE\QXPHURXVKLVWRULDQVRIERWKQDYDODQGIRUHLJQSROLF\
EDFNJURXQGVLQFOXGLQJ(ULN*ROGVWHLQ-RKQ0DXUHU+HUEHUW/H3RUH(PLO\*ROGPDQ
DQG&KULVWRSKHU+DOOWRQDPHMXVWDIHZ 1DYDODUPVFRQWUROZDVERUQLQ$PHULFDGXULQJ
WKH:DVKLQJWRQ1DYDO&RQIHUHQFHDVDPHDQVWRVORZDQGOLPLWWKH
H[WUDRUGLQDULO\H[SHQVLYHEXLOGLQJSURJUDPVWKDWFRQWLQXHGXQDEDWHGIROORZLQJWKH
FRQFOXVLRQRI:RUOG:DU2QH7ZRULVLQJSRZHUVWKH8QLWHG6WDWHVDQG-DSDQ
WKUHDWHQHGWKHVWDWXVTXRGRPLQDQFHRIWKH5R\DO1DY\7KH8QLWHG6WDWHVEHJDQWKLV
FRQVWUXFWLRQSURJUDPLQDVDPHDQVWRGHIHQGLWVQHXWUDOLW\IURPEHOOLJHUHQWVRQ
ERWKVLGHVRIWKH(XURSHDQZDU7KH-DSDQHVHEXLOWWRNHHSSDFHZLWKWKHLUSUHVXPHG
FRPSHWLWRU$PHULFD%RWKQDWLRQVZHUHORFNHGLQWREXLOGLQJSURJUDPVIRUZKLFKWKHUHQR
ORQJHUH[LVWHGDQ\LQWHQGHGSXUSRVH7KH8QLWHG.LQJGRPPHDQZKLOHZDVOHIWZLWKD
IOHHWEORDWHGE\ZDUWLPHFRQVWUXFWLRQWKDWKDGEHFRPHRXWRIDQ\SURSRUWLRQWRDQ\
UHPDLQLQJWKUHDW<HWQRQHRIWKHWKUHHFRXOGWDNHWKHILUVWVWHSWRGLVDUPRUWRFDQFHO
EXLOGLQJSURJUDPVOHVWWKH\EHOHIWGLVWDQWO\EHKLQGWKHLUQDYDOSHHUV,WZDVDFODVVLF
VHFXULW\GLOHPPDDQGRQHWKDWFRXOGRQO\EHVROYHGE\LQWHUQDWLRQDOFRRSHUDWLRQ
7KHDFWXDOVKDSHDQGIRUPRIWKH:DVKLQJWRQ7UHDW\ZDVODUJHO\GHWHUPLQHGE\
WKH$PHULFDQ6HFUHWDU\RI6WDWH&KDUOHV(YDQV+XJKHVZKRVXJJHVWHGWRWKHGHOHJDWHV
WKDWWKHLUQDWLRQVVFUDSPLOOLRQWRQVRIVKLSVWKDWHLWKHUH[LVWHGRUZHUHXQGHU
FRQVWUXFWLRQ7KHVKLSVLQTXHVWLRQZHUHFDSLWDOVKLSVWKHYHU\ODUJHEDWWOHVKLSVRU
EDWWOHFUXLVHUVWKDWZHUHSUHGRPLQDQWO\YLHZHGDWWKHWLPHDVWKHPDLQFXUUHQF\RIQDYDO
SRZHU +XJKHVDOVRVXJJHVWHGWKDWWKHSUHPLHUSRZHUVDJUHHWRDWRQQDJHFHLOLQJIRU
FDSLWDOVKLSVDQGDIIL[WKHPVHOYHVWRDWRQQDJHUDWLRRIZLWK-DSDQDVVXPLQJWKH
(ULN*ROGVWHLQDQG-RKQ0DXUHU7KH:DVKLQJWRQ&RQIHUHQFH1DYDO5LYDOU\(DVW$VLDQ
6WDELOLW\DQGWKH5RDGWR3HDUO+DUERU,OIRUG)UDQN&DVV&R/WG+HUEHUW/H3RUH7KH3ROLWLFV
DQG)DLOXUHRI1DYDO'LVDUPDPHQW7KH3KDQWRP3HDFH1HZ<RUN7KH(GZLQ0HOOHQ3UHVV
/WG&KULVWRSKHU+DOO%ULWDLQ$PHULFDDQG$UPV&RQWURO1HZ<RUN6W0DUWLQ¶V3UHVV
(PLO\*ROGPDQ6XQNHQ7UHDWLHV1DYDO$UPV&RQWURO%HWZHHQWKH:DUV3HQQV\OYDQLD7KH
3HQQV\OYDQLD6WDWH8QLYHUVLW\3UHVV
/HSRUH'LVDUPDPHQW
ORZHVWILJXUH -DSDQZDVFRPSHQVDWHGE\DQRQIRUWLILFDWLRQFODXVHZKLFKSUHYHQWHG
ERWKWKH86DQG8.IURPEXLOGLQJEDVHVLQWKHLU3DFLILFWHUULWRULHVIURPZKLFKWKH\FRXOG
VWULNHDWWKH-DSDQHVHKRPHODQG1XPHURXVRWKHUOLPLWDWLRQVZHUHDJUHHGWRPRVWQRWDEO\
XQLWOLPLWDWLRQVRQEDWWOHVKLSVWRDPD[LPXPRIWRQVDQGRQDOORWKHUVKLSVWR
WRQV )LQDOO\D³EDWWOHVKLSKROLGD\´RIWHQ\HDUVZDVDJUHHGWRGXULQJZKLFK
WLPHQRVLJQDWRU\FRXOGEHJLQFRQVWUXFWLRQRQDFDSLWDOVKLS ,QDGGLWLRQWRWKH)LYH
3RZHU7UHDW\WKH)RXU3RZHU7UHDW\ZDVDJUHHGWRZKLFKVHWWKHWHUULWRULDOVWDWXVTXRLQ
WKH:HVWHUQ3DFLILFDQGWKH1LQH3RZHU7UHDW\ZKLFKHVWDEOLVKHGWKHORQJVWDQGLQJ
$PHULFDQSROLF\RIWKH2SHQ'RRULQ&KLQD
$IWHUPXFKQHJRWLDWLRQWKHVHWHUPVZHUHDJUHHGWR7KH8QLWHG6WDWHVDVLWZDV
QRWHGE\PDQ\QDYDOLVWVIRU\HDUVWRFRPHVDFULILFHGWKHJUHDWHVWWRQQDJHRIDOOWKH
SRZHUV7KH8QLWHG6WDWHVVFUDSSHGRYHUWRQVRIFDSLWDOVKLSVWKHPDMRULW\RI
WKHPEUDQGQHZYHVVHOVRUVKLSVLQYDULRXVVWDJHVRIFRQVWUXFWLRQ 7KH8QLWHG.LQJGRP
VFUDSSHGWRQVDOORILWFRPSULVHGRIROGHUYHVVHOV-DSDQVFUDSSHGVRPHWKLQJ
DSSURDFKLQJWRQV 7KHJUHDWHUVDFULILFHE\WKH8QLWHG6WDWHVUDQNOHGVRPH
ZLWKLQWKH861DOOWKHPRUHVLQFHLWZDVDFNQRZOHGJHGWKDWWKH8.¶VH[WHQVLYHV\VWHP
RIEDVHVDQGUHIXHOLQJVWDWLRQVPDGHWKH5R\DO1DY\XQTXHVWLRQDEO\WKHJUHDWHVWQDYDO
)UDQFHDQG,WDO\ZKLFKDOVRSRVVHVVHGODUJHVXUIDFHIOHHWVE\WKHHQGRI::,PDGHXSWKHRWKHUWZR
SDUWLHVRIWKH:DVKLQJWRQ1DYDO7UHDW\7KH\ZHUHJUDQWHGZKDWDPRXQWHGWRDUDWLRWRWKH86DQG
8.¶VDQG-DSDQ¶V
$LUFUDIWFDUULHUVZHUHDOVROLPLWHGWRDXQLWWRQQDJHRIWRQVSHUYHVVHODQGDWRWDOFDSDW
WRQV
7KH%ULWLVKZHUHDOORZHGWREXLOGWKH1HOVRQDQG5RGQH\GXULQJWKHKROLGD\WRFRPSHQVDWHIRUWKH51¶V
ODFNRIEDWWOHVKLSVZLWKLQFKEDWWHULHV*ROGPDQ6XQNHQ7UHDWLHV
1$5$,)RUHLJQ5HODWLRQV6HQ%%&DSWDLQ3XOHVWRQWR6HQDWRU.H\3LWWPDQ)HE
7KHFDSLWDOVKLSVXQGHUFRQVWUXFWLRQLQ86VKLS\DUGVLQUDQJHGIURPFRPSOHWH
1$5*ER[1DYDO:DU&ROOHJH6WXG\³:KDW:LOOEHWKH)DWHRIWKH5DWLRLQÉ\
/LHXWHQDQW&RPPDQGHU'30RRQ-XO\SJ
SRZHUHYHQLIWKHWZRIOHHWVZHUHQXPHULFDOO\HTXDO 1RSDUW\ZDVHQWLUHO\KDSS\ZLWK
WKHUHVXOWKRZHYHU7KH-DSDQHVHZHUHXQKDSS\WREHJLYHQVXFKDQLQIHULRUUDWLR$QG
PDQ\%ULWLVKRIILFLDOVZKRKDGEHHQSUHYLRXVO\EHHQXQGLVSXWHGPDVWHUVRIWKHVHDRQO\
UHOXFWDQWO\VXEPLWWHGWRSDULW\ZLWKWKHXSVWDUW$PHULFDQV5RVVO\Q:HVWHU:HP\VV
IRUPHUO\WKH)LUVW6HD/RUGJUXPEOHGWKDW$PHULFDKDGGRQHZHOOIRULWVHOI³7KH\KDYH
ULGWKHPVHOYHVRIDYDVWDQGUXLQRXVVKLSEXLOGLQJSURJUDPZLWKRXWJLYLQJXSWKHREMHFW
IRUZKLFKLWZDVSURMHFWHGWKH\KDYHVHFXUHGDJHQHUDOUDWLRRIQDYDOVWUHQJWKZKLFK
OHDYHVWKHPIUHHIURPDQ[LHW\LQDOOTXDUWHUVDQGWKH\KDYHDWWDLQHGDQHTXDOLW\ZLWKWKH
ILUVWQDYDO3RZHUZLWKDPLQLPXPRIHIIRUW´ 7KHV\VWHPUHTXLUHGVDFULILFHVIURPDOOSDUWLHV²WKHUDWLRVDQGWRQQDJHFDSVZHUH
EDVHGRQHVWLPDWHVRIHDFKQDWLRQ¶VVHFXULW\QHHGVDQGLQGXVWULDOFDSDFLWLHV7KH8QLWHG
6WDWHVZLWKLWVWUHPHQGRXVLQGXVWULDOPLJKWFRXOGKDYHEXLOWWKHZRUOG¶VODUJHVWQDY\LILW
KDGFKRVHQWRGRVREXWPRVW86SROLF\PDNHUVZHUHXQZLOOLQJWRDVVXPHWKHLPPHQVH
FRVWWKDWVXFKDQHIIRUWUHTXLUHG%\HVWDEOLVKLQJSDULW\ZLWKWKH%ULWLVKERWKSDUWLHVJRW
ZKDWWKH\ZDQWHG7KH%ULWLVKVWLOOPDLQWDLQHGDIOHHWQHFHVVDU\WRVHFXUHWKHLUIDUIOXQJ
HPSLUHZKLOHWKH$PHULFDQVFKHDSO\HQKDQFHGWKHLUSUHVWLJHDQGWKHLUFORXWLQ
LQWHUQDWLRQDODIIDLUV-DSDQZKLOHXQKDSS\ZLWKLWVORZHUUDWLREHFDPHQHDUO\
XQDVVDLODEOHLQLWVKRPHZDWHUVE\GLQWRIWKHQRQIRUWLILFDWLRQFODXVH7KH:DVKLQJWRQ
7UHDW\SURYLGHGDUHODWLYHO\ILUPIRXQGDWLRQRIPLOLWDU\DQGSROLWLFDODJUHHPHQWVIRURUGHU
LQWKH3DFLILFGHVSLWHWKHPLVJLYLQJVRIVRPHQDWLRQDOLVWV$V(PLO\2*ROGPDQQRWHV
KRZHYHUWKHDJUHHPHQWDW:DVKLQJWRQUHVWHGRQDYHU\SDUWLFXODUFRQJUXLW\RILQWHUHVWV
1$5*ER[*HQHUDO%RDUG³'LVSODFHPHQWDQG*XQ&DOLEHURQ%DWWOHVKLSV´SUHSDUHGE\
&RPPDQGHU(0:LOOLDPV0D\:LOOLDPVQRWHGWKDWWKH%ULWLVKKDGEDVHVEHWZHHQWKH8QLWHG
.LQJGRPDQG6LQJDSRUHZKHUHDV$PHULFDKDGEXWRQH+DZDLLEHWZHHQ6DQ)UDQFLVFRDQGWKH
3KLOLSSLQHV7KLVGLVSDULW\OHIWWKH8.³VXSUHPHRQWKHVHD´
*ROGPDQ6XQNHQ7UHDWLHV
$VUHODWLYHSRZHUDQGQDWLRQDOSROLFLHVZRXOGFKDQJHRYHUWLPHDVWKH\LQHYLWDEO\
ZRXOGWKHEDVLVIRUWKHV\VWHPZDVOLNHO\WRHURGH,QFRQWUDVWWRPDQ\LQWHUQDWLRQDO
DJUHHPHQWVWKH:DVKLQJWRQV\VWHPZDVHDVLHUWRHVWDEOLVKWKDQLWZDVWRPDLQWDLQ 7KH:DVKLQJWRQ7UHDW\KDGDSSOLHGTXDQWLWDWLYHOLPLWDWLRQWRFDSLWDOVKLSVRQO\
7KH$PHULFDQGHOHJDWLRQKDGVRXJKWWRDSSO\WKHUDWLRVDQGWRQQDJHFDSVWRDOOQDYDO
YHVVHOVEXWWKHUHZDVREMHFWLRQIURPWKHRWKHUSRZHUV%ULWDLQLQSDUWLFXODUDUJXHGWKDW
FDSLWDOVKLSVRXJKWWREHOLPLWHGEHFDXVHWKHLUSXUSRVHZDVVWULFWO\IRUZDUIDUHZKHUHDV
OLJKWHUYHVVHOVKDGPXOWLIDFHWHGGXWLHVLQFOXGLQJFRPPHUFHSURWHFWLRQDQGSROLFLQJ
DFWLRQV 7KH$PHULFDQVDFFHSWHGWKLVDUJXPHQWIRUWKHVDNHRIH[SHGLHQF\7KH8QLWHG
6WDWHVTXLFNO\IHOOEHKLQG%ULWDLQDQG-DSDQLQFUXLVHUFRQVWUXFWLRQGXULQJWKHPLGGOH
\HDUVRIWKHVKRZHYHUSURPSWLQJFDOOVWRUHJXODWHDX[LOLDU\YHVVHOV
7KHILUVWVXFKDWWHPSWDURVHLQZLWKWKH*HQHYD1DYDO&RQIHUHQFH
$PHULFDQSROLWLFDOOHDGHUVVDZWKHFUXLVHUGHEDWHDVSULPDULO\DWHFKQLFDOLVVXHUDWKHU
WKDQDSROLWLFDORQHDQGDVVXFKJDYHXQLIRUPHGQDYDORIILFHUVDPXFKODUJHUUROHWKDQ
WKH\KDGEHHQJUDQWHGDW:DVKLQJWRQ%ULWDLQ¶VUHTXHVWHGFUXLVHUIOHHWGZDUIHGWKHRQH
GHVLUHGE\$PHULFDQGHOHJDWHVDQGWKHFRQIHUHQFHHQGHGLQFRPSOHWHIDLOXUH 7KH
QHJRWLDWLRQVIRXQGHUHGDVDUHVXOWRIXQUHDVRQDEOHSRVLWLRQVRQERWKVLGHV7KH8QLWHG
6WDWHVSRVVHVVHGRQO\DVPDOOFUXLVHUIOHHWDQGLWZDVLQQRUHDOSRVLWLRQWRGLFWDWHWKH
OHYHODWZKLFKSDULW\RXJKWWREHVHW7KH%ULWLVKRQWKHRWKHUKDQGLQVLVWHGRQDIOHHWRI
*ROGPDQ6XQNHQ7UHDWLHV
-RKQ+0DXUHUDQG&KULVWRSKHU0%HOOHGV$WWKH&URVVURDGVEHWZHHQ3HDFHDQG:DU1DYDO
5LYDOULHVDQG$UPV&RQWUROEHWZHHQWKH:RUOG:DUV7KH/RQGRQ&RQIHUHQFHRI$QQDSROLV0'
1DYDO,QVWLWXWH3UHVV&LWHGIURPDPDQXVFULSWFRS\ZLWKRXWSDJHQXPEHUV,Q3ULPH
0LQLVWHU0DF'RQDOGVDLGWKDW³7KHFUXLVHUFDWHJRU\IRUPHLVWKHUHIRUHRQO\SDUWO\DILJKWLQJFDWHJRU\DQG
LVWRDFRQVLGHUDEOHH[WHQWDSROLFHFDWHJRU\«,FDQQRWWDNHWKHQHFHVVDU\SROLFHRIIWKHVHDV«´
5D\PRQG*2¶&RQQRU3HULORXV(TXLOLEULXP7KH8QLWHG6WDWHV1DY\DQGWKH/RQGRQ1DYDO
&RQIHUHQFHRI/DZUHQFH8QLYHUVLW\RI.DQVDV3UHVV%ULWDLQ¶VSURSRVHGWRQQDJHFDSIRU
FUXLVHUVH[FHHGHG$PHULFDQH[SHFWDWLRQVE\DURXQGWRQV
FUXLVHUVZKLFKZDVZHOOLQH[FHVVRIWKHIOHHWWKH\SRVVHVVHGDQGIRUZKLFKQR
SROLWLFDOZLOOHYHQH[LVWHGLQ%ULWDLQWRFUHDWH 7KHFROODSVHRIWKHFRQIHUHQFHOHGWRD
WURXEOLQJEUHDNLQ$QJOR$PHULFDQUHODWLRQVDQGSURPSWHGDUHWDOLDWRU\FUXLVHU
FRQVWUXFWLRQSURJUDPLQWKH8QLWHG6WDWHV 2YHUWKHIROORZLQJWKUHH\HDUVSROLF\PDNHUVLQ%ULWDLQDQGWKH8QLWHG6WDWHV
H[SUHVVHGDGHVLUHWRUHSDLUWKHLUUHODWLRQVDQGWRILQLVKWKHEXVLQHVVWKDWKDGEHHQVWDUWHG
LQ*HQHYD7KLVHIIRUWFXOPLQDWHGLQWKH/RQGRQ&RQIHUHQFHRI$JDLQWKHFUXFLDO
IDFWRUEHFDPHWKHFUXLVHULVVXH7KH%ULWLVKVFDOHGEDFNWKHLUGHPDQGVFRQVLGHUDEO\DWWKH
FRQIHUHQFHEXWDTXDOLWDWLYHLVVXHVRRQEHFDPHWKHFHQWUDOFRQFHUQ7KH%ULWLVKSUHIHUUHG
DFUXLVHUIOHHWFRPSRVHGRIYHVVHOVRIDURXQGWRQVPRXQWLQJVL[LQFKJXQV7KH
$PHULFDQVRQWKHRWKHUKDQGSUHIHUUHGWREXLOGWRWKHFDWHJRU\OLPLWRIWRQVZLWK
DQHLJKWLQFKEDWWHU\861VWUDWHJ\KHOGWKDWWKHODFNRI$PHULFDQEDVHVLQWKH3DFLILF
PHDQWWKDWWKHLUVKLSVQHHGHGODUJHFUXLVLQJUDGLLDQGDKLJKGHJUHHRI³VXUYLYDELOLW\´ 7KH%ULWLVKZLWKWKHLUQXPHURXVEDVHVDQGIDUIOXQJHPSLUHSUHIHUUHGDODUJHUQXPEHURI
VPDOOHUYHVVHOVWRSHUIRUPDODUJHQXPEHURIGXWLHV
7KHGLVDJUHHPHQWKLJKOLJKWHGDVLJQLILFDQWGLIIHUHQFHLQGRFWULQHDQGDV86
GHOHJDWH:LOOLDP93UDWWUHPDUNHG³DV\PPHWULHVLQGRFWULQHFDQVHULRXVO\UHVWULFWWKH
VFRSHRIDUPVOLPLWDWLRQ´ 7KH%ULWLVKGHVLUHGZKDWFRXOGEHFDOOHG³SDVVLYHVHD
FRQWURO´,QWLPHVRISHDFHWKLVPHDQWFRQWUROOLQJRUDWOHDVWVKRZLQJDSUHVHQFHLQ
GLVSDUDWHZDWHUVDJDLQVWHQFURDFKPHQWVIURPQXPHURXVSRWHQWLDOWKUHDWV,QWLPHVRIZDU
0DXUHUDQG%HOO7KH/RQGRQ&RQIHUHQFHRI
+5SDVVHG)HEUXDU\DWWKHXUJLQJRI3UHVLGHQW&RROLGJHSURYLGHGIRUWKHFRQVWUXFWLRQRI
FUXLVHUV
6LQFHWKHYHVVHOVZRXOGFRQFHLYDEO\EHRSHUDWLQJIDUIURPDQ\GRFNLQJIDFLOLW\LWZDVWKRXJKW
LPSHUDWLYHWRKDYHYHVVHOVWKDWFRXOGZLWKVWDQGDJUHDWGHDORIGDPDJHLQEDWWOHVRWKDWDGDPDJHVKLS
ZRXOGQRWHTXDODORVWVKLS
*ROGPDQ6XQNHQ7UHDWLHV
WKLVPHDQWSURWHFWLQJGLVWDQWPHUFKDQWIOHHWVIURPFRPPHUFHUDLGHUVZKLOH
VLPXOWDQHRXVO\UDLGLQJWKHHQHP\¶VFRPPHUFHDQGGLVUXSWLQJWKHLUOLQHVRI
FRPPXQLFDWLRQ%RWKFLUFXPVWDQFHVFDOOHGIRUDODUJHDQGQLPEOHIOHHW7KH8QLWHG
6WDWHVRQWKHRWKHUKDQGSODQQHGDOPRVWH[FOXVLYHO\IRUZDUZLWKDVLQJOHSURVSHFWLYH
HQHP\-DSDQ$VVXFK$PHULFDQVWUDWHJ\FRXOGEHPRUHSURSHUO\ODEHOHGDV³DFWLYHVHD
FRQWURO´ZKHQZDUFDPHWKH861VLPSO\QHHGHGIOHHWVXSHULRULW\DWWKHSRLQWRI
FRQWDFW 7KLVGLVSDULW\LQGRFWULQHIXHOOHGWKHPDLQFRQWURYHUV\WKDWZRXOGEHGHYLO
$QJOR$PHULFDQUHODWLRQVDWWKHFRQIHUHQFHDQGLQWKH\HDUVDKHDG
1HJRWLDWLRQVZHUHRIWHQKHDWHGDQGPDQ\RIWKHVDPHEDUEVSUHVHQWDWWKH
*HQHYD&RQIHUHQFHFDPHRXWDJDLQ$WOHQJWKKRZHYHUDVHWWOHPHQWZDVUHDFKHGE\
ZD\RIWKH³\DUGVWLFNÍRUPXOD7KLVIRUPXODDLPHGWRFRPSHQVDWHWKH%ULWLVKLQ
DGGLWLRQDOWRWDOFUXLVHUWRQQDJHZKLOHDOORZLQJWKH86SUHSRQGHUDQFHLQWKH³KHDY\
FUXLVHU´FDWHJRU\WKDWWKH\IDYRUHG7KH%ULWLVKZHUHWRKDYHDIOHHWWRWDOOLQJWRQV
ZLWKKHDY\FUXLVHUVZKLOHWKH$PHULFDQVZHUHWRKDYHWRQVZLWKKHDY\
FUXLVHUV $WWKHXUJLQJRIWKH$PHULFDQGHOHJDWLRQDQGDJDLQVWWKHGHVLUHVRIWKH
$GPLUDOW\WKHEDWWOHVKLSKROLGD\ZDVH[WHQGHGWRWKHHQGRI 7KHPDLQWURXEOHDW
WKH/RQGRQ&RQIHUHQFHLQYROYHGWKH-DSDQHVHGHOHJDWLRQZKLFKSUHVVHGIRUDKLJKHU
UDWLRIRUDX[LOLDU\YHVVHOVWKDQWKH\KDGEHHQJLYHQIRUEDWWOHVKLSV,Q-DSDQKHOGD
VXEVWDQWLDOO\ODUJHUFUXLVHUIOHHWWKDQWKH8QLWHG6WDWHVDUHVXOWRIWKHDJJUHVVLYH
FRQVWUXFWLRQRIWKHIRUPHUDQGWKHODQJXLGEXLOGLQJSURJUDPVRIWKHODWWHU:KLOHWKH
7KLVZDVDWOHDVWWUXHXQGHUWKHHDUOLHUYHUVLRQVRI:DU3ODQ2UDQJHLQZKLFKWKH86IOHHWZRXOGVHHN
RXWD³GHFLVLYHEDWWOH´ZLWKWKH,-17KLVSODQFKDQJHGLQWKHVDQGIOHHWGRFWULQHFKDQJHG
DFFRUGLQJO\
0DXUHUDQG%HOO7KH/RQGRQ&RQIHUHQFHRI
0DXUHUDQG%HOO7KH/RQGRQ&RQIHUHQFHRI7KH%ULWLVKFDSLWDOIOHHWZDVRQDYHUDJHWKHROGHVWRI
WKHQDYDOSRZHUV
-DSDQHVHGHOHJDWLRQZDVFRQFLOLDWHGE\WKHKLJKHUUDWLRLQOLJKWFUXLVHUVDQG
GHVWUR\HUVDVZHOODVSDULW\LQVXEPDULQHVWKH\ZHUHQRQHWKHOHVVRXWUDJHGE\WKHIDFW
WKDWWKH\ZRXOGKDYHWRVORZWKHLUFUXLVHUFRQVWUXFWLRQWRDOORZWKH8QLWHG6WDWHVWREXLOG
WRWKHLUDOORWWHGVXSHULRULW\ 7KHLQWHUYHQLQJ\HDUVEHIRUHWKHQH[WFRQIHUHQFHVFKHGXOHGIRUZHUH
PDUUHGE\WKH*UHDW'HSUHVVLRQLPSHULDOZDUVRIH[SDQVLRQLQ$VLDDQG$IULFDDQGWKH
ULVHRI1D]L*HUPDQ\7KHVHIDFWRUVFRPSHOOHGWKH%ULWLVKWRDOWHUWKHLUVHFXULW\
HVWLPDWLRQVDQGUHWXUQWRWKHLUGHPDQGIRUFUXLVHUV7KH-DSDQHVH*RYHUQPHQW
PHDQZKLOHIDFLQJGRPHVWLFIXU\IRUFRQFHGLQJWRWKH7UHDW\DQGLQWKHPLGGOHRID
YLROHQWH[SDQVLRQLQPDLQODQG&KLQDDQQRXQFHGLWVLQWHQWLRQWRVHHNSDULW\LQDOOFODVVHV
RIZDUVKLSVZLWK%ULWDLQDQG$PHULFD)DFHGZLWKWKHVHWZRSRVLWLRQV$PHULFDQOHDGHUV
WKUHZWKHLUZHLJKWEHKLQG%ULWLVKSURSRVDOVWREORFNWKH-DSDQHVHIURPJDLQLQJSDULW\
7KH-DSDQHVHZLWKGUHZIURPWKHFRQIHUHQFHZKHQLWEHFDPHDSSDUHQWWKDWWKH:HVWHUQ
SRZHUVZRXOGQRWFRQFHGHSDULW\RQSDSHU7KHWUHDW\XOWLPDWHO\SURGXFHGDWWKH
&RQIHUHQFHFRQWDLQHGQRTXDQWLWDWLYHSURYLVLRQVIRFXVLQJLQVWHDGRQOLPLWLQJWKHVL]HRI
LQGLYLGXDOXQLWVDQGUHTXLULQJWKHVLJQDWRULHVWRQRWLI\HDFKRWKHURIWKHLUDQQXDOEXLOGLQJ
SURJUDPV 'LSORPDWLFHIIRUWVWREULQJLQ-DSDQ*HUPDQ\DQG,WDO\WRWKHWUHDW\DIWHU
WKHIDFWIDLOHGVRRQDIWHUWKHWUHDW\ZDVVLJQHGOHDGLQJWKHVLJQDWRULHVWRDEDQGRQZKDW
UHPDLQHGRIDUPVOLPLWDWLRQDQGHQJDJHLQZKDWZDVWREHDQDYDOFRQVWUXFWLRQUDFH
7KLVWKHVLVZLOOH[DPLQHWKHILQDOFRQIHUHQFHRIWKHDUPVFRQWUROHUDWKHVHFRQG
/RQGRQ1DYDO&RQIHUHQFH$FORVHVWXG\RIWKHFRQIHUHQFHIURPDQ$PHULFDQ
6WHSKHQ(3HO]5DFHWR3HDUO+DUERU7KH)DLOXUHRIWKH6HFRQG/RQGRQ&RQIHUHQFHDQGWKH2QVHWRI
:RUOG:DU,,&DPEULGJH0DVV+DUYDUG8QLYHUVLW\3UHVV
,WDO\DOVRZLWKGUHZIURPWKHFRQIHUHQFHOHDYLQJRQO\WKH8QLWHG6WDWHV%ULWDLQDQG)UDQFHDV
VLJQDWRULHV
SHUVSHFWLYHPXVWLQFOXGHVHYHUDOOD\HUVRIDQDO\VLVLQFOXGLQJPLOLWDU\SROLF\GRPHVWLF
SROLWLFVDQGLQWHUQDWLRQDOUHODWLRQV(DFKRIWKHVHILHOGVKDVORQJDQGFRPSOH[
KLVWRULRJUDSKLHVDQGLQWHUQDOGHEDWHV,QWKHPRUHVSHFLILFFDVHRIWKHVHFRQG/RQGRQ
1DYDO&RQIHUHQFHWKHVHOD\HUVRIDQDO\VLVFDQEHPRUHSDUWLFXODUO\LGHQWLILHGDV86
1DY\SROLF\$PHULFDQLVRODWLRQLVPLQWKHLQWHUZDUSHULRGDQGWKHQDWXUHRIWKH$QJOR
$PHULFDQUHODWLRQVKLSLQWKHV$OORIWKHVHLVVXHVLQWHUVHFWDWWKHFRQIHUHQFH
7KHVWDWHGSROLF\RIWKH8QLWHG6WDWHVWRPDLQWDLQDIOHHW³VHFRQGWRQRQH´SODFHVJUHDW
ZHLJKWXSRQWKHUHODWLRQVKLSRI$PHULFDZLWKWKHVWURQJHVWQDYDOSRZHULQWKHV\VWHPWKH
8QLWHG.LQJGRP'HWHUPLQLQJWKHH[LVWHQFHDQGWKHGHJUHHRI³LVRODWLRQLVP´LQWKHPLG
VPHDQZKLOHLVFULWLFDOJLYHQWKHLQWHUQDWLRQDOLVWDJHQGDRIWKHFRQIHUHQFH
7KHKLVWRULRJUDSK\RIWKH8QLWHG6WDWHV1DY\LVDFULWLFDOFRPSRQHQWWRDQ\VWXG\
RIWKH/RQGRQ1DYDO&RQIHUHQFH7KHFRQYHQWLRQDOKLVWRULRJUDSK\RILQWHUZDU
$PHULFDQIRUHLJQSROLF\LQWHUVHFWVZLWKWKHORQJDFFHSWHGLQWHUSUHWDWLRQRIWKHLQWHUZDU
861DY\+LVWRULDQVVXFKDV5REHUW2¶&RQQHOOKDYHDUJXHGWKDWWKH861DY\UHPDLQHG
ULJLGO\KLHUDUFKLFDOWKURXJKRXWWKHLQWHUZDUSHULRGDQGWKDWWKLVEUHGDQLQVWLWXWLRQDO
FRQVHUYDWLVPZLWKLQWKHRIILFHUFRUSV 2¶&RQQHOODOVRDUJXHVWKDW86QDYDORIILFHUV
ZHUHRYHUO\ZHGGHGWRWKHGRFWULQHRI$OIUHG70DKDQDXWKRURIWKHVHPLQDOZRUN7KH
,QIOXHQFHRI6HD3RZHU8SRQ+LVWRU\,QWKHERRN0DKDQDGYRFDWHVDVLQJOHGHFLVLYH
EDWWOHVKLSHQJDJHPHQWDVWKHPRVWHIILFDFLRXVSDWKWRYLFWRU\2QFHWKHHQHP\¶VPDLQ
IOHHWKDGEHHQGLVFRYHUHGDQGGHVWUR\HGWKHYLFWRULRXVQDY\ZRXOGEHIUHHWREORFNDGH
WKHHQHP\¶VSRUWVDQGDFKLHYHYLFWRU\WKURXJKHFRQRPLFVWUDQJXODWLRQ 7KLVVWUDWHJ\
KHOGWKHEDWWOHVKLSDVWKHEDFNERQHRIWKHIOHHWDQGE\FRUROODU\LWSODFHGKLJKYDOXHRQ
5REHUW/2¶&RQQHOO6DFUHG9HVVHOV7KH&XOWRIWKH%DWWOHVKLSDQGWKH5LVHRIWKH861DY\%RXOGHU
:HVWYLHZ3UHVV,QF
2¶&RQQHOO6DFUHGYHVVHOV
JUHDWVL]HDQGODUJHDUPDPHQWVXSRQVXFKYHVVHOV0DKDQ¶VWKHRU\RIQDYDOSRZHUJDLQHG
ZRUOGZLGHUHFRJQLWLRQEXWIRXQGDVSHFLDOSODFHLQWKHKHDUWRI3UHVLGHQW7KHRGRUH
5RRVHYHOWDQGKLVFORVHVWDGYLVRUV%HFDXVHWKH5RRVHYHOWDGPLQLVWUDWLRQZDVVR
LQVWUXPHQWDOLQPRGHUQL]LQJDQGH[SDQGLQJWKH$PHULFDQIOHHWH[SHQGLQJRQDYHUDJH
SHUFHQWRIIHGHUDOH[SHQGLWXUHVRQWKHQDYDOEXLOGXS 2¶&RQQHOODUJXHVWKDWWKH86
1DY\ZDVXQGXO\LQIOXHQFHGE\WKH0DKDQLDQGRFWULQHRIDEDWWOHVKLSFHQWULFQDY\ $V
DUHVXOWLQWHUZDU861DYDOSROLF\LQFOXGLQJLWVHIIRUWVDWQDYDODUPVFRQWUROZDV
PLVJXLGHGDQGDLPHGDWVROYLQJWKHZURQJSUREOHPV 2¶&RQQHOO¶VFHQWUDOWKHVLV²WKDW86QDYDOSODQQHUVZHUHEHKROGHQWRWKH
VLPSOLVWLFVWUDWHJLHVRI0DKDQDQGWKHFHQWUDOLW\RIWKHEDWWOHVKLSHYHQDIWHUHYROYLQJ
WHFKQRORJ\DQGWDFWLFVKDGUHQGHUHGWKHPREVROHWH²LVDWKHVLVWKDWZDVUHODWLYHO\
FRPPRQLQWKHHDUO\KLVWRULRJUDSK\RIWKH8QLWHG6WDWHV1DY\ 7KHWKHVLVLVIODZHGDQG
RQHVLGHGDQGQXPHURXVKLVWRULHVLQUHFHQW\HDUVKDYHVLQFHRIIHUHGDPRUHURXQGHG
YLHZRIWKH861DY\:DU3ODQ2UDQJHE\(GZDUG60LOOHUH[DPLQHVWKH8QLWHG6WDWHV
-RLQW$UP\DQG1DY\%RDUG¶VSODQWRGHIHDW-DSDQLQWKHHYHQWRID3DFLILF:DU:KLOH
WKHSODQRULJLQDOO\UHOLHGRQVHHNLQJDEDWWOHVKLSFHQWULF³0DKDQLDQ´VW\OHGHFLVLYHEDWWOH
DIWHUDSHOOPHOOWUDQVSDFLILFGDVKWKHSODQHYROYHGLQWKHVDORQJVLGHSROLWLFDODQG
WHFKQRORJLFDOGHYHORSPHQWV7KH³WKURXJKWLFNHW´DSSURDFKZDVUHSODFHGE\WKHVRFDOOHG
:LOOLDP00F%ULGH7HFKQRORJLFDO&KDQJHDQGWKH8QLWHG6WDWHV1DY\%DOWLPRUH-RKQV
+RSNLQV8QLYHUVLW\3UHVV
2¶&RQQHOO6DFUHG9HVVHOV2¶&RQQHOOFODLPVWKDWWKURXJKRXWWKHLQWHUZDUSHULRG861DY\RIILFHUV
ZHUHKHVLWDQWWREUHDN0DKDQ¶V³FRPPDQGPHQWV´DQGIUHTXHQWO\PHQWLRQV³WKHFXOWRI0DKDQ´
2¶&RQQHOO6DFUHG9HVVHOV2¶&RQQHOOEHOLHYHVWKDWWKHOHVVRQRIWKH:DVKLQJWRQ1DYDO&RQIHUHQFH
LVWKDW³QHJRWLDWHGDUPVFRQWUROZDVJHQHUDOO\IDUPRUHVXFFHVVIXODWOLPLWLQJZHDSRQVWKDWGLGQRWZRUNRU
ZHUHXQZDQWHGIRURWKHUUHDVRQV´0HDQZKLOHPRUHGHDGO\DQGHIIHFWLYHWHFKQRORJLHVVXFKDVVXEPDULQHV
ZHQWODUJHO\XQUHJXODWHG
6HHIRULQVWDQFH%UD\WRQ+DUULV7KH$JHRIWKH%DWWOHVKLS0DGLVRQ8QLYHUVLW\RI
:LVFRQVLQ3UHVVRU5LFKDUG+RXJK'HDWKRIWKH%DWWOHVKLS7KH7UDJLF&ORVHRIWKH(UDRI6HD
3RZHU0LFKLJDQ0DF0LOODQ3XEOLVKHUV
³FDXWLRQDU\VWUDWHJ\´ZKLFKLQYROYHGWKHVORZDGYDQFHRIWKH861DY\DFURVVWKH
3DFLILFXVLQJWKH0LFURQHVLDQ$WROOVDVDVRUWRI³KLJKZD\´7KLVVWUDWHJ\GHSHQGHGRQ
QRYHOWDFWLFVDQGWHFKQRORJ\LQFOXGLQJDLUFUDIWFDUULHUVDQGMRLQWDUP\QDY\EHDFK
ODQGLQJV 7KHPDLQDUFRI0LOOHU¶VDUJXPHQWLVWKDWZKLOHDFRQVHUYDWLYHVWUHDNGLGUXQ
WKURXJKWKHLQWHUZDUQDY\LWZDVQRQHWKHOHVVKLJKO\DGDSWLYHWRVKLIWLQJSROLWLFDOUHDOLWLHV
DQGWRUDSLGO\GHYHORSLQJPHDQVRIZDUIDUH:LOOLDP0F%ULGHSXUVXHVDVLPLODU
DUJXPHQWLQKLVERRN7HFKQRORJLFDO&KDQJHDQGWKH8QLWHG6WDWHV1DY\0F%ULGHDOORZV
WKHSRLQWWKDW0DKDQKDGWUHPHQGRXVLQIOXHQFHRYHUWKH8QLWHG6WDWHV1DY\DWWKHWXUQRI
WKHFHQWXU\DVHYLGHQFHGE\WKH³DOOELJJXQ´DGPLUDOVLQWKHOHDGXSWR:RUOG:DU
2QH <HW0F%ULGHDUJXHVWKDWVXFKDWWLWXGHVZHUHSUHYDOHQWLQHYHU\QDY\DFURVVWKH
JOREHIROORZLQJWKH³OHVVRQÓHDUQHGDWWKH%DWWOHRI7VXVKLPDLQ )ROORZLQJWKH
LQFRQFOXVLYHUHVXOWVRI:RUOG:DU2QHDQGWKHFRQVWUDLQWVRIWKH:DVKLQJWRQ7UHDW\86
1DY\SODQQHUVEHFDPHUHFHSWLYHWRQHZWHFKQRORJLHV:KLOHEDWWOHVKLSFHQWULFRIILFHUV
VWLOOFRQVWLWXWHGWKHEXONRIWKHQDYDOKLHUDUFK\WHFKQRORJLFDOLQVXUJHQWVVXFKDV:LOOLDP
6LPVDQG%UDGOH\)LVNHWRXWHGDOWHUQDWLYHWHFKQRORJLHVDQGZRQWKHDWWHQWLRQRIWKH
UHFHSWLYH*HQHUDO%RDUG 1HZWHFKQRORJLHVVXFKDVDLUFUDIWFDUULHUVDQGVXEPDULQHV
ZHUHGHYHORSHGDVDX[LOLDULHVWRWKHEDWWOHVKLSSDUDGLJP\HWDPELWLRXVFDSWDLQVZHUH
DEOHWRSURYHWKHLUZRUWKLQGHSHQGHQWO\ 7KHVKLIWLQKLVWRULRJUDSKLFDOFRQVHQVXVLVVHHQ
(GZDUG60LOOHU:DU3ODQ2UDQJH7KH866WUDWHJ\WR'HIHDW-DSDQ$QQDSROLV1DYDO
3UHVV,QVWLWXWH7KH8QLWHG6WDWHV0DULQH&RUSVZDVVWLOOWLQ\DQGXQWHVWHGDWWKLVWLPH
0F%ULGH7HFKQRORJLFDO&KDQJH
0F%ULGH7HFKQRORJLFDO&KDQJH7KH-DSDQHVHYLFWRU\RYHUWKH5XVVLDQ1DY\DW7VXVKLPD%D\
ZDVDFKLHYHGLQVSLWHRIVLJQLILFDQW-DSDQHVHLQIHULRULW\LQQXPEHUVDQGZDVODUJHO\DWWULEXWHGWRWKH
VXSHULRUVSHHGDQGILUHSRZHURIWKH-DSDQHVHEDWWOHVKLSV7KLVOHGWRWKH³DOOELJJXQ´GHVLJQDQGWKH
GUHDGQRXJKWUDFH
0F%ULGH7HFKQRORJLFDO&KDQJH
0F%ULGH7HFKQRORJLFDO&KDQJH)RUDPRUHWKRURXJKH[DPLQDWLRQRILQWHUZDUQDYDOWHVWLQJVHH
&UDLJ&)HONHU7HVWLQJ$PHULFDQ6HD3RZHU861DY\6WUDWHJLF([HUFLVHV&ROOHJH6WDWLRQ
PRVWUHFHQWO\LQ$JHQWVRI,QQRYDWLRQE\-RKQ.XHKQ+HUH.XHKQH[DPLQHVKRZWKH
*HQHUDO%RDUGRIWKH8QLWHG6WDWHV1DY\UHVSRQGHGWRSROLWLFDOGHYHORSPHQWVLQWKH
LQWHUZDUSHULRG:KLOHRXWUDJHGDWWKHSROLWLFDOUHDOP¶VVDFULILFHRIQDYDOEDVHVLQWKH
ZHVWHUQ3DFLILFE\VLJQLQJWKH:DVKLQJWRQ1DYDO7UHDW\LQWKH1DY\*HQHUDO
%RDUGLPPHGLDWHO\EHJDQGHYHORSLQJQHZWHFKQRORJLHVLQRUGHUWRFRPSHQVDWHVXFKDV
WKHDLUFUDIWFDUULHUDQGPRELOHGU\GRFNV 7KHGHEDWHRQWKHQDWXUHRIWKHLQWHUZDU8QLWHG6WDWHV1DY\KDVVKLIWHGGHFLGHGO\
WRWKHYLHZWKDW$PHULFD¶VPRVWSURPLQHQWLQWHUZDUPLOLWDU\DUPWREHPXFKPRUH
IOH[LEOHDQGLQQRYDWLYHWKDQSUHYLRXVO\DVVXPHG7KHFRQVHQVXVDPRQJQDYDOKLVWRULDQV
DVWRWKHDWWLWXGHRIWKH861WRZDUGVDUPVFRQWUROLVQRWVRVHWWOHG3KLOLS75RVHQ
DUJXHVWKDWWKH+DUGLQJ$GPLQLVWUDWLRQVDZWKH:DVKLQJWRQ7UHDW\ODUJHO\DVDPHDQVWR
FXWFRVWVDQGDIWHUVRPHVNLOOIXOPDQHXYHULQJE\6HFUHWDU\+XJKHV³DQLVRODWLRQLVW
SHRSOHHDJHUO\DFFHSWHGWKHQLQHWUHDWLHVSURGXFHGE\WKHFRQIHUHQFH´ 7KH*HQHUDO
%RDUG³UHSHDWHGO\ZDUQHGDJDLQVWQDYDOOLPLWDWLRQVDUJXLQJWKDWVXFKDSROLF\ZRXOG
SURYHGDQJHURXVWRWKH8QLWHG6WDWHV´7KH+DUGLQJ$GPLQLVWUDWLRQLJQRUHGWKH%RDUG¶V
ZDUQLQJVDQGWKH1DY\ZDVIRUFHGWR³JUXGJLQJO\´DFFHSWWKHOLPLWDWLRQVDQGZRUN
ZLWKLQWKHP)RUWKHUHPDLQGHURIWKHLQWHUZDUSHULRGWKH1DY\¶VSULPDU\FRQFHUQ
EHFDPHWKH5HSXEOLFDQDGPLQLVWUDWLRQVZKLFKRFFXSLHGWKH:KLWH+RXVHLQWKHV
DQGDWWHPSWHGWRLPSOHPHQWDSROLF\RIGLVDUPDPHQWE\H[DPSOH$FFRUGLQJWR5RVHQ
+RRYHUZDVSDUWLFXODUO\PDOLJQHGE\WKH861IRUKLVDWWHPSWVWR³VWDUYHWKH1DY\´ 7H[DV$08QLYHUVLW\3UHVV)URPWKH861DY\KHOGPDMRUIOHHWH[HUFLVHV
$IWHUDOOVXFKIOHHWH[HUFLVHVLQYROYHGWZRRSSRVLQJIOHHWVERWKHTXLSSHGZLWKDLUFUDIWFDUULHUV
-RKQ7.XHKQ$JHQWVRI,QQRYDWLRQ7KH*HQHUDO%RDUGDQGWKH'HVLJQRIWKH)OHHWWKDW'HIHDWHGWKH
-DSDQHVH1DY\$QQDSROLV1DYDO,QVWLWXWH3UHVV
3KLOLS75RVHQ³7KH7UHDW\1DY\´LQ,Q3HDFHDQG:DU,QWHUSUHWDWLRQVRI$PHULFDQ
1DYDO+LVWRU\HG.HQQHWK-+DJDQ:HVWSRUW&7*UHHQZRRG3UHVV
5RVHQ³7UHDW\1DY\´
,UULWDWLRQDWWKHFRQVWUDLQWVSODFHGRQWKHFUXLVHUIOHHWDWWKH/RQGRQ&RQIHUHQFH
SHUVLVWHGLQWKHODWHULQWHUZDUSHULRGEXWWKHPDLQEDWWOHFRQVLVWHGRIZLQQLQJWKH
DSSURSULDWLRQVQHFHVVDU\WREXLOGWKHIOHHWWKDWH[LVWHGRQSDSHU *HRUJH%DHU¶V2QH+XQGUHG<HDUVRI6HD3RZHUDUJXHVWKDWWKHUHZDVDODFNRI
FRRUGLQDWLRQEHWZHHQWKH6WDWH'HSDUWPHQWDQGWKH1DY\DWWKH:DVKLQJWRQ&RQIHUHQFH
DQGWKDWFRQVHTXHQWO\WKH1DY\IHOWWKDWDUPVFRQWUROKDGEHHQXQIDLUO\LPSRVHGRQWKHP
E\FLYLOLDQVZLWKRXWWKHWHFKQLFDOH[SHUWLVHWRXQGHUVWDQGWKHUDPLILFDWLRQV %DHUDVVHUWV
WKDWWKH+DUGLQJ$GPLQLVWUDWLRQZDVQRWLQWHUHVWHGLQWKHFRVWRIPDLQWDLQLQJDILUVWFODVV
IOHHWDQGWKHUHIRUHSXVKHGWKH1DY\¶VREMHFWLRQVDVLGHDQGQHJRWLDWHGSDULW\ZLWKWKH
8QLWHG.LQJGRPWRDOHYHOWKDWZRXOGEHDFFHSWDEOHIURPDEXGJHWDU\VHQVH $IWHUWKH
V\VWHPZDVHVWDEOLVKHG%DHUDUJXHVWKDWWKH1DY\VLPSO\VDZDUPVOLPLWDWLRQDVDEDUULHU
WRRYHUFRPHDQGDGDSWWRZKLOHDOVRSHWLWLRQLQJIRUIXQGVWRDWOHDVWEXLOGXSWRWUHDW\
OLPLWV -RKQ.XHKQWHOOVDVLPLODUVWRU\$IWHUWKHLUVXJJHVWLRQVZHUHVZDWWHGGRZQDWWKH
:DVKLQJWRQ&RQIHUHQFHWKH1DY\VLPSO\DFFHSWHGWKHQHZUHDOLW\RIDUPVOLPLWDWLRQDQG
VWURYHWRGHVLJQDQGPDLQWDLQDIOHHWWKDWZRXOGPDNHEHVWXVHRIWKHVHOLPLWDWLRQV ,QD
PRUHUHFHQWZRUN.XHKQKDVZULWWHQWKDWWKH6WDWH'HSDUWPHQWVDZWKH:DVKLQJWRQ
&RQIHUHQFHDVDPHDQVWRHQKDQFHWKHUROHRIWKH8QLWHG6WDWHVLQIRUHLJQDIIDLUVDQG
QHJRWLDWHGLWVWHUPVPRUHRUOHVVVHSDUDWHO\IURPWKHDGYLFHRIWKH*HQHUDO%RDUG
+RZHYHUDIWHU6HFUHWDU\RI6WDWH+XJKHVGHYLVHGWKHDJHQGDIRUDUPVFRQWUROEDVHGRQ
5RVHQ³7UHDW\1DY\´
*HRUJH%DHU2QH+XQGUHG<HDUVRI6HD3RZHU7KH861DY\6WDQIRUG6WDQIRUG
8QLYHUVLW\3UHVV
%DHU6HD3RZHU
%DHU6HD3RZHU
-RKQ7.XHKQ$JHQWVRI,QQRYDWLRQ7KH*HQHUDO%RDUGDQGWKH'HVLJQRIWKH)OHHWWKDW'HIHDWHGWKH
-DSDQHVH1DY\$QQDSROLV1DYDO,QVWLWXWH3UHVV[Y
WKHDLPRIHQKDQFLQJ$PHULFD¶VLQWHUQDWLRQDOVWDWXUHLWZDVOHIWWRWKH%RDUGWRDFWXDOO\
LPSOHPHQWWKHWUHDW\¶VWHFKQLFDOSURYLVLRQV %\WKHWLPHRIWKH/RQGRQ
&RQIHUHQFHWKHLVVXHRIOLPLWDWLRQKDGEHHQUHQGHUHGODUJHO\PRRWDV&RQJUHVVKDGQRW
DOORFDWHGVXIILFLHQWIXQGVWRHYHQEXLOGXSWRWKH:DVKLQJWRQOLPLWV $FFRUGLQJWR
.XHKQWKH:DVKLQJWRQV\VWHPZDVGHYLVHGE\WKHFLYLOLDQJRYHUQPHQWDQGWKHQODLGDW
WKHIHHWRIWKHXQLIRUPHGRIILFHUVWRLPSOHPHQW
5D\PRQG*2¶&RQQRU¶V3HULORXV(TXLOLEULXPLVDQDFFRXQWRIWKH/RQGRQ
1DYDO&RQIHUHQFHWKHUHODWLYHO\VXFFHVVIXOPLGSRLQWWRWKHWUHDW\V\VWHP2¶&RQQRU
SURYLGHVDIDLUO\FRQYHQWLRQDODQDO\VLVRIWKHFRQIHUHQFHZKLFKDWWHPSWHGWRUHJXODWH
DX[LOLDU\YHVVHOVXQGHUWKH:DVKLQJWRQUDWLRWKDWKDGRULJLQDOO\DSSOLHGRQO\WRFDSLWDO
VKLSV2¶&RQQRULGHQWLILHVWKUHHSULQFLSDODFWRUVRQWKH$PHULFDQVLGHWKH+RRYHU
DGPLQLVWUDWLRQQRWDEO\3UHVLGHQW+RRYHUDQG6HFUHWDU\RI6WDWH+HQU\6WLPVRQWKH
*HQHUDO%RDUGRIWKH861DY\DQGWKH$PHULFDQGHOHJDWLRQDWWKHFRQIHUHQFH
2¶&RQQRUHPSKDVL]HVWKHULJLGLW\DQGPDUJLQDOL]DWLRQRIWKH*HQHUDO%RDUGZKRVH
FRXQWOHVVUHFRPPHQGDWLRQVZHUHFRQWLQXDOO\LJQRUHGDQGZLWKZKRP+RRYHUPHWRQO\
RQFH 7KH*HQHUDO%RDUGLQVLVWHGRQHTXDOLW\ZLWKWKH8QLWHG.LQJGRPGHVSLWH%ULWLVK
SURWHVWDWLRQVIRUJUHDWHUVHFXULW\QHHGVVLQFH$PHULFDQHHGHGDZRUOGFODVVQDY\LQDQ
XQFHUWDLQZRUOG2¶&RQQRUZULWHVWKDWWKH³QHJDWLYHDWWLWXGHGLVSOD\HGE\WKH1DY\
'HSDUWPHQWPXVWKDYHDQQR\HGDQGGLVWXUEHGWKH3UHVLGHQWDQGKLV6HFUHWDU\RI6WDWH«
WKHXQZLOOLQJQHVVRISURIHVVLRQDOVWRSURYLGHFRQVWUXFWLYHFULWLFLVPWKUHZWKHSUREOHP
EDFNLQWRWKHKDQGVRIWKHFLYLOLDQV´ 7KHFLYLOLDQVLGHZDVPRUHFRQFHUQHGZLWK
0DXUHUDQG%HOO7KH/RQGRQ&RQIHUHQFHRI
,ELG
2¶&RQQRU3HULORXV(TXLOLEULXP
2¶&RQQRU3HULORXV(TXLOLEULXP
DEVROXWHQDYDOUHGXFWLRQVWKDQWKHRUHWLFDOUDWLRVZKLFKOHGWRWKH$PHULFDQGHOHJDWLRQ
DUJXLQJHQWLUHO\VHSDUDWHSRLQWVWRWKHPXFKPRUHWHFKQLFDOO\RULHQWHG%ULWLVKGHOHJDWLRQ
:KLOHWKLVLVDQDFFRXQWRIWKHILUVWUDWKHUWKDQWKHVHFRQG/RQGRQ1DYDO
&RQIHUHQFH2¶&RQQRUXQGHUVFRUHVVHYHUDOUHFXUUHQWWKHPHVLQLQWHUZDUQDYDO
KLVWRULRJUDSK\)LUVWDQGIRUHPRVWLVWKHGHSLFWLRQRIDFRQIXVHG$PHULFDQDSSURDFKWR
WKHFRQIHUHQFHVDFRQIXVLRQWKDW2¶&RQQRUDWWULEXWHVWR³WKHGLIILFXOW\EHWZHHQWKH
PLOLWDU\DQGFLYLOEUDQFKHVRIWKHJRYHUQPHQW>ZKLFK@VWHPPHGIURPWKHODFNRID
VDWLVIDFWRU\ZRUNLQJDUUDQJHPHQWEHWZHHQWKHWZR´ 7KHRWKHUQRWDEOHWKHPHLVWKH
SHUFHLYHGULJLGLW\DQGFRQVHUYDWLVPRIWKH1DY\*HQHUDO%RDUGDQGRIQDYDOOLQHRIILFHUV
LQJHQHUDO+RZHYHU2¶&RQQRUGRHVQRWVSDUHWKH6WDWH'HSDUWPHQWHLWKHUDUJXLQJWKDW
LWVHQWLUHWKHRU\RIDUPVFRQWUROZDVIODZHGIURPLWVLQFHSWLRQ
«VXFFHVVIXOGLSORPDF\LVGLSORPDF\EDFNHGE\IRUFH/DFNLQJWKHPHDQV
RIIXOILOOPHQWFRPPLWPHQWVDUHUREEHGRIERWKVSLULWDQGVXEVWDQFH+XJKHV
YHU\SURSHUO\VXERUGLQDWHGPLOLWDU\WRSROLWLFDOFRQVLGHUDWLRQVEXW
SROLWLFDOO\KHDSSDUHQWO\ZDVPRUHFRQFHUQHGZLWKUHDFKLQJDQ
XQGHUVWDQGLQJWKDWZRXOGJLYHWKHLOOXVLRQLIQRWWKHUHDOLW\RIDZRUOGLQ
KDUPRQ\8QZLOOLQJRUXQDEOHWRUHVLVWWKHFODPRUIRUHFRQRP\DQGSHDFH
WKURXJKWKHUHGXFWLRQRUHOLPLQDWLRQRIWKHZHDSRQVRIZDUWKH6HFUHWDU\RI
6WDWHVDFULILFHG$PHULFD¶VIUHHGRPRIDFWLRQOHVVHQHGKHULQIOXHQFHLQ
ZRUOGDIIDLUVDQGZHDNHQHGKHUDELOLW\WRSURPRWHWKHQDWLRQDOLQWHUHVW,W
ZDVDSUHFDULRXVSRVLWLRQIRUDQDWLRQWKDWKDGUHQRXQFHGWKHSULQFLSOHRI
FROOHFWLYHVHFXULW\ 7KH6HFRQG/RQGRQ1DYDO&RQIHUHQFHWKHILQDODUPVFRQWUROFRQIHUHQFHRIWKH
LQWHUZDUSHULRGUHFHLYHVE\DZLGHPDUJLQWKHOHDVWDWWHQWLRQLQWKHKLVWRULRJUDSK\(YHQ
LQJHQHUDOKLVWRULHVRIQDYDODUPVFRQWUROWKHFRQIHUHQFHUHFHLYHGOLWWOHVHULRXVFRYHUDJH
(PLO\*ROGPDQ¶V6XQNHQ7UHDWLHVPHQWLRQVLWRQO\LQSDVVLQJ&KULVWRSKHU+DOOGHGLFDWHV
2¶&RQQRU3HULORXV(TXLOLEULXP
2¶&RQQRU3HULORXV(TXLOLEULXP
DFKDSWHUWRWKHFRQIHUHQFHLQ%ULWDLQ$PHULFDDQG$UPV&RQWUROEXWWDONVPRVWO\DERXW
WKHFLUFXPVWDQFHVOHDGLQJXSWRWKHQHJRWLDWLRQVUDWKHUWKDQLGHQWLI\LQJDQ\UHDOZRUWKLQ
WKHQHJRWLDWLRQVWKHPVHOYHV+LVWRULHVRIWKH8QLWHG6WDWHV1DY\VXFKDV*HURJH%DHU¶V
2QH+XQGUHG<HDUVRI6HDSRZHURU:LOOLDP0F%ULGH¶V7HFKQRORJLFDO&KDQJHLQWKH
8QLWHG6WDWHV1DY\HLWKHUIDLOWRPHQWLRQWKHFRQIHUHQFHDWDOORUHOVHXVHLWDVD
FRQYHQLHQWHQGSRLQWLQWKH:DVKLQJWRQ6\VWHP
6WHSKHQ(3HO]¶V7KH5DFHWR3HDUO+DUERULVWKHRQO\DWWHPSWDWDIXOOOHQJWK
DFFRXQWRIWKHFRQIHUHQFH$SSUR[LPDWHO\WKHILUVWWKLUGRI3HO]¶VERRNLVGHGLFDWHGWRWKH
PLOLWDU\SROLWLFDOVLWXDWLRQLQ-DSDQWKDWSUHFHGHGWKHLUGHFLVLRQWRDEURJDWHWKHWUHDW\DQG
WRWKH8QLWHG6WDWHV1DY\¶VXVXDOO\DFFXUDWHHVWLPDWLRQRI-DSDQHVHQDYDOSODQVLQWKH
HYHQWRIZDU 7KHODWWHUWZRWKLUGVRIWKHQDUUDWLYHVKLIWVLQDGHFLGHGO\FLYLOLDQ
GLUHFWLRQWKRXJK3HO]LQFOXGHVWKHDFWLRQVSHUVSHFWLYHVDQGDGYLFHRIWKH861/LNH
2¶&RQQRU3HO]GHWHUPLQHVWKDWWKHUHZDVDFRQVLGHUDEOHGLVFRQQHFWEHWZHHQWKHQDYDO
OHDGHUVDQGWKHUHDOSROLF\PDNHUVDGLVFRQQHFWUHFRUGHGLQRQHDGPLUDO¶VFRPSODLQWWKDW
LWZDV³EHFRPLQJWKHIDVKLRQWREHOLWWOHWHFKQLFDODGYLFHPHDQLQJWKHDGYLFHRIQDYDO
RIILFHUVFRQFHUQLQJQDYDOPDWWHUV´ &KLHIRI1DYDO2SHUDWLRQV:LOOLDP6WDQGOH\WKH
OLQFKSLQEHWZHHQWKHFLYLOLDQDQGXQLIRUPHGGLYLVLRQVRIWKH1DY\'HSDUWPHQWLVJLYHQ
SDUWLFXODUDWWHQWLRQLQWKHQDUUDWLYH6WDQGOH\ZDVLQFOXGHGLQPRVWRI5RRVHYHOW¶V
PHHWLQJVRQWKH/RQGRQ&RQIHUHQFH6WDQGOH\XUJHGWKH3UHVLGHQWWRPRUHFOHDUO\GHILQH
$PHULFD¶VLQWHUHVWVLQWKH)DU(DVWDQGWRGUDZGHILQLWHSDUDPHWHUVIRUZKHQPLOLWDU\
3HO]5DFHWR3HDUO+DUERU(VVHQWLDOO\WKH-DSDQHVHSODQZDVWRKDUDVVDQGDWWULWHWKH861DY\
RQLWVWUDQVSDFLILFMRXUQH\ZLWKVXEPDULQHVDQGDLUFUDIWDQGWKHQVHHNDGHFLVLYHEDWWOHVKLSHQJDJHPHQWRQ
WHUPVRIUHODWLYHHTXDOLW\UHO\LQJRQWKHVXSHULRUUDQJHRIWKHLUJXQV
3HO]5DFHWR3HDUO+DUERUUHPDUNRI$GPLUDO)UDQN+6FKRILHOGWR&KLHIRI1DYDO2SHUDWLRQV
:LOOLDP+6WDQGOH\6FKRILHOGZHQWRQWRUHPDUNWKDW³$VDPDWWHURIIDFWWKH\>QDYDORIILFHUV@DUHWKH
RQO\RQHVFRPSHWHQWWRMXGJHWKHQDYDODVSHFWVRIQDYDOSURSRVDOV«,WLVZHZKRKDYHWRVWD\RQWKHMRE
WKURXJKRXWWKH\HDUVRIRXUOLIHDQGZKRKDYHWRFRPEDWWKHLOOHIIHFWVRIGLSORPDWLFGHFLVLRQVWDNHQ\HDUV
EHIRUHFRQWUDU\WRWKDWDGYLFH´
LQWHUYHQWLRQRXJKWWREHXVHG6WDQGOH\UHFRPPHQGHGWKDWWKH5RRVHYHOWDGPLQLVWUDWLRQ
VKRXOGHLWKHUFRPPLWFRQFUHWHQDYDOIRUFHVWRWKHGHIHQVHRILWV)DU(DVWHUQLQWHUHVWVRU
HOVHZLWKGUDZDOWRJHWKHUEHIRUHWKH\ZHUHFKDOOHQJHG 3HO]DOVRSD\VFRQVLGHUDEOH
DWWHQWLRQWR$QJOR$PHULFDQLQWHUDFWLRQVLQWKHSUHOXGHWRWKHFRQIHUHQFHJHQHUDOO\
GHSLFWLQJWKHXQLIRUPHGPHQRIERWKQDWLRQVDVPXWXDOO\KRVWLOHZKLOHWKHGLSORPDWVZHUH
VWXEERUQEXWFROOHJLDO <HWWKHUHZHUHOLPLWVWR$QJOR$PHULFDQFRRSHUDWLRQLQWKHOHDG
XSWRWKHFRQIHUHQFHDQGIXQGDPHQWDOSUREOHPVZLWKWKHLUSHUFHSWLRQRI-DSDQ,QWKH
ILQDODQDO\VLV3HO]EHOLHYHVWKDW³WKHQDYDOV\VWHP«FROODSVHGQRWEHFDXVHLWWKUHDWHQHG
RUGLVFULPLQDWHGDJDLQVW-DSDQEXWEHFDXVHLWDVVXPHGWKDW-DSDQZDVDVDWLVILHG
SRZHU´ 3HO]¶VQDUUDWLYHLVHIIHFWLYHEXWQRWGHILQLWLYH+LVPDLQREMHFWLYHLVWRH[SODLQ
ZK\WKHFRQIHUHQFHIDLOHGZLWKPXFKRIKLVIRFXVGHGLFDWHGWRWKHSROLWLFDOGHYHORSPHQWV
LQ-DSDQWKDWOHGWRLWVGHPDQGIRUSDULW\+HVXFFXPEVWRDVLPLODUSUHFRQFHLYHGQRWLRQ
WKDWPRVWKLVWRULDQVVXEVFULEHWRZKHQGLVFXVVLQJWKHFRQIHUHQFH²GXHWR-DSDQHVH
3HO]5DFHWR3HDUO+DUERULQDPHHWLQJRQ6HSWHPEHU6WDQGOH\VDLGWR5RRVHYHOW³,IZH
GHVLUHWRJLYHDGHTXDWHVXSSRUWWRWKHSROLFLHVZKLFKZHKDYHEHHQIROORZLQJLQWKHSDVWVXFKDVWKH2SHQ
'RRUWKH3RZHU7UHDW\WKH.HOORJJ3DFWHWFHWHUDWKHQZHPXVWSRVVHVVDGHTXDWHQDYDOIRUFH´
$PHULFDQSURIHVVLRQDOQDYDORIILFHUVJHQHUDOO\EHOLHYHGWKDW*UHDW%ULWDLQKDGRXWPDQHXYHUHG$PHULFD
DWERWK:DVKLQJWRQDQGDW/RQGRQLQZKLOH%ULWLVKQDYDOLVWVVXFKDV:LQVWRQ&KXUFKLOO
EHOLHYHGWKDWWKH7UHDW\V\VWHPUHQGHUHG%ULWDLQ³DQLQIHULRUVHDSRZHU´JLYHQWKH(PSLUH¶VGLVSDUDWH
VHFXULW\QHHGV3HO]5DFHWR3HDUO+DUERU%ULWLVKDQG$PHULFDQGLSORPDWVZHUHPXFKPRUHDJUHHDEOH
DWWKHFRQIHUHQFHDVERWKZHUHHDJHUIRUDUHQHZDORIWKH7UHDW\V\VWHP%ULWDLQWRDYRLGDQ
H[SHQVLYHQDYDOUDFHLWFRXOGLOODIIRUGDQG$PHULFDGXHWRGRPHVWLFSROLWLFDOFRQVWUDLQWV3HO]
3HO]5DFHWR3HDUO+DUERU3HO]DOVREODPHVWKHLQFRQVLVWHQWQDYDOEXLOGLQJSURJUDPVRIWKH%ULWLVK
DQGWKH$PHULFDQVIRUXOWLPDWHO\SXVKLQJWKHSDUDQRLG-DSDQHVHRYHUWKHEULQNLQ'HFHPEHU
³'LVWUDFWHGE\WURXEOHVLQ(XURSHE\GRPHVWLFHFRQRPLFGLVWUHVVDQGE\H[WUHPHSROLWLFDOSDUWLVDQVKLSWKH
$PHULFDQVDQGWKH%ULWLVKUHIUDLQHGIURPHQWHULQJLQWRWKHQDYDOFRPSHWLWLRQXQWLOYHU\ODWHLQWKHGD\%XW
E\WKHVXGGHQDQGPDVVLYHHQWU\LQWRWKHQDYDOUDFHE\WKH8QLWHG6WDWHV>LQDQGZLWKWKH
YDULRXV9LQVRQ3ODQV@FDVWDVWHDGLO\OHQJWKHQLQJVKDGRZRYHU-DSDQ¶VEXLOGLQJSURJUDPV)DFHGZLWKERWK
WKHIUXVWUDWLRQRIWKHLUSODQVIRUH[SDQVLRQDQGDFRXQWHUEDODQFHWRWKHIOHHWIRUZKLFKWKH\KDGPDGHJUHDW
HFRQRPLFVDFULILFHVWKHOHDGHUVRI-DSDQ¶VQDY\GHFLGHGWRVHHNEDWWOHZKLOHWKH\ZHUHVWLOOIDLUO\FRQILGHQW
RIYLFWRU\,Q'HFHPEHUQDYDOWHFKQRORJ\ZKLFKKDGEHHQFRQWUROOHGXQWLOE\WKH:DVKLQJWRQ
DQG/RQGRQQDYDOWUHDWLHVILQDOO\VHL]HGWKHZKHHODQGVDLOHGIRUZDU´3HO],QRWKHUZRUGVLI
$PHULFDKDGIROORZHGLWVQDYDOSURIHVVLRQDOV¶DGYLFHDQGEXLOWWRWUHDW\OLPLWVWKURXJKRXWWKHLQWHUZDU
SHULRGUDWKHUWKDQJRLQJDOOLQDOODWRQFHWKHQ-DSDQPLJKWKDYHEHHQPRUHHIIHFWLYHO\GHWHUUHG
GHPDQGVDQG:HVWHUQXQZLOOLQJQHVVWRDFFHGHWRWKHPWKHFRQIHUHQFHZDVGRRPHGIURP
WKHVWDUWDQGZDVWKHUHIRUHQRWSDUWLFXODUO\LPSRUWDQW5DWKHULWVLPSO\ILWVLQWR3HO]¶V
QDUUDWLYHDVDSUHFXUVRUWR³WKHUDFHWR3HDUO+DUERU´
7KHKLVWRULRJUDSK\RI$PHULFD¶VLQWHUZDUIRUHLJQSROLF\LVWKHVHFRQGOHQV
WKURXJKZKLFKWKHQDYDOFRQIHUHQFHPXVWEHH[DPLQHG7KHKLVWRULRJUDSK\LV
GRPLQDWHGE\WKHLVRODWLRQLVWLQWHUSUHWDWLRQ,VRODWLRQLVPUHIHUVWRWKHSROLF\RIFXWWLQJRII
WKHQDWLRQIURPLQYROYHPHQWLQIRUHLJQDIIDLUVDQGH[HUWLQJQHDUO\DOOQDWLRQDOHQHUJ\
UHVRXUFHVDQGDWWHQWLRQLQZDUG,VRODWLRQLVPLVRIWHQPRVWLQWHQVHLQWKHDUHQDRIVHFXULW\
DJUHHPHQWVDVLWVDGKHUHQWVVHHNWRDYRLGDOOLDQFHVDQGXQGHUWDNHDXQLODWHUDOGHIHQVH
SROLF\+RZHYHULVRODWLRQLVPLVDEODQNHWGRFWULQHZKLFKHVFKHZVWUDGHWUHDWLHV
LQYROYHPHQWLQWUDQVQDWLRQDOLQVWLWXWLRQV²HVVHQWLDOO\DQ\IRUPRILQWHUQDWLRQDO
HQJDJHPHQW
1XPHURXVIDFWRUVKDYHOHGDVHULHVRIKLVWRULDQVWRODEHOWKH8QLWHG6WDWHV
LVRODWLRQLVWLQWKHLQWHUZDUSHULRG7KHQDUUDWLYHW\SLFDOO\EHJLQVZLWKWKH$PHULFDQ
UHMHFWLRQRIWKH7UHDW\RI9HUVDLOOHVOHDGLQJWRLWVDEVWHQWLRQIURPWKH/HDJXHRI1DWLRQV
7KHLPSUHVVLRQLVVWUHQJWKHQHGE\YDULRXVRWKHUSROLWLFDOGHYHORSPHQWVZKLFKVHHPHGWR
SODFH$PHULFDRXWVLGHRIWKHSRVWZDULQWHUQDWLRQDORUGHULQFOXGLQJWKHUHIXVDOWR
SDUWLFLSDWHLQWKH:RUOG&RXUWWKHLPSOHPHQWDWLRQRIWKH1HXWUDOLW\$FWVRIWKHV
DQGWKHFRQWLQXRXVUHMHFWLRQRIDQ\FROOHFWLYHVHFXULW\DJUHHPHQW,QHFRQRPLFSROLF\
WRRWKH8QLWHG6WDWHVKDVEHHQDFFXVHGRISXUVXLQJDQLVRODWLRQLVWDJHQGD$SURWHFWLRQLVW
LPSXOVHKDGEHHQUHODWLYHO\VWURQJZLWKLQWKH5HSXEOLFVLQFHLWVIRXQGLQJEDVHGRQWKH
WKHRU\WKDWLWZRXOGKHOSQXUWXUHDUREXVWGRPHVWLFPDQXIDFWXULQJVHFWRU7KHVHLPSXOVHV
ZHUHLQWHQVLILHGLQWKHLQWHUZDUSHULRGZLWKWKHLQWURGXFWLRQRIWKH6PRRW+DZOH\$FW
ZKLFKUDLVHGWDULIIVRQDIXOOVSHFWUXPRILPSRUWHGJRRGVWRVWDJJHULQJOHYHOV(YHQ
EHIRUHWKHHQDFWPHQWRI6PRRW+DZOH\WKH86HFRQRP\UHPDLQHGDUHODWLYHO\FORVHG
FLUFXLWDIIDLU²IRUHLJQWUDGHDFFRXQWHGIRUOHVVWKDQSHUFHQWRIWKHQDWLRQ¶VDVVHWV
WKURXJKRXWWKHV *LYHQWKHVHIDFWRUVLWLVHDV\WRVHHKRZWKHGRPLQDQFHRIWKH
LVRODWLRQLVWSDUDGLJPLQ$PHULFDQLQWHUZDUKLVWRULRJUDSK\WRRNKROG
7KHKLVWRULRJUDSK\RILQWHUZDU$PHULFDQIRUHLJQSROLF\EHJLQVLQWKHVDQG
VZLWKKLVWRULDQVZKRHPSOR\HGWUDGLWLRQDOPHWKRGRORJLHVVWURQJO\HPSKDVL]LQJ
KLJKOHYHOGLSORPDWLFH[FKDQJHVEHWZHHQSURPLQHQWVWDWHVPHQ7KLVPHWKRGRORJ\
QHFHVVDULO\SODFHVJUHDWZHLJKWRQWKHDFWLRQVDQGSHUVRQDOLWLHVRIDUHODWLYHO\VPDOO
JURXSRISROLF\PDNHUV:LOOLDP//DQJHUDQG6(YHUHWW*OHDVRQLQ7KH&KDOOHQJHWR
,VRODWLRQEHOLHYHWKDW3UHVLGHQW5RRVHYHOWZDVDQLQKHUHQWO\LQWHUQDWLRQDOLVWOHDGHUZKR
ZDVIRUFHGWRSUHVLGHRYHULVRODWLRQLVWSROLFLHVGXHWRWKHSUHVVXUHVRIWKH'HSUHVVLRQ 7KHDXWKRUVLGHQWLI\3UHVLGHQW5RRVHYHOW¶V4XDUDQWLQH6SHHFKLQZKLFKKH
GHQRXQFHGDJJUHVVRUQDWLRQVDQGYDJXHO\UHFRPPHQGHGWKDW³PRUDO´QDWLRQV
³TXDUDQWLQH´VXFKDJJUHVVRUVDVWKHEUHDNLQJSRLQWIURPKLVLVRODWLRQLVWILUVWWHUP 8VLQJDVLPLODUSROLWLFRGLSORPDWLFPHWKRGRORJ\6HOLJ$GOHU¶VFODVVLF$PHULFDQ)RUHLJQ
3ROLF\%HWZHHQWKH:DUVFKDUDFWHUL]HVWKHWKUHHLQWHUZDU5HSXEOLFDQ3UHVLGHQWVDV
QDUURZPLQGHGQDWLRQDOLVWVZKRVHVROHSUHRFFXSDWLRQZDVEXVLQHVVUDWKHUWKDQ
:LOOLDP(/HXFKWHQEXUJ7KH3HULOVRI3URVSHULW\6HFRQG(GLWLRQ&KLFDJR8QLYHUVLW\RI
&KLFDJR3UHVV
:LOOLDP//DQJHUDQG6(YHUHWW*OHDVRQ7KH&KDOOHQJHWR,VRODWLRQ1HZ<RUN+DUSHU
DQG5RZ³,QWKHHDUO\\HDUVRIKLVDGPLQLVWUDWLRQKHZDVVRHQJURVVHGZLWKWKHSUREOHPVRIWKH
1HZ'HDOWKDWKHKDGUHODWLYHO\OLWWOHWLPHIRULQWHUQDWLRQDOLVVXHV%XWE\WKH\HDUWKDWZDVQRORQJHU
WKHFDVH7KH1HZ'HDOKDGEHHQIDLUO\ODXQFKHGDQGDVWKHVLWXDWLRQLQWKH)DU(DVWDQGLQ(XURSHEHFDPH
GDQJHURXVO\DFXWH0U5RRVHYHOWFRQFHQWUDWHGKLVDWWHQWLRQPRUHDQGPRUHRQH[WHUQDOSUREOHPV´
/DQJHUDQG*OHDVRQ,VRODWLRQ
LQWHUQDWLRQDOHQJDJHPHQW 7KH:DOO6WUHHWFROODSVHRIDQGWKHKDUG\HDUVWKDW
IROORZHGRQO\VHUYHGWRKHLJKWHQ$PHULFDQLQGLIIHUHQFHWRJOREDOHYHQWVDQGDJJUDYDWHG
DJHQHUDOXQZLOOLQJQHVVWRIXQGDQDFWLYLVWIRUHLJQSROLF\ $GOHUVHHV5RRVHYHOWDVPRUH
LQWHUQDWLRQDOO\PLQGHGWKDQKLV5HSXEOLFDQSUHGHFHVVRUVHVSHFLDOO\LQWKHUHDOPRIQDYDO
UHDUPDPHQWLQWKHODWHV EXWRYHUDOO5RRVHYHOWKDG³WHQXRXVFRQWURORIIRUHLJQ
SROLF\DQGDVODWHDVRIWKHKDUGURFNVWUHQJWKRILVRODWLRQLVWVHQWLPHQWLQ
$PHULFD´ (DUO\WUDGLWLRQDODFFRXQWVVXFKDVWKHVHHVWDEOLVKHGWKHRUWKRGR[
LQWHUSUHWDWLRQRI$PHULFDQLQWHUZDUIRUHLJQSROLF\GHSLFWLQJWKH8QLWHG6WDWHVDV
GDQJHURXVO\LVRODWLRQLVWXQWLOODWHLQWKHV,QGHHGWKHZDWHUVKHGGDWHRILVVWLOO
XVHGE\PDQ\KLVWRULDQVWRGD\7KHVHDFFRXQWVLIWKH\GHDOZLWKWKH1DYDO/LPLWDWLRQ
7UHDWLHVDWDOOWHQGWRGLVPLVVWKHPDVEHLQJDJUHHDEOHWRLVRODWLRQLVPDQGWKHUHIRUHQRW
OHJLWLPDWHLQWHUQDWLRQDODFWLYLVP
7KHKLVWRULRJUDSK\RIWKH5RRVHYHOWDGPLQLVWUDWLRQWHQGVWRHPSKDVL]HD
FRQWLQXHGLVRODWLRQLVW$PHULFDQIRUHLJQSROLF\LQVSLWHRIWKDW3UHVLGHQW¶VPRUH
LQWHUQDWLRQDOLVWOHDQLQJV5REHUW'DOOHNSHUKDSV5RRVHYHOW¶VPRVWFHOHEUDWHGDFDGHPLF
ELRJUDSKHUEHOLHYHVWKDW5RRVHYHOWZDVDWKHDUWDQLQWHUQDWLRQDOLVWZKRVHLQFOLQDWLRQV
ZHUHFXUEHGE\WKHH[LJHQFLHVRIWKH'HSUHVVLRQDQGWKHFRQVWUDLQWVRIGRPHVWLFSROLWLFV
$V'DOOHNZULWHV5RRVHYHOWFKDPSLRQHGWKH/HDJXHRI1DWLRQVIRU:RRGURZ:LOVRQ
6HOLJ$GOHU7KH8QFHUWDLQ*LDQW$PHULFDQ)RUHLJQ3ROLF\%HWZHHQWKH:DUV1HZ<RUN
&ROOLHU0DF0LOODQ/WG$GOHUDOVRFDOOHG6HFUHWDU\RI6WDWH&KDUOHV(YDQ+XJKHVWKH
SULQFLSOH$PHULFDQSURSRQHQWIRUWKH:DVKLQJWRQ1DYDO7UHDW\D³PRGLILHGLVRODWLRQLVW´
$GOHU8QFHUWDLQ*LDQW$GOHUVHHVWKHQHXWUDOLW\OHJLVODWLRQRIWKHPLGWKLUWLHVWREHWKHQDGLURI
$PHULFDQLVRODWLRQLVP$VKHSXWVLW³6L[\HDUVRIVKDUSGHSUHVVLRQDQGVXFFHVVLYHDJJUHVVLRQKDG
LQWHQVLILHGLQWURYHUVLYHWKLQNLQJÓHDGLQJWR³WKHVXSUHPHWULXPSKRIWKHLVRODWLRQLVWFRQFHSW²WKH
LQIOH[LEOHQHXWUDOLW\OHJLVODWLRQ´
$GOHU8QFHUWDLQ*LDQW
$GOHU8QFHUWDLQ*LDQW
DQGWULHGWRUHYLYHHQWKXVLDVPIRUWKH/HDJXHDV-DPHV0&R[¶VUXQQLQJPDWHLQ ,WZDVRQO\ZKHQKHZDVUXQQLQJIRU3UHVLGHQWWZHOYH\HDUVODWHUWKDW5RRVHYHOW
GLVPLVVHGWKH/HDJXHDV³µDPHUHPHHWLQJSODFHIRUWKHSROLWLFDOGLVFXVVLRQRIVWULFWO\
(XURSHDQDIIDLUV¶ÍRUZKLFKUHDVRQKH³µ>GLG@QRWVXSSRUW$PHULFDQSDUWLFLSDWLRQ´ 'DOOHNDOVRDVVHUWVWKDW5RRVHYHOWVWDFNHGWKH6WDWH'HSDUWPHQWZLWK³QDWLRQDOLVWV´D
PRYHZKLFK³LQGLFDWHGWKDW5RRVHYHOWLQWHQGHGWRGHDOZLWKGRPHVWLFSUREOHPVILUVW´ ,W
ZDVRQO\DIWHUWKHIDLOXUHRIWKH6HFRQG/RQGRQ1DYDO&RQIHUHQFHDQGWKHDWWHQGDQW
VWUHQJWKHQLQJRI$QJOR$PHULFDQUHODWLRQVWKDW5RRVHYHOW¶VLQWHUQDWLRQDOLVWOHDQLQJV
ZHUHJLYHQH[SUHVVLRQLQPHDQLQJIXOSROLF\RXWSXWV ,UZLQ*HOOPDQ¶V*RRG1HLJKERU'LSORPDF\DOVRDUJXHVWKDW5RRVHYHOWZDVDQ
LQWHUQDWLRQDOLVWDWKHDUWEXWWKDWWKLVLPSXOVHZDVPXWHGLQWKHVWRFRQVHUYHSROLWLFDO
FDSLWDOIRUKLVGRPHVWLFDJHQGD*HOOPDQEHOLHYHVWKDW5RRVHYHOW¶VHDUO\IRFXVRQ/DWLQ
$PHULFDQUHODWLRQVLVSURRIRIKLVLQWHUQDWLRQDOLVWLQFOLQDWLRQV5RRVHYHOWKRZHYHU
MXVWLILHGWKHDFWLYLVWQDWXUHRIWKH*RRG1HLJKERUSROLF\WRDQLVRODWLRQLVWSXEOLFDORQJWKH
OLQHVRIKHPLVSKHULFVROLGDULW\DQGWKHHVWDEOLVKHGSUHFHGHQWRIWKH0RQURH'RFWULQH $IWHUJHWWLQJKLVIHHWZHWLQLQWHUQDWLRQDOUHODWLRQV5RRVHYHOW¶VH\HPRYHGEH\RQGWKH
QHDUDEURDGDVLQWHUQDWLRQDOFULVHVPRXQWHGUDSLGO\DIWHU +LVILUVWDGPLQLVWUDWLRQ
*HOOPDQKDVJHQHUDOO\FRQFOXGHGZDVRYHUZKHOPHGE\WKHGRPHVWLFDJHQGDDQGWKH
5REHUW'DOOHN)UDQNOLQ'5RRVHYHOWDQG$PHULFDQ)RUHLJQ3ROLF\2[IRUG2[IRUG
8QLYHUVLW\3UHVV
'DOOHN5RRVHYHOW
'DOOHN5RRVHYHOW
'DOOHN5RRVHYHOWLQSDUWLFXODU'DOOHNQRWHVDFRQVLGHUDEOHH[SDQVLRQRIWKH861DY\DQGDLUIRUFH
EXGJHWVLQVSULQJDQGWKH5RRVHYHOWDGPLQLVWUDWLRQ¶VDWWHPSWVWRPRGLI\WKHQHXWUDOLW\
OHJLVODWLRQWKURXJKRXW
,UZLQ*HOOPDQ*RRG1HLJKERU'LSORPDF\8QLWHG6WDWHV3ROLFLHVLQ/DWLQ$PHULFD
%DOWLPRUH-RKQV+RSNLQV8QLYHUVLW\3UHVV
*HOOPDQ*RRG1HLJKERU'LSORPDF\
IRUHLJQSROLF\LQLWLDWLYHZDVKLJKO\FRQVWUDLQHGDQGFRQGXFWHGLQDPDQQHUWKDWZDV
FRQGXFLYHWRQDWLRQDOLVWDJHQGD
'HDOLQJPRUHVSHFLILFDOO\ZLWK$PHULFD¶VIRUHLJQSROLF\LQWKH3DFLILFLV'RURWK\
%RUJ¶V7KH8QLWHG6WDWHVDQGWKH)DU(DVWHUQ&ULVLV%RUJDVVHUWVWKDWGHVSLWHKLJK
IO\LQJUKHWRULFDQGIDQWDVWLFDOSRUWUDLWVRILWVSRWHQWLDOWKH8QLWHG6WDWHVZDVQHYHU
SDUWLFXODUO\GHYRWHGWR&KLQDRUHYHQLWVRZQ3DFLILFWHUULWRULHVLQWKHLQWHUZDUSHULRG
,QGHHGWKHRQO\$PHULFDQIDFWLRQWKDWWUXO\FDUHGDERXWWKHPZDVWKHQDY\IRUSXUHO\
VWUDWHJLFUHDVRQV %RUJEHOLHYHVWKDW5RRVHYHOW¶VRQO\IRUHLJQSROLF\REMHFWLYHLQKLV
ILUVWWHUP³ZDVQRWWRFKDPSLRQ&KLQDEXWUDWKHUWRSUHYHQWWKHWKUHDWRIZDUEHWZHHQWKH
8QLWHG6WDWHVDQG-DSDQIURPLQFUHDVLQJ´ (YHQDIWHUZKHQ-DSDQKDGDEURJDWHG
WKH:DVKLQJWRQ7UHDW\DQGEHJDQDQDYDODUPVUDFH%RUJDVVHUWVWKDW5RRVHYHOW
³LQGLFDWHGWKDWKHQHLWKHUZDQWHGWRJRWRZDUZLWK-DSDQQRUWRDGRSWPHDVXUHVWKDWUDQ
ULVNRISUHFLSLWDWLQJDZDU«>KH@SUREDEO\QHYHUGHSDUWHGIDUIURPWKLVSRVLWLRQ´ $FFRUGLQJWR%RUJWKHQWKH5RRVHYHOWDGPLQLVWUDWLRQZDVLQWHUHVWHGLQWKHLQWHUQDWLRQDO
V\VWHPRQO\LQDVPXFKDVWRNHHSWKHLPPHGLDWHSHDFHDQGWKHUHIRUHVKRZHG³DPDUNHG
GHVLUHWRDYRLGDQ\DFWLYHLQYROYHPHQWVLQWKH)DU(DVW´ 7KHWKHPHRIUHFNOHVV$PHULFDQLVRODWLRQLVPLVUHSHDWHGLQFRXQWOHVVQDUUDWLYHVRI
WKHLQWHUZDUSHULRG:LOOLDP(/HXFKWHQEXUJ¶VZRUNRQWKHV7KH3HULOVRI
3URVSHULW\WHOOVWKHVWRU\RIWKUHH5HSXEOLFDQDGPLQLVWUDWLRQVWKDWZHUHP\RSLFDOO\
REVHVVHGZLWKVODVKLQJVSHQGLQJDQGSURPRWLQJEXVLQHVVZKLOVWLJQRULQJWKHXQVWHDG\
'RURWK\%RUJ7KH8QLWHG6WDWHVDQGWKH)DU(DVWHUQ&ULVLVRI%RVWRQ+DUYDUG8QLYHUVLW\
3UHVV7KH861ZDVLQWHQWRQKROGLQJVWUDWHJLFWHUULWRULHVOLNHWKH3KLOLSSLQHVDQG*XDPIRU
FRQGXFWLQJRSHUDWLRQVLQWKH)DU(DVWHVSHFLDOO\DJDLQVW-DSDQ
%RUJ)DU(DVWHUQ&ULVLVY
%RUJ)DU(DVWHUQ&ULVLV+HUH%RUJUHIHUVWRWKH5RRVHYHOWDGPLQLVWUDWLRQ¶VPLOGUHDFWLRQWRWKH
-DSDQHVHVLQNLQJRIWKH8663DQD\LQ&KLQDRQ'HFHPEHU
%RUJ)DU(DVWHUQ&ULVLV
JOREDOVFHQH/HXFKWHQEXUJZULWHVVFDWKLQJO\RI:LOVRQ¶VVXFFHVVRU:DUUHQ*+DUGLQJ
FDOOLQJKLPD³WKLUGUDWH3UHVLGHQW´DQGUHFRXQWLQJKXPLOLDWLQJWDOHVRIKLVLJQRUDQFHRI
ERWKGRPHVWLFDQGLQWHUQDWLRQDODIIDLUV /HXFKWHQEXUJVHHVWKHODQGVOLGHHOHFWLRQLQ
RIVXFKDQXQLPSUHVVLYHDQGSURYLQFLDOVSHFLPHQDVDFOHDUUHSXGLDWLRQRI:LOVRQ¶V
IRUD\LQWRLQWHUQDWLRQDOLVP $IXQGDPHQWDOSUREOHPWKDW/HXFKWHQEXUJLGHQWLILHVDPRQJ
$PHULFDQSROLF\PDNHUVZDVWKDW³SHDFHZDVVHHQDVPHUHO\WKHDYRLGDQFHRIZDUUDWKHU
WKDQWKHFRQWLQXRXVSURFHVVRISROLWLFDODFFRPPRGDWLRQ´ ,WZDVWKLVZLGHO\VKDUHG
EHOLHIWKDWOHG$PHULFDWRQRWRQO\UHMHFWWKH/HDJXHEXWDOVRWRWKURZXSLPSRVLQJ
WDULIIVFHDVHLQWHUYHQWLRQVLQWR/DWLQ$PHULFDDOPRVWHQWLUHO\E\WKHHQGRIWKHGHFDGH
DQGODJIDUEHKLQGLWVFRPSHWLWRUVLQQDYDOEXLOGLQJ /HXFKWHQEXUJDUJXHVWKDWWKH
8QLWHG6WDWHVERXJKWWURXEOHIRULWVHOIDWWKH:DVKLQJWRQ1DYDO&RQIHUHQFHEHFDXVH³E\
FRPPLWWLQJLWVHOIWRWKHFDXVHRI&KLQHVHLQGHSHQGHQFHDQGWRPDLQWDLQLQJ3DFLILF
SRVVHVVLRQVLWZDVXQZLOOLQJWRGHIHQGLWVWRRGLQWKHZD\RI-DSDQHVHDPELWLRQVZLWKRXW
GHYHORSLQJDSRZHUEDVHWKDW-DSDQZRXOGEHFRPSHOOHGWRUHVSHFW´ 7KHWHUPVRIWKH
:DVKLQJWRQ7UHDW\SURKLELWHG$PHULFDIURPGHYHORSLQJIRUWLILHGEDVHVZHVWRI+DZDLL
ZKLFKDFFRUGLQJWR/HXFKWHQEXUJ³WXUQHGWKHZHVWHUQ3DFLILFLQWRD-DSDQHVH/DNH´ ,QUHFHQW\HDUVKRZHYHUVRPHKLVWRULDQVKDYHTXHVWLRQHGWKHLVRODWLRQLVW
SDUDGLJP3DXO-RKQVRQLQ³7KH0\WKRI$PHULFDQ,VRODWLRQLVP´KDVDUJXHGWKDWWKH
8QLWHG6WDWHVKDVEHHQYHU\DFWLYHRQWKHLQWHUQDWLRQDOVFHQHVLQFHLWVIRXQGLQJGHVSLWH
/HXFKWHQEXUJ3HULOVRI3URVSHULW\:KHQDVNHGRIGHYHORSPHQWVLQWKH/HDJXHRI1DWLRQVE\D
:DVKLQJWRQMRXUQDOLVW+DUGLQJDGPLWWHG³,GRQ¶WNQRZDQ\WKLQJDERXWWKLV(XURSHDQVWXII´:KHQ
GLVFXVVLQJDWD[SUREOHPZLWKKLVVSHHFKZULWHU+DUGLQJODPHQWHG³,OLVWHQWRRQHVLGHDQGWKH\VHHP
ULJKWDQGWKHQ²*RG²,WDONWRWKHRWKHUVLGHDQGWKH\VHHPMXVWDVULJKW´(YHQWXDOO\+DUGLQJFDPHWR
WKHJORRP\FRQFOXVLRQWKDW³,NQHZWKLVMREZRXOGEHWRRPXFKIRUPH´
/HXFKWHQEXUJ3HULOVRI3URVSHULW\
/HXFKWHQEXUJ3HULOVRI3URVSHULW\
/HXFKWHQEXUJ3HULOVRI3URVSHULW\
/HXFKWHQEXUJ3HULOVRI3URVSHULW\
/HXFKWHQEXUJ3HULOVRI3URVSHULW\
LWVUHODWLYHJHRJUDSKLFDOLVRODWLRQDQGWKHVHFXULW\WKDWWKLVHQWDLOV,QGHHG³JLYHQWKH
VKHHUVL]HRIWKH$WODQWLFZLWKLWVWHPSWDWLRQWRKHUPLWU\´WKHFHQWUDOUROHRIWKH8QLWHG
6WDWHVLQZRUOGDIIDLUVLVQRWKLQJVKRUWRIUHPDUNDEOH -RKQVRQDUJXHVWKDWWKH8QLWHG
6WDWHVSXEOLFDQGHYHQLWV&RQJUHVVZDVQRWDVRSSRVHGWRSDUWLFLSDWLRQLQWKH/HDJXHRI
1DWLRQVDVKLVWRU\JHQHUDOO\UHPHPEHUV7KH5HSXEOLFDQRSSRVLWLRQWR:LOVRQ¶V)RXUWHHQ
3RLQWVOHGE\6HQDWRU+HQU\&DERW/RGJHZDVQRWXQLIRUPO\LVRODWLRQLVWDQG/RGJHDQG
KLVDOOLHVPD\HYHQKDYHKDUERUHGLQWHUQDWLRQDOLVWVHQWLPHQWV7KHIDLOXUHWREULQJWKH86
LQWRWKH/HDJXHIROGZDVGXHWRWKHLQIOH[LELOLW\DQGSRRUSROLWLFVRI:LOVRQUDWKHUWKDQ
DQ\VRUWRIRYHUZKHOPLQJSRVWZDULVRODWLRQLVWLPSXOVH-RKQVRQVWRSVVKRUWRI
TXHVWLRQLQJWKHZKROHSUHPLVHRI$PHULFDQLVRODWLRQLVPLQWKHLQWHUZDUSHULRGKRZHYHU
FODLPLQJWKDW³,WFDQEHDUJXHGZLWKPRUHMXVWLFHWKDW$PHULFDZDVLVRODWLRQLVWLQWKH
V´DVDUHVXOWRIULVLQJIHDUVRIZDUDQGWKHGRPHVWLFSUHVVXUHVRIWKH*UHDW
'HSUHVVLRQ 7KHZHLJKWRILVRODWLRQLVWKLVWRULRJUDSK\LVHYLGHQWO\KDUGWREXFNHYHQLQ
WUHDWLVHVLQWHQGHGWRTXHVWLRQLWVYDOLGLW\
$IXOOHUDQGPRUHVSHFLILFDWWHPSWWRUHLQWHUSUHW$PHULFDQLQWHUZDUIRUHLJQSROLF\
LVRIIHUHGE\%HDU)%UDXPRHOOHULQKLVLGHQWLFDOO\WLWOHG³7KH0\WKRI$PHULFDQ
,VRODWLRQLVP´%UDXPRHOOHUEHOLHYHVWKDWWKHODEHO³LVRODWLRQLVP´LVRYHUEORZQDQG
LQDFFXUDWH+HDVVHUWVWKDWPDQ\VWDWHVWKURXJKRXWKLVWRU\KDYHVZXQJIURPSHULRGVRI
LQWHQVHLQWHUQDWLRQDODFWLYLW\WRSHULRGVRIUHODWLYHUHFOXVLRQWKRXJKHOHPHQWVRIERWK
LQFOLQDWLRQVDUHSUHVHQWGXULQJHLWKHUSHULRG+HSRLQWVRXWWKDWLQWKHGHFDGHVSUHFHGLQJ
WKHWKFHQWXU\*UHDW%ULWDLQZDVVDLGWREHSXUVXLQJ³VSOHQGLGLVRODWLRQÉXWWKDWWKLV
3DXO-RKQVRQ³7KH0\WKRI$PHULFDQ,VRODWLRQLVP´LQ)RUHLJQ$IIDLUV
-RKQVRQ³0\WK´
ZDVDUHODWLYHWHUPUDWKHUWKDQDQDEVROXWHRQH %UDXPRHOOHUFODLPVWKDWWKHVDPHKROGV
WUXHIRUWKH86LQWKHLQWHUZDUSHULRG:KLOHSROLF\PDNHUVVKLHGDZD\IURP$PHULFD¶V
HDUO\WKFHQWXU\IOLUWDWLRQZLWKHPSLUHXQGHUOHDGHUVOLNH7KHRGRUH5RRVHYHOWDQGIURP
:LOVRQ¶VSRVW:RUOG:DULQWHUQDWLRQDOLVWYLVLRQWKH\ZHUHQRQHWKHOHVVDFWLYHO\HQJDJHG
LQPDQ\DUHQDVDURXQGWKHJOREH3ROLF\PDNHUVVLPSO\IRXQGWKDWWKH\FRXOG³UHO\RQ
EDQNVUDWKHUWKDQWDQNV´WRVHWWOHLQWHUQDWLRQDOTXDUUHOVGXHWR$PHULFD¶VQHZIRXQG
LQIOXHQFHDVWKHZRUOG¶VELJJHVWFUHGLWRUDQGWKDWLWFRXOGWKHUHE\SURWHFWLWVLQWHUHVWV
ZLWKRXWUHSHDWLQJLWVLQYROYHPHQWLQD(XURSHDQFRQIOLFW %UDXPRHOOHUDOVRWDFNOHVWKH
VXSSRVHGLVRODWLRQLVPLQWKHVDUJXLQJWKDWWKH1HXWUDOLW\$FWVZHUHWKHUHVXOWRI
FRPSOLFDWHGSROLWLFVUDWKHUWKDQVWUDLJKWIRUZDUGLVRODWLRQLVPDQGWKDW$PHULFD¶VODFNRI
UHDFWLRQWR1D]L*HUPDQ\¶VUHDUPDPHQWZDVEDVHGRQWKHUHPRWHQHVVRIWKHWKUHDWUDWKHU
WKDQJHQHUDOLQGLIIHUHQFH %UDXPRHOOHUPDNHVDFRPSHOOLQJFDVHEXWKLVDFFRXQWOLNH-RKQVRQ¶VLV
JHQHUDOO\OLPLWHGWRWKHGRPHVWLFSROLWLFVEHKLQG$PHULFD¶VIRUHLJQSROLF\DSSDUDWXV
UDWKHUWKDQIRFXVLQJRQWKHQDWXUHRIWKHLQWHUQDWLRQDOLQWHUDFWLRQLWVHOI7KHVHUHYLVLRQLVW
DXWKRUVDOVRQHJOHFWZKDWPD\EHWKHJUHDWHVWFKDOOHQJHWRWKHLVRODWLRQLVWPRGHO
$PHULFD¶VSLYRWDOLQYROYHPHQWLQLQWHUZDUQDYDODUPVFRQWURO *LYHQWKHXQVHWWOHG
QDWXUHRIWKHKLVWRULRJUDSK\RIWKH8QLWHG6WDWHV¶IRUHLJQSROLF\LQWKLVSHULRGDQ
H[DPLQDWLRQRI$PHULFD¶VUROHLQQDYDODUPVFRQWUROFRXOGVKHGVRPHOLJKWRQWKLV
RQJRLQJGHEDWH
%HDU)%UDXPRHOOHU³7KH0\WKRI$PHULFDQ,VRODWLRQLVP´)RUHLJQ3ROLF\$QDO\VLV
:KLOH%ULWDLQUHPDLQHGODUJHO\DORRIRI(XURSHDQDIIDLUVLQWKHODWHWKFHQWXU\LWZDVDFWLYHLQIXUWKHULQJ
LWVLPSHULDODJHQGDLQ$VLDDQG$IULFD
%UDXPRHOOHU³0\WK´
%UDXPRHOOHU³0\WK´
-RKQVRQQHJOHFWVWKHWRSLFDOPRVWHQWLUHO\%UDXPRHOOHUGRHVDGGUHVVWKH:DVKLQJWRQ1DYDO&RQIHUHQFH
TXLWHWKRURXJKO\EXWQHJOHFWVWKHODWHUFRQIHUHQFHVDQGGLVPLVVHVWKHFRQIHUHQFHLQD
VHQWHQFH3J
7KHILQDOFUXFLDOOHYHORIDQDO\VLVZKLFKPXVWEHXQGHUVWRRGLVWKHQDWXUHRIWKH
UHODWLRQVKLSEHWZHHQWKH8QLWHG6WDWHVDQG*UHDW%ULWDLQLQWKHLQWHUZDUSHULRG7KHUHLVD
UHODWLYHO\ZLGHERG\RIKLVWRULRJUDSK\GHGLFDWHGWRWKHLQWHUZDU$QJOR$PHULFDQ
UHODWLRQVKLSDQGWKHFRQVHQVXVLVJHQHUDOO\WKDWLWZDVFRRORFFDVLRQDOO\KRVWLOHDQG
YHU\LQFRQVLVWHQW'DYLG5H\QROGVLQKLVFODVVLFZRUN7KH&UHDWLRQRIWKH$QJOR
$PHULFDQ$OOLDQFHDVVHUWVWKDW³WKH86$ZDVGHHSO\LVRODWLRQLVWDQGSUHRFFXSLHGZLWK
LWVJUDYH'HSUHVVLRQ´LQWKHVDQGWKDWWKHGRPHVWLFSUHVVXUHWRUHOLHYHWKHHFRQRPLF
VXIIHULQJFRQVXPHGDOPRVWDOORIWKH5RRVHYHOWDGPLQLVWUDWLRQ¶VILUVWWZRWHUPV 5H\QROGVEHOLHYHVWKDWWKHDGPLQLVWUDWLRQ¶VKDQGVRIIDSSURDFKWRIRUHLJQDIIDLUVDOORZHG
DJHQHUDOO\LVRODWLRQLVW&RQJUHVVWRDXWKRUDVHULHVRIFULSSOLQJ1HXWUDOLW\ODZV
WKURXJKRXWWKHVZKLFKLQWXUQZHUHDUHVSRQVHWR%ULWDLQ¶VLQDELOLW\WRSD\EDFNLWV
ZDUGHEWDORQJULJLG$PHULFDQWHUPV7KHVHLVRODWLRQLVWSROLFLHVKDGWKHHIIHFWRI
DOLHQDWLQJ$PHULFD¶VPRVWLPSRUWDQWVWUDWHJLFDOO\5H\QROGVDVVHUWVWKDWWKH
³XQLPSRUWDQFHRIIRUHLJQDIIDLUVWKHVWUHQJWKRIWKHLVRODWLRQLVWVHQWLPHQWWKH
IUDJPHQWHGQDWXUHRI&RQJUHVVDQGEXUHDXFUDF\DQGWKHSHUVRQDOLW\RI)'5KLPVHOI´
OHGWRRIWHQFRQIXVHGDQGLUUDWLRQDOSROLF\RXWSXWVLQWKHV )RU5H\QROGVLWZDV
QRWXQWLOWKDWWKH$QJOR$PHULFDQUHODWLRQVKLSZDVILQDOO\DEOHWRRYHUFRPHGHHS
'DYLG5H\QROGV7KH&UHDWLRQRIWKH$QJOR$PHULFDQ$OOLDQFH/RQGRQ(XURSD3XEOLFDWLRQV
/WG
5H\QROGV$OOLDQFH5H\QROGVEHOLHYHVWKDWWKHDIRUHPHQWLRQHGFKDUDFWHULVWLFVPHDQVWKDW³$PHULFDQ
GLSORPDF\LQWKHVDSSUR[LPDWHVPRUHWRZKDWSROLWLFDOVFLHQWLVWVFDOOWKHµEXUHDXFUDWLFSROLWLFV¶PRGHO
RIIRUHLJQSROLF\PDNLQJWKDQWRWKDWRIWKHµXQLWDU\DJHQW¶$FFRUGLQJWRWKHODWWHUPRGHODJRYHUQPHQW¶V
IRUHLJQSROLF\FDQEHXQGHUVWRRGRQWKHDQDORJ\RIDQLQGLYLGXDO¶VSXUSRVLYHDFWLRQ²DGHOLEHUDWHFKRLFHRI
ZKDWVHHPVWREHWKHEHVWPHDQVWRUHDFKDGHILQHGJRDODIWHUGLVFXVVLRQRIDOOWKHYDULRXVDOWHUQDWLYHV
&OHDUO\WKLVZDVQRWWUXHRI:DVKLQJWRQLQWKHV´
VHDWHGGLIIHUHQFHVLQVHFXULW\FRQFHSWLRQVDQGEHJLQLWVHYROXWLRQWRZDUGVDIRUPDO
DOOLDQFH %-&0F.HUFKHUDOVREHOLHYHVWKDWWKHUHODWLRQVKLSKDGVWULFWOLPLWDWLRQVLQWKLV
SHULRG+HDUJXHVWKDW$PHULFDQSRZHUEHWZHHQWKHZDUVUHPDLQHGSRWHQWLDOUDWKHUWKDQ
UHDODVSROLF\PDNHUVODFNHGWKHZLOORUGHVLUHWRWUDQVODWHWKHQDWLRQ¶VWUHPHQGRXV
HFRQRPLFSRZHULQWRWKHSRZHURILQWHUQDWLRQDOUHODWLRQV %\GHFOLQLQJLWVPRPHQWWR
EHFRPHWKHSUHHPLQHQWSRZHUWKH8QLWHG6WDWHVFHGHGWKHUHVSRQVLELOLW\RIPDLQWDLQLQJ
JOREDOVHFXULW\WRWKH%ULWLVK²\HWWKH$PHULFDQVEHFDPHLUULWDWHGZKHQWKH%ULWLVK
DVVHUWHGWKHLUSUHURJDWLYHLQWKHUHDOPRIJOREDOVHFXULW\ 7KH%ULWLVKPHDQZKLOHZHUH
EHVHWE\VHFXULW\SUREOHPVDFURVVWKHLUHPSLUHWKURXJKRXWWKHVZKLFKOLPLWHGWKH
VFRSHRIWKHLUFRRSHUDWLRQZLWKWKH$PHULFDQVRQLVVXHVZKHUHWKHLUVWUDWHJLHVZHUH
LUUHFRQFLODEOH %ULWLVKSROLF\PDNHUVZRXOGKDYHOLNHG$PHULFDQSDUWLFLSDWLRQLQWKH
PDLQWHQDQFHRI(XURSHDQVHFXULW\EXWWKH\GLGOLWWOHWRFRXUWLW 0F.HUFKHUEHOLHYHVWKDW
LWZDVRQO\DIWHU%ULWDLQ¶VSROLF\RIDSSHDVHPHQWKDGFOHDUO\IDLOHGLQWKDWWKH
UHODWLRQVKLSILQDOO\PRYHGIRUZDUGLQDPHDQLQJIXOZD\ 5H\QROGV$OOLDQFH5H\QROGVEHOLHYHVWKDWFRQWLQXRXVIDLOXUHRIWKH5RRVHYHOWDGPLQLVWUDWLRQWRFUDIWD
SROLF\RIPHDQLQJIXODVVLVWDQFH²IRULQVWDQFHLWVQRQUHDFWLRQWRWKH³3DQD\,QFLGHQW´RUWKH
DGPLQLVWUDWLRQ¶VIDLOXUHWRUHYLVH1HXWUDOLW\LQ²LQGLFDWHVWKHFRQWLQXHGGRPLQDQFHRI
LVRODWLRQLVPULJKWXSXQWLOWKHGHFODUDWLRQRIZDULQ6HSWHPEHU
%-&0F.HUFKHU³µ2XU0RVW'DQJHURXV(QHP\¶*UHDW%ULWDLQ3UH(PLQHQWLQWKHV´7KH
,QWHUQDWLRQDO+LVWRU\5HYLHZ
0F.HUFKHU³*UHDW%ULWDLQ3UH(PLQHQW´
0F.HUFKHU³*UHDW%ULWDLQ3UH(PLQHQW´7KHGLVSDULW\LQVWUDWHJLFFRQFHSWLRQVZDVHVSHFLDOO\
DSSDUHQWLQWKHWZRQDWLRQV¶QDYDOSROLFLHV³%ULWDLQKDGDQDEVROXWHQHHGIRUDPLQLPXPQXPEHURI
ZDUVKLSVDQGRWKHUDUPVZKLOHWKH$PHULFDQVZLWKQRFRPPLWPHQWVRIDQ\VRUWEH\RQGWKHQHFHVVLW\WR
SURWHFWWKHLUURXWHVWRRYHUVHDVPDUNHWVDQGWKHLULPSHULDOKROGLQJVLQWKHZHVWHUQKHPLVSKHUHDQGWKH
ZHVWHUQ3DFLILFKDGDUHODWLYHQHHGWKH\FRXOGDFFHSWVLJQLILFDQWUHGXFWLRQVDVORQJDVRWKHUSRZHUVGLG
WKHVDPH+HQFHWKH86HPSKDVLVRQFXWWLQJDUPVVSHQGLQJWRHIIHFWUHGXFWLRQVVXFKUHGXFWLRQVZRXOG
HQKDQFHWKHLUVHFXULW\´
0F.HUFKHU³*UHDW%ULWDLQ3UH(PLQHQW´
,ELG
'RQDOG&DPHURQ:DWWH[SORUHGWKLVUHODWLRQVKLSH[WHQVLYHO\LQ6XFFHHGLQJ-RKQ
%XOO$PHULFDLQ%ULWDLQ¶V3ODFH+LVFKDSWHUVRQWKHLQWHUZDUSHULRGDVVHUW
WKDWWKHUHODWLRQVKLSZDVIUHTXHQWO\URFN\DQGDWWLPHVRXWULJKWKRVWLOH:DWWZULWHVWKDW
³IURPRQZDUGV´%ULWLVKSROLF\PDNHUVLQFUHDVLQJO\FDPHWREHOLHYHWKDW³WKH8QLWHG
6WDWHVZDVLQUHDOLW\KRVWLOHLQLPLFDODQGDERYHDOOµIRUHLJQ¶´DQGWKDW³WKHQHZ
JHQHUDWLRQVRI$PHULFDZHUHµJURZLQJDSDUW¶IURP%ULWDLQ´ 2I$PHULFD:DWWZULWHV
WKDW³&RQJUHVVZDVFRQJHQLWDOO\UHVSRQVLYHWRWKH$QJORSKREHVDVZDVWKH86SUHVV´ DQGWKDWWKH6WDWH'HSDUWPHQWZDVRIWHQWRRTXLFNWRH[HUWSUHVVXUHRQ%ULWLVKGRPLQLRQV
WRIRUFHWKHPWRWRHWKH$PHULFDQOLQH 7KHYLUWXDOSDUDO\VLVRI3UHVLGHQW:LOVRQ¶VILQDO
ODPHGXFN\HDUDQGWKHODQJXLG5HSXEOLFDQDGPLQLVWUDWLRQVWKDWIROORZHGKDGWKHHIIHFW
RI³DFFHQWXDWLQJWKHHYHUSUHVHQWILVVLSDURXVIRUFHVLQ$PHULFDQIRUHLJQSROLF\PDNLQJ
(DFKGHSDUWPHQWRIWKH86JRYHUQPHQW6WDWH:DU&RPPHUFHDQG7UHDVXU\GHYHORSHG
LWVRZQIRUHLJQSROLFLHVVRGLGWKHRLOOREE\WKH1HZ<RUNEDQNLQJFRQIUDWHUQLW\DQG
$PHULFDQH[SRUWHUVDEURDG´ :DWWZULWHVH[WHQVLYHO\RQWKHIDFWLRQDOQDWXUHRI
$PHULFDQJRYHUQPHQWZLWK³HFRQRPLFH[SDQVLRQLVWV´FRQWUROOLQJLQWKH6WDWH
'HSDUWPHQWLVRODWLRQLVWVLQWKH7UHDVXU\'HSDUWPHQWDQG³VWUDWHJLFQDWLRQDOLVWV
HQVFRQFHGLQWKH*HQHUDO%RDUGRIWKH861DY\´ 7KHVHVWDUNGLYLVLRQVZLWKLQWKH86
JRYHUQPHQWZKLFKSHUVLVWHGDQGHYHQZRUVHQHGXQGHUWKHKLJKO\SHUVRQDOL]HGUXOHRI
)UDQNOLQ5RRVHYHOWIUDFWXUHG$QJOR$PHULFDQUHODWLRQVDQGIUHTXHQWO\OHGWRHUUDWLF
IRUHLJQSROLF\RXWSXWV$VDUHVXOW:DWWZULWHV%ULWDLQQHYHUIXOO\WUXVWHGWKH8QLWHG
'RQDOG&DPHURQ:DWW6XFFHHGLQJ-RKQ%XOO$PHULFDLQ%ULWDLQ¶V3ODFH&DPEULGJH
&DPEULGJH8QLYHUVLW\3UHVV
:DWW6XFFHHGLQJ-RKQ%XOO
:DWW6XFFHHGLQJ-RKQ%XOO7KLVUHIHUVWR:DWW¶VMXGJPHQWRI³>6HFUHWDU\RI6WDWH@+XJKHV¶VWRR
HIILFLHQWXVHRI&DQDGLDQLQIOXHQFHDWWKH'RPLQLRQV&RQIHUHQFHLQ-XQHWRWKZDUW%ULWLVKSODQVWR
UHQHZWKH$QJOR-DSDQHVHDOOLDQFH´
:DWW6XFFHHGLQJ-RKQ%XOO
:DWW6XFFHHGLQJ-RKQ%XOO
6WDWHVZKLOH$PHULFDQHYHUWUXO\GHYHORSHGDXQLILHGSROLF\UHJDUGLQJLWVUHODWLRQVKLS
ZLWK%ULWDLQEHIRUH:RUOG:DU7ZR
$VUHJDUGVWKHQDY\VSHFLILFDOO\WKHUHLVDVWURQJLPSUHVVLRQLQWKHOLWHUDWXUHWKDW
WKHLQWHUZDU861DQGLQSDUWLFXODUWKH*HQHUDO%RDUGZDVKLJKO\DQWDJRQLVWLFWRZDUGV
DUPVOLPLWDWLRQDQGWRZDUGVWKH%ULWLVKZKRWKH\EHOLHYHIRLVWHGGLVDGYDQWDJHRXVWHUPV
XSRQDQXQVXVSHFWLQJ6WDWH'HSDUWPHQW3KLOLS75RVHQVXJJHVWVWKDWZKLOHSODQQHUVKDG
PRVWO\GLVPLVVHGWKHSRVVLELOLW\RIDQ$QJOR$PHULFDQZDUE\WKHVWKHWRSEUDVVRI
WKH1DY\UHPDLQHG$QJORSKRELFDQGDYHUVHWRFRRSHUDWLRQ $VSUHYLRXVO\PHQWLRQHG
ERWK2¶&RQQRUDQG3HO]QRWHGDKLJKGHJUHHRI$QJORSKRELDDQGULJLGQHVVDPRQJWKH
XQLIRUPHGPHQRIWKH861DY\*HRUJH%DHU¶VQDUUDWLYHLQ2QH+XQGUHG<HDUVRI6HD
3RZHUSDLQWVDJHQHUDOO\IDYRUDEOHYLHZRIWKHLQWHUZDU861DVDQLQQRYDWLYHDQG
UHVRXUFHIXOLQVWLWXWLRQ1RQHWKHOHVVKHGHVFULEHVWKH861DV$QJORSKRELFDQGW\SLFDOO\
KRVWLOHWRZDUGVQDYDODUPVFRQWURO 7KHWKHPHRIELWWHUQHVVZLWKLQWKH861DWEHLQJ
UHOHJDWHGWRDSHUFHLYHG³VHFRQGSODFHÉ\WKH:DVKLQJWRQ7UHDWLHVLVDSUHYDOHQWWKHPH
LQWKHOLWHUDWXUH 7KHKLVWRULFDOFRQVHQVXVRQWKHLQWHUZDU$QJOR$PHULFDQUHODWLRQVKLSZDVWKDWLW
ZDVGLVWDQWFRRODQGODFNHGWKHVRUWRIFRRSHUDWLRQWKDWZRXOGEHH[SHFWHGEHWZHHQWZR
OLEHUDOGHPRFUDFLHVLQDQLQFUHDVLQJO\LOOLEHUDOZRUOG7KHGDWHDWZKLFKWKHUHODWLRQVKLS
EHJDQLWVHYROXWLRQWRZDUGVWKHZDUWLPH³6SHFLDO5HODWLRQVKLSÚDQJHVIURPWR
7KHWLJKWHQLQJRIWKH$QJOR$PHULFDQUHODWLRQVKLSDWWKH6HFRQG/RQGRQ1DYDO
&RQIHUHQFHLVEDGO\QHJOHFWHGLQWKHKLVWRULRJUDSK\,QFUHDVLQJFRQFHUQVRI-DSDQHVH
5RVHQ³7UHDW\1DY\´
%DHU6HD3RZHU
0LFKDHO6LPSVRQHG$QJOR$PHULFDQ1DYDO5HODWLRQV1DY\5HFRUGV6RFLHW\3XEOLFDWLRQV
YRO/RQGRQ$VKJDWH3XEOLVKLQJ
PLOLWDULVPLQWKH3DFLILFDQGHYROYLQJ$PHULFDQQDYDOVWUDWHJ\OHGSROLF\PDNHUVWRUH
HYDOXDWHWKHLUUHODWLRQVKLSZLWK%ULWDLQRYHUWKHFRXUVHRIWKHFRQIHUHQFHDQGLWV
VXUURXQGLQJQHJRWLDWLRQV7KLVWKHVLVZLOOHVWDEOLVKWKDWWKHEHJLQQLQJVRIWKH$QJOR
$PHULFDQDOOLDQFHFDQEHWUDFHGEDFNIXUWKHUWKDQWKHRIWFLWHGZDWHUVKHGGDWHRI
7KHVHFRQG/RQGRQ1DYDO&RQIHUHQFHRIIHUVDFRPSHOOLQJRSSRUWXQLW\WR
H[DPLQHWKHVHYDULRXVKLVWRULRJUDSKLFDOGHEDWHVLQDQDOOWRRRIWHQRYHUORRNHGFRQWH[W,Q
SDUWLFXODUWKLVWKHVLVZLOODLPWRIXHOWKHUHFHQWWUHQGLQEXFNLQJWKHLVRODWLRQLVW
LQWHUSUHWDWLRQRI$PHULFDLQWKHLQWHUZDUSHULRGE\H[DPLQLQJWKHUROHDQGLQWHQGHG
SXUSRVHRIWKH8QLWHG6WDWHV1DY\5HYLVLRQLVWZRUNVE\-RKQVRQDQG%UDXPRHOOHUIRFXV
PDLQO\RQUHHYDOXDWLQJWKHIDLOXUHRIWKH8QLWHG6WDWHVWRDGKHUHWRYDULRXVLQWHUQDWLRQDO
LQVWLWXWLRQVEODPLQJLWRQWKHFRPSOH[LW\RIGRPHVWLFSROLWLFVUDWKHUWKDQLQWULQVLF
LVRODWLRQLVP:KLOHWKLVLVDZHOFRPHGHYHORSPHQWLVRODWLRQLVPDOVRPXVWEHTXHVWLRQHG
DORQJWKHOLQHVRIPLOLWDU\SROLF\DVZHOO+LVWRU\KDVJHQHUDOO\UHPHPEHUHGLQWHUZDU
$PHULFDDVSDFLILVWWRWKHSRLQWRIFRPSODFHQF\EXWDQH[DPLQDWLRQRIWKH
FRQIHUHQFHZLOOVKRZWKDW86SROLF\PDNHUVWRRNDFWLYHVWHSVWRUHVXVFLWDWHWKH
:DVKLQJWRQ6\VWHPUHLQIRUFHWKHIDLOLQJOLEHUDOLQWHUQDWLRQDORUGHUDQGHQKDQFHWKH
VHFXULW\RIWKHLUKRPHODQGDQGWKHLURYHUVHDVLQWHUHVWV
$PHULFD¶VSODFHZLWKLQWKHDUPVFRQWUROIUDPHZRUNLQWKH:DVKLQJWRQ6\VWHP¶V
WZLOLJKW\HDUVZLOODOVREHH[DPLQHG7KHUHH[LVWVDJHQHUDOKLVWRULRJUDSKLFDOFRQVHQVXV
WKDWWKH:DVKLQJWRQ7UHDW\ZDVEHQHILFLDOWRWKH8QLWHG6WDWHVLQWKDWLWFKHDSO\ERXJKW
WKHQDWLRQVHFXULW\LQLWVRZQZDWHUVSDULW\ZLWKWKHJUHDWHVWQDYDOSRZHULQWKHV\VWHP
DQGQHXWUDOL]DWLRQRILWVSUHVXPHGFRPSHWLWRU-DSDQ$1DY\HTXDOWRWKHZRUOG¶VODUJHVW
JUDQWHGWKH8QLWHG6WDWHVERWKKHPLVSKHULFVHFXULW\DQGWKHSUHVWLJHWKDWFRPHVZLWK
³*UHDW3RZHU´VWDWXV$VLPLODUFRQVHQVXVDOVRH[LVWVWKDWZKLOHDUPVOLPLWDWLRQPD\
KDYHEHHQFRQGXFLYHWR$PHULFDQIRUHLJQSROLF\WKHDUPHGVHUYLFHVFKDIHGXQGHULWV
OLPLWVDQGUHVHQWHGWKHTXHOOLQJRI$PHULFD¶VSRWHQWLDOIRURXWULJKWGRPLQDQFH
7KLVFRQVHQVXVLVQRWVRFOHDUIRUWKHODWWHUGD\VRIQDYDODUPVFRQWURO,QWKH
KLVWRULRJUDSK\WKHFHQWUDODQWDJRQLVWWRWKH8QLWHG6WDWHV1DY\LQWKHVZDVQR
ORQJHUDUPVOLPLWDWLRQEXWUDWKHUGHSULYDWLRQDWWKHKDQGVRILWVRZQJRYHUQPHQW)XUWKHU
ZKLOH$PHULFDQJRDOVPD\KDYHEHHQDFKLHYHGDWWKH:DVKLQJWRQ&RQIHUHQFHWKH
PRWLYDWLRQVDQGDLPVRI86SROLF\PDNHUVDWWKHILQDODUPVFRQWUROFRQIHUHQFHKDYHQRW
EHHQVXIILFLHQWO\H[SORUHG7KLVWKHVLVZLOODUJXHWKDWHYROYLQJ$PHULFDQQDYDOVWUDWHJLHV
WUDQVIRUPHGWKH861LQWRDQXQOLNHO\VXSSRUWHURIDUPVFRQWUROLQWKHPLGVDW
WLPHVWRDJUHDWHUGHJUHHWKDQLWVFRXQWHUSDUWVLQWKH6WDWH'HSDUWPHQW1RQHWKHOHVVWKLV
WKHVLVZLOODOVRDUJXHWKDWFRQWUDU\WRWKHEHOLHIVRIKLVWRULDQVOLNH2¶&RQQRUDQG3HO]
WKH1DY\DQGWKH6WDWH'HSDUWPHQWZRUNHGUHODWLYHO\FORVHO\DQGXVXDOO\KDUPRQLRXVO\
$PHULFDQGLSORPDWVHYHQWXDOO\VDZWKHFRQIHUHQFHDVDQRSSRUWXQLW\WRHVWDEOLVKFORVHU
OLQNDJHVZLWKWKH:HVWHUQQDYDOSRZHUVLQSDUWLFXODUWKH8QLWHG.LQJGRPLQRUGHUWR
FXOWLYDWHDPRUHIDYRUDEOHVWUDWHJLFHQYLURQPHQWLQWKH3DFLILF7KHFLYLOLDQDQGPLOLWDU\
EUDQFKHVRIWKH86JRYHUQPHQWDOLJQHGRQWKLVLVVXHWRDJUHDWHUGHJUHHWKDQWKH
KLVWRULRJUDSK\DOORZV
7KH$PHULFDQDSSURDFKWRWKH1DYDO&RQIHUHQFHVLPSO\GRHVQRWILWZLWK
WKHWUDGLWLRQDOLQWHUSUHWDWLRQRILVRODWLRQLVPLQWKHLQWHUZDUSHULRG7KHFORVHGHJUHHRI
FRRSHUDWLRQZLWKWKH%ULWLVKWKURXJKRXWWKHQHJRWLDWLRQVWKHGHWHUPLQDWLRQWRSUHVHUYH
QDYDODUPVFRQWURODQGDEURDGVWUDWHJLFYLVLRQIRU$PHULFDQVHFXULW\DOOFDVWGRXEWRQ
WKHQDUURZODEHORILVRODWLRQLVP$PHULFD¶VFRPPLWPHQWWRDUPVFRQWUROWUDQVFHQGHG
PXOWLSOHSUHVLGHQWLDODGPLQLVWUDWLRQVDQGDQHZJHQHUDWLRQRIQDYDOOHDGHUV,WV
FRPPLWPHQWSURYHGGXUDEOHHYHQDVLWVJUHDWHVWFRPSHWLWRUUDWWOHGLWVVZRUGDFURVVWKH
3DFLILF7KLVWKHVLVZLOOVKHGQHZOLJKWRQWKHUHODWLRQVKLSEHWZHHQWKHLQWHUZDUIRUHLJQ
SROLF\RIWKH8QLWHG6WDWHVHYROYLQJFRQFHSWVRIQDYDOVWUDWHJ\DQGVHFXULW\DQGWKH
$QJOR$PHULFDQUHODWLRQVKLS
&+$37(5$181&(57$,1%(*,11,1*
,QWKH\HDUVIROORZLQJWKH/RQGRQ1DYDO&RQIHUHQFH$PHULFDQDWWLWXGHV
WRZDUGVDUPVFRQWUROEHJDQWRFKDQJHDORQJZLWKWKHWLPHV7KHWZRDJHQFLHVW\SLFDOO\
UHVSRQVLEOHIRUQHJRWLDWLQJDQGLPSOHPHQWLQJWKHDUPVFRQWUROWUHDWLHVWKH6WDWH
'HSDUWPHQWDQGWKH1DY\'HSDUWPHQWERWKXQGHUZHQWLQWHUQDOFKDQJHVLQ\HDUVEHWZHHQ
WKHWZR/RQGRQ&RQIHUHQFHV7KH8QLWHG6WDWHV1DYDOHVWDEOLVKPHQWZKLFKKDGEHHQ
JHQHUDOO\KRVWLOHWRZDUGVDUPVFRQWUROWKURXJKRXWWKHVDQGLQWRWKH
FRQIHUHQFHEHJDQWRFKDQJHLWVWXQH7KHRXWUDJHHYRNHGE\WKHFDQFHOODWLRQRI:LOVRQ¶V
EXLOGLQJSURJUDPVKDGODUJHO\IDGHG,WVUHIHUHQFHZDVVWLOOHQRXJKWRHYRNHELWWHUQHVVDW
$PHULFD¶VORVWPRPHQWDPRQJVHQLRU861RIILFHUVEXWE\WKHHDUO\\HDUVRIWKHV
WKHTXHVWIRUGRPLQDQFHKDGEHHQUHSODFHGGHFLGHGO\E\DVWUXJJOHWRWUHDGZDWHU7KH
FRQIHUHQFHLQ/RQGRQZDVKHOGEHIRUHWKHWUXHH[WHQWRIWKHUHFHVVLRQEHFDPH
NQRZQ$V$PHULFDHQWHUHGWKHZRUVW\HDUVRIWKH*UHDW'HSUHVVLRQWKH1DY\EHFDPH
MXVWRQHRIPDQ\JRYHUQPHQWGHSDUWPHQWVWXUQHGLQWREHJJDUVIRUGZLQGOLQJIHGHUDO
GROODUV*LYHQWKHSHUVLVWHQWO\KRVWLOHQDWXUHRIWKHLQWHUZDU5HSXEOLFDQDGPLQLVWUDWLRQV
WRZDUGVLQFUHDVLQJPLOLWDU\H[SHQGLWXUHVDQGRIWKH+RRYHUDGPLQLVWUDWLRQLQSDUWLFXODU
H[FHHGLQJWKH:DVKLQJWRQWRQQDJHFDSVZDVQRORQJHURQWKH861¶VDJHQGDLQWKHHDUO\
V6LPSO\EXLOGLQJXSWRWKHPZRXOGSURYHFKDOOHQJHHQRXJK,QWKLVVHQVH
PDLQWDLQLQJWKHUDWLRVEHFDPHDGHVLUDEOHJRDOIRUWKH861DVLWSURYLGHGDQRSSRUWXQLW\
WROLPLWWKHQDYDOFRQVWUXFWLRQRIQDWLRQVPRUHHDJHUWRSURYLGHODUJHPLOLWDU\RXWOD\V
7KH861DOVRH[SHULHQFHGDFKDQJHLQDWWLWXGHDPRQJLWVVHQLRUPRVWEUDVV,Q
6HSWHPEHU:LOOLDP93UDWWEHFDPHWKH&KLHIRI1DYDO2SHUDWLRQVWKHKLJKHVW
XQLIRUPHGSRVLWLRQZLWKLQWKH8613UDWWZDVDQRXWVSRNHQVXSSRUWHURIWKH:DVKLQJWRQ
7UHDW\VLQFHWKHHDUO\VDQGKDGDVVXPHGWKHUROHRIFKLHIWHFKQLFDODGYLVRUWRWKH
$PHULFDQGHOHJDWLRQDWWKH/RQGRQ&RQIHUHQFHLQZKLFKFDSDFLW\KHKHOSHGWRVPRRWK
RXWFUXLVHUGLIIHUHQFHVZLWKWKH%ULWLVK 3UDWWKDGWDNHQDJUHDWGHDORIKHDWIURPWKH
*HQHUDO%RDUGRIWKH861DY\DQGIURPPDQ\QDYDOOLQHRIILFHUV7KH%RDUGDQGPDQ\
RWKHUVZLWKLQWKH1DY\'HSDUWPHQWKDGSXEOLFO\FULWLFL]HGWKHWUHDW\IRUVHUYLQJ%ULWDLQ¶V
LQWHUHVWVEHWWHUWKDQ$PHULFD¶VDQGWKH\SRLQWHGWKHILQJHUVTXDUHO\DW3UDWWIRUWKH
IDLOXUH $GPLUDO&KDUOHV)+XJKHV3UDWW¶VSUHGHFHVVRUDV&12UHIXVHGWRVKDNH
3UDWW¶VKDQGDWWKHFKDQJHRIFRPPDQGFHUHPRQ\ +RVWLOLW\WRQDYDODUPVOLPLWDWLRQ
ZDVFHUWDLQO\VWLOOVWURQJXSXQWLOWKHFRQIHUHQFH
<HW3UDWW¶VDVVXPSWLRQRIWKH1DY\¶VKLJKHVWXQLIRUPHGRIILFHFRLQFLGHGZLWKWKH
1DY\¶VEOHDNHVW\HDUVVLQFHEHIRUH:RUOG:DU2QH$OWKRXJKKHZDVSURWUHDW\KHZDV
DOVRDSHUVLVWHQWYRLFHIRUPRUHIXQGVIRUWKH1DY\$V&12KHEHFDPHLQVWUXPHQWDOLQ
VWHHULQJ8QLWHG6WDWHV1DYDOSROLF\WRZDUGVWKHFRQVWUXFWLRQDQGPDLQWHQDQFHRIDIXOO
WUHDW\1DY\LQDOOFDWHJRULHV$V5REHUW2¶&RQQRUKDVZULWWHQWKH/RQGRQ7UHDW\DWOHDVW
JDYHWKH1DY\DJRDOWREXLOGWRZDUGVDVRSSRVHGWRDQRSHQHQGHGFRPSHWLWLRQZLWK
%ULWDLQDQG-DSDQ 3UHVHUYLQJWKHTXDQWLWDWLYHOLPLWDWLRQVRQQDYDOWRQQDJHZRXOGEX\
WKH861WKHWLPHLWQHHGHGWRDFKLHYHIXOOWUHDW\VWUHQJWKGHHPHGUHTXLVLWHIRUEDVHOLQH
QDWLRQDOVHFXULW\*LYHQWKHH[SHFWHGEXGJHWDU\GURXJKWRFFDVLRQHGE\WKH'HSUHVVLRQ
WKH861ZDVFOHDUO\LQQHHGRIWLPHZKHQLWFDPHWRQDYDOFRQVWUXFWLRQ3UDWW¶VSUR
WUHDW\LQIOXHQFHZKLFKZDVH[WHQGHGGXULQJKLVQH[WWZRVXFFHVVRUV¶UHLJQVFRPELQHG
0DXUHUDQG%HOO7KH/RQGRQ&RQIHUHQFHRI
-RKQ7.XHKQ³7KH861DY\*HQHUDO%RDUGDQG1DYDO$UPV/LPLWDWLRQ´7KH-RXUQDORI
0LOLWDU\+LVWRU\
,ELG
2¶&RQQRU3HULORXV(TXLOLEULXP
ZLWKWKHEHOWWLJKWHQLQJ\HDUVRIWKH*UHDW'HSUHVVLRQWUDQVIRUPHGWKH861¶VDWWLWXGH
WRZDUGVDUPVFRQWUROIURPJHQHUDOKRVWLOLW\WRUHOXFWDQWVXSSRUW
7KH6WDWH'HSDUWPHQWRQWKHRWKHUKDQGKDGEHHQWKHJUHDWFKDPSLRQRIQDYDO
DUPVFRQWUROVLQFHLWVLQFHSWLRQ6HFUHWDU\RI6WDWH&KDUOHV(YDQV+XJKHVKDGSOD\HGD
SLYRWDOUROHLQHVWDEOLVKLQJWKH:DVKLQJWRQ6\VWHPLQDQGVLQFHWKDWGDWHWKH6WDWH
'HSDUWPHQWKDGWRXWHGWKHWUHDW\DV$PHULFD¶VJUHDWHVWFRQWULEXWLRQWRZRUOGSHDFH$W
WKH/RQGRQ&RQIHUHQFH6HFUHWDU\RI6WDWH+HQU\6WLPVRQFDUULHGWKLVWRUFKDVD
GHOHJDWHDQGZRUNHGKDUGWRUHDFKDFRPSURPLVHZLWKWKH%ULWLVKRQWKHLUQDYDO
GLIIHUHQFHV6WLPVRQZDVDSSDOOHGE\WKHEUHDNLQ$QJOR$PHULFDQUHODWLRQVRFFDVLRQHG
E\WKHGLVDVWURXV*HQHYD&RQIHUHQFHDQGIRXJKWWRJHWWKH861LQOLQHZLWKWKH
FRQFHVVLRQVQHFHVVDU\WRVROYHWKHFUXLVHULVVXH +HZDVQRIULHQGWRDODUJH1DY\
EHOLHYLQJLWWREHDSROLWLFDOOLDELOLW\LQERWKGRPHVWLFDQGLQWHUQDWLRQDOWHUPV 6WLPVRQ
EHOLHYHGWKH1DY\WREHXQQHFHVVDULO\ODUJHIRUWKHSXUSRVHVRI$PHULFDQGHIHQVHDQG
ZDVWKHUHIRUHZLOOLQJWRXVHLWDVDEDUJDLQLQJFKLSWRUHSDLUGDPDJHGUHODWLRQVKLSVZLWK
%ULWDLQDQG-DSDQDQGVROLGLI\$PHULFD¶VUROHDVSHDFHNHHSHUE\H[DPSOH
VDZDFKDQJHLQ86DGPLQLVWUDWLRQVDQGQHZO\HOHFWHG)UDQNOLQ'
5RRVHYHOWVHOHFWHG&RUGHOO+XOODVKLV6HFUHWDU\RI6WDWH+XOOZDVDZHOONQRZQ
LQWHUQDWLRQDOLVWEXWKLVSDVVLRQOD\ZLWKORZHULQJHFRQRPLFEDUULHUVUDWKHUWKDQVROYLQJ
VHFXULW\LVVXHV+HFDOOHGIRUZRUOGUHFRYHU\E\PHDQVRI³HFRQRPLFGLVDUPDPHQWÉXW
KDGOLWWOHWRVD\UHJDUGLQJQDYDOGLVDUPDPHQW 7KHUHZDVHYHU\UHDVRQWREHOLHYHWKDW
+XOOZRXOGWRHKLV'HSDUWPHQW¶VKLVWRULFOLQHDQGFRQWLQXHWRILJKWIRUDUPVFRQWURO
2¶&RQQRU3HULORXV(TXLOLEULXP
/H3RUH1DYDO'LVDUPDPHQW
'DOOHN5RRVHYHOW
,WDSSHDUHGLQWKH\HDUVSUHFHGLQJWKHFRQIHUHQFHWKDWWKHHYROYLQJYLHZVRI
WKH1DY\EURXJKWWKHWZR'HSDUWPHQWVSULQFLSDOO\LQYROYHGLQDUPVFRQWUROFORVHUWKDQ
HYHU,QGHHGDORQJWKHEXPS\URDGDKHDGWKH1DY\'HSDUWPHQWDQGHYHQWKH*HQHUDO
%RDUGZRXOGDWWLPHVH[FHHGWKH6WDWH'HSDUWPHQWLQWKHLUFRPPLWPHQWWRWKH
:DVKLQJWRQUDWLRV,QDQ\HYHQWWKHWZR'HSDUWPHQWVUHPDLQHGLQFORVHFRQWDFWDQG
FRRUGLQDWHGSROLF\WKURXJKRXWWKHFRQIHUHQFHDQGWKH\HDUVVXUURXQGLQJLWKDUPRQL]LQJ
WKHLUYLHZVWRDIDUJUHDWHUH[WHQWWKDQWKHSUHFHGLQJWKUHHFRQIHUHQFHV%RWKDJHQFLHV
ZHUHFRPPLWWHGWRWKHPDLQWHQDQFHRISDULW\ZLWKWKH8QLWHG.LQJGRPDQGERWKVDZ
YDOXHLQOLPLWDWLRQ+LVWRULDQVKDYHJHQHUDOO\HPSKDVL]HGWKHGLVFRQQHFWEHWZHHQWKHWZR
DJHQFLHVGXULQJWKH:DVKLQJWRQ&RQIHUHQFHDQGWKHIROORZLQJGHFDGHEXWKDYH
QHJOHFWHGWKHLUFRRSHUDWLRQLQWKHPLGVGXHWRDJHQHUDOGLVPLVVDORIWKHVHFRQG
/RQGRQ1DYDO&RQIHUHQFH7KLVWKHVLVZLOOVKRZDWUHQGWRZDUGVJUHDWHULQWHUDJHQF\
FRRSHUDWLRQDQGGHSDUWXUHIURPWKH861¶VWUDGLWLRQDOKRVWLOLW\WRZDUGVDUPVFRQWURO
7KH\HDUVEHWZHHQWKHWZR/RQGRQ&RQIHUHQFHVZHUHPDUUHGE\QXPHURXV
GLVWXUEDQFHVWKDWJUHDWO\XSVHWWKHJHQHUDOLQWHUQDWLRQDOVLWXDWLRQ7KHRQVHWRIWKH*UHDW
'HSUHVVLRQWKH-DSDQHVHDQQH[DWLRQRI0DQFKXULDWKHDFFHVVLRQRI+LWOHUDQGWKH1D]L
3DUW\LQ*HUPDQ\DQGWKH,WDOLDQLQYDVLRQRI$E\VVLQLDDOORFFXUUHGLQWKH\HDUVWKDW
LPPHGLDWHO\IROORZHGWKHVLJQDWXUHRIWKH/RQGRQ7UHDW\7KHYHU\FRQFHSWDQG
SKLORVRSK\RIDUPVFRQWUROZDVDOVREDGO\ZHDNHQHG7KH/17KDGLQVSLUHGDVHULHVRI
DVVDVVLQDWLRQVLQ-DSDQDQGKDGJUHDWO\VWUHQJWKHQHGWKH)OHHW)DFWLRQ7KH)OHHW)DFWLRQ
ZDVDQXQRIILFLDORUJDQL]DWLRQFRPSRVHGRIRIILFHUVRIWKH,-1DVZHOODVWKHLUSROLWLFDO
DOOLHVWKDWRSSRVHGWKHDUPVFRQWUROWUHDWLHV7KH\KDGEHHQDSURPLQHQWIRUFHZLWKLQ
-DSDQHVHSROLWLFVVLQFHWKH:DVKLQJWRQ&RQIHUHQFHEXWZLWKWKHPLOLWDULVWXSZHOOLQJLQ
WKHHDUO\VWKH\EHFDPHLQFUHDVLQJO\GRPLQDQWDQGVWULGHQWLQWKHLUGHPDQGVIRU
DEURJDWLRQRIWKH:DVKLQJWRQ7UHDW\6RPHSURPLQHQWPHPEHUVRIWKH)OHHW)DFWLRQ
HYHQFRQWHQGHGWKDWDVDUHVXOWRIWKH'HSUHVVLRQLQWKH:HVWDQGWKHUHVRXUFHVIORZLQJLQ
IURPQHZO\FRQTXHUHG0DQFKXULDWKDW-DSDQFRXOGZLQDQDYDODUPVUDFH 7KXVGHVSLWHWKHFKDQJHVDIRRWZLWKLQWKH8QLWHG6WDWHVWKHJHQHUDOSURVSHFWVIRU
DUPVFRQWUROLQWKHPLGVZHUHGLVPDO$WLPHRILQWHUQDWLRQDOGLVWXUEDQFHZDVD
SRRUWLPHWRVHHNOLPLWDWLRQVRQVHFXULW\7KHLVVXHVSHFXOLDUWRQDYDODUPVFRQWURODOVR
DSSHDUHGWRZRUNDJDLQVWWKHSRVVLELOLW\RILQWHUQDWLRQDODJUHHPHQWLQ7KHWZR
JUHDWHVWDQLPDWLQJIRUFHVIRUQDYDOOLPLWDWLRQLQWKH\HDUVEHWZHHQWKHWZRFRQIHUHQFHV
ZHUHWKH-DSDQHVHSXVKIRUSDULW\DQGWKHEHODWHGH[SDQVLRQRIWKH$PHULFDQIOHHW7KH
IRUPHUVLJQLILHGDWKUHDWWRWKHH[LVWHQFHRIWKH:DVKLQJWRQV\VWHPWKHODWWHUVLJQLILHGD
VXEVWDQWLDOUHFRPPLWPHQWWRWKDWYHU\V\VWHP7KHFRQIOLFWEHWZHHQWKHVHWZRSROLFLHV
ZRXOGGHWHUPLQHWKHVKDSHDQGRXWFRPHRIWKHFRQIHUHQFH
7KH:RUOG'LVDUPDPHQW&RQIHUHQFHLQ*HQHYDFRQYHQHGLQ)HEUXDU\ZDV
DQHIIRUWE\WKHPHPEHUVRIWKH/HDJXHRI1DWLRQVDWFRPSUHKHQVLYHDUPVOLPLWDWLRQWKDW
WKHWUHDW\RI9HUVDLOOHVKDGIDLOHGWRDFKLHYH:KLOHWKHFRQIHUHQFHZDVODUJHO\GLUHFWHGDW
OLPLWLQJDUPDPHQWVRQWKHODQGDQGLQWKHDLUQDYDOOLPLWDWLRQZDVDOVRGLVFXVVHG7KH
-DSDQHVHZKRUHPDLQHGPHPEHUVRIWKH/HDJXHXQWLOWKHIROORZLQJ\HDUIRUPDOO\
DGYDQFHGWKHLUSURSRVDOIRUQDYDOOLPLWDWLRQLQ'HFHPEHU6HL]LQJXSRQWKHZLGHO\
KHOGGHVLUHDPRQJ(XURSHDQSXEOLFRSLQLRQWROLPLWZHDSRQVRISULPDULO\³RIIHQVLYH´
YDOXHWKH-DSDQHVHVXJJHVWHGWKDWQDYDOYHVVHOVRXJKWWREHFDWHJRUL]HGDVHLWKHU
RIIHQVLYHRUGHIHQVLYHLQQDWXUH7KH-DSDQHVHGHOHJDWLRQDUJXHGWKDWWKHODUJHVWYHVVHOV
QDPHO\EDWWOHVKLSVDLUFUDIWFDUULHUVDQGKHDY\FUXLVHUVFRQVWLWXWHG³IRUFHVZKLFKDUH
3HO]5DFHWR3HDUO+DUERU
DJJUHVVLYHLQFKDUDFWHUDQGVWURQJLQRIIHQVLYHSRZHU´GXHWRWKHLUORQJFUXLVLQJUDGLL
DQGSRZHUIXODUPDPHQWV 8QGHUWKH-DSDQHVHSODQWKHVH³RIIHQVLYHÝHVVHOVZRXOGEH
JUHDWO\UHGXFHGERWKTXDQWLWDWLYHO\DQGTXDOLWDWLYHO\LQRUGHUWROLPLWWKHLUSRWHQWLDOIRU
DJJUHVVLRQ9HVVHOVZKLFKWKH-DSDQHVHGHOHJDWLRQGHHPHG³GHIHQVLYH´QDPHO\
VXEPDULQHVGHVWUR\HUVDQGOLJKWFUXLVHUVZHUHWREHJLYHQ³PD[LPXPWRQQDJHVXQLIRUP
WRWKHILYHQDYDO3RZHUV´PHDQLQJWKHRULJLQDOILYHVLJQDWRULHVWRWKH:DVKLQJWRQ1DYDO
7UHDW\LQ 7KHSURSRVDOSUHHPSWLYHO\DGGUHVVHG%ULWLVKFRQFHUQVDERXWWKH
VXEPDULQHE\VWDWLQJWKDW³VXEPDULQHVDVZDVUHFRJQL]HGE\DODUJHPDMRULW\RIWKH
PHPEHUVRIWKH1DYDO&RPPLVVLRQDUHRIDGHIHQVLYHDQGQRWRIIHQVLYHFKDUDFWHU´$W
WKHVDPHWLPHWKH-DSDQHVHDSSHDOHGWRWKH)UHQFKDGKHUHQFHWRDODUJHVXEPDULQHIOHHW
DQGWKHUHE\ZLGHQHGWKH$QJOR)UHQFKULIWWKDWKDGRSHQHGDWWKH/RQGRQ1DYDO
&RQIHUHQFHLQVD\LQJWKDW³>VXEPDULQHV@DUHLQGLVSHQVDEOHIRUWKHGHIHQVHRID
OHVVHUQDYDOSRZHU´ 7KH-DSDQHVHSURSRVDOZDVDQH[FHOOHQWZD\WRIUDPHWKHQDYDOGHEDWHWKDWZDV
VXUHWREHZDJHGDWWKH*HQHYD&RQIHUHQFHDQGDWWKHQH[WQDYDOFRQIHUHQFHWKDWZDV
VFKHGXOHGEHIRUHWKH/RQGRQ7UHDW\H[SLUHGLQ7KHSURSRVDOVNLOOIXOO\DOOLHGLWVHOI
ZLWKDUPVOLPLWDWLRQHQWKXVLDVWVZLWKLWVSURPLVHRIOLPLWLQJWKHWRROVRIDJJUHVVLRQDQG
LWVFRPPLWPHQWWR³DQHQRUPRXVUHGXFWLRQLQH[SHQGLWXUHVRQDUPDPHQWWKDWQRZZHLJK
KHDYLO\XSRQWKHSHRSOHVRIWKHZRUOG´ 7KHSURSRVDODOVRDOLJQHG-DSDQHVHLQWHUHVWV
ZLWKWKRVHRIWKHMXQLRUVLJQDWRULHVRIWKH:DVKLQJWRQ7UHDW\,WDO\DQG)UDQFHE\
SOHGJLQJWKHULJKWRIDOOILYHSRZHUVWRDFRPPRQWRQQDJHOLPLWDQGE\FKDPSLRQLQJWKH
)RUHLJQ5HODWLRQVRIWKH8QLWHG6WDWHV+HUHDIWHU)586,'DYLVWR+XOO'HF
,ELG
,ELG
,ELG
GHIHQVLYHXVHIXOQHVVRIWKHVXEPDULQH7KHSURSRVDOFOHDUO\SOD\HGWR-DSDQHVHLQWHUHVWV
DVLWZRXOGJUHDWO\OLPLWWKHYHVVHOVZKLFKWKH8QLWHG6WDWHVDQG*UHDW%ULWDLQKHOGD
GHFLGHGDGYDQWDJHLQZKLOHJUDQWLQJWKHPWKHULJKWWREXLOGWRHTXDOWRQQDJHLQVPDOOHU
OHVVH[SHQVLYHFUDIW
7KH-DSDQHVHSURVFULSWLRQIRUQDYDODUPVFRQWURODWWKH*HQHYD&RQIHUHQFHZDVD
GHOLFDWHSKUDVLQJE\WKH-DSDQHVH)RUHLJQ2IILFHRIDQLQFUHDVLQJO\KDUGOLQHWDNHQE\WKH
1DY\DQGWKHLUFLYLOLDQVXSSRUWHUV)ROORZLQJWKHVLJQLQJRIWKH/RQGRQ1DYDO7UHDW\LQ
WKHMXQLRUQDYDORIILFHUFRUSVRUJDQL]HGDVSDWHRIDVVDVVLQDWLRQVWDUJHWLQJSUR
WUHDW\SROLWLFLDQVDFURVV-DSDQ 7KLVFXOPLQDWHGLQWKH0D\DVVDVVLQDWLRQRI
WKH-DSDQHVH3ULPH0LQLVWHU,QXNDL7VX\RVKLZKRZDVYLHZHGE\QDYDOH[WUHPLVWVDV
EHLQJIDUWRRFRQFLOLDWRU\ZLWKWKH:HVWHUQSRZHUV 7KHHOHYHQMXQLRURIILFHUVZKR
PXUGHUHG7VX\RVKLZHUHRSHQO\GHIHQGHGE\WKH1DY\0LQLVWHUZKRVDLGWKDW³ZKHQZH
FRQVLGHUZKDWFDXVHGWKHVHSXUHKHDUWHG\RXWKVWRPDNHWKLVPLVWDNHUHYHUHQWUHIOHFWLRQ
LVSURSHU´ 0HDQZKLOHWKH-DSDQHVHFRQVROLGDWHGWKHLUKROGRYHU0DQFKXULDIROORZLQJ
WKHLULQWHUQDWLRQDOO\FHQVXUHGDQQH[DWLRQRIWKH&KLQHVHWHUULWRU\LQ7VX\RVKL¶V
VXFFHVVRU6DLWR0DNRWRUHFRJQL]HGWKHLQGHSHQGHQFHRIWKHSXSSHWVWDWH0DQFKXNXRLQ
DQGVRRQDIWHUZDUG-DSDQZRXOGZLWKGUDZIURPWKH/HDJXHRI1DWLRQV %H\RQG
WKHLUQHZUHVSRQVLELOLWLHVRQWKHPDLQODQGWKH-DSDQHVHPLOLWDU\HVWDEOLVKPHQWDOVRFDVWD
ZDU\H\HDWWKHUDSLGO\LQGXVWULDOL]LQJ6RYLHW8QLRQDQGWKHDWWHQGDQWLQFUHDVHLQWKHLU
PLOLWDU\VWUHQJWK 7KXVE\DFRPELQDWLRQRISUHVVXUHVERWKGRPHVWLFDQGH[WHUQDOWKH
-DSDQHVH1DY\ZDVFRPSHOOHGWRVHHNDVWURQJHUKDQGYLVjYLVWKHVWDWXVTXRSRZHUVLQ
+DOO$UPV&RQWURO
3HO]5DFHWR3HDUO+DUERU
,ELG
6DQGUD:LOVRQ7KH0DQFKXULDQ&ULVLVDQG-DSDQHVH6RFLHW\/RQGRQ5RXWOHGJH
0DXUHUDQG%HOO7KH/RQGRQ&RQIHUHQFHRI
WKH3DFLILF7KLVUDGLFDOUHLPDJLQLQJRIWKH:DVKLQJWRQ7UHDW\ZRXOGGRJ$QJOR
$PHULFDQQDYDOHVWDEOLVKPHQWVIRUWKHQH[WWKUHH\HDUV
7KHRWKHUPDMRUIDFWRUWKDWZRXOGVKDSHWKH6HFRQG/RQGRQ1DYDO&RQIHUHQFH
FDPHIURPWKH8QLWHG6WDWHV7KH8QLWHG6WDWHVIRXQGLWVHOILQDSHUSHWXDOO\SRRU
QHJRWLDWLQJSRVLWLRQDIWHUWKH:DVKLQJWRQ&RQIHUHQFHLQWKHHDUO\VDVLWIDLOHGWR
NHHSSDFHZLWKWKHRWKHUQDYDOSRZHUV¶EXLOGLQJSURJUDPV 7KH5HSXEOLFDQ
DGPLQLVWUDWLRQVRIWKHVZKLOHQRWTXLWHDVSHQXULRXVWRZDUGVWKH1DY\DVWKH
KLVWRULRJUDSK\RIWHQVXJJHVWVSURYLGHGOLWWOHLQWKHZD\RIDSSURSULDWLRQVIRUQHZ
FRQVWUXFWLRQ%HWZHHQDQGWKH8QLWHG6WDWHVODLGGRZQVKLSVWRWDOOLQJ
DSSUR[LPDWHO\WRQVRIQDYDOFRQVWUXFWLRQ,QWKHVDPHVSDQRIWLPHWKH8QLWHG
.LQJGRPKDGODLGGRZQWRQVDQGWKH-DSDQHVHWRQV 1HDUO\DOOWKLV
WRQQDJHFDPHLQWKHIRUPRIDX[LOLDU\YHVVHOVLQSDUWLFXODUFUXLVHUVDFDWHJRU\LQZKLFK
WKH8QLWHG6WDWHV1DY\ODJJHGEDGO\EHKLQGLWVFRPSHWLWRUV7KLVGHILFLWKDGGLUHSROLWLFDO
FRQVHTXHQFHV7KHQHJRWLDWLRQVKDGQHDUO\IDOOHQDSDUWRYHUWKHLQVLVWHQFHRIWKH
$PHULFDQGHOHJDWHVWRH[WHQGWKH:DVKLQJWRQUDWLRVWRDX[LOLDULHVLQDGGLWLRQWRFDSLWDO
VKLSVHYHQWKRXJKWKH-DSDQHVHKDGDWRQHGJHRQWKH8QLWHG6WDWHV1DY\LQ
FUXLVHUFRQVWUXFWLRQ 7KH-DSDQHVHZHUHIRUFHGWRKDOWWKHLUFUXLVHUFRQVWUXFWLRQWR
DOORZWKH$PHULFDQVWRFDWFKXSDQGSUHVXPDEO\HYHQWXDOO\RYHUWDNHWKHP 1HJRWLDWLQJIURPDGHILFLWZDVDQHDUO\GLVDVWURXVSROLF\IRUWKHGHOHJDWLRQLQDQG
1$5*ER[1DYDO:DU&ROOHJH6WXG\³:KDW:LOOEHWKH)DWHRIWKH5DWLRLQÉ\
/LHXWHQDQW&RPPDQGHU'30RRQ-XO\SJ
,ELG
1$5*%R[*HQHUDO%RDUGPHPRRQFRQYHUVLRQRI+DZNLQVFODVVFUXLVHUVE\*UHDW%ULWDLQ
HQFORVHGHVWLPDWHRIFUXLVHUWRQQDJHVVLQFH$XJXVW
3HO]5DFHWR3HDUO+DUERU
JLYHQWKHGRPHVWLFUHDFWLRQWRWKHWUHDW\LQ-DSDQWKH$PHULFDQVZHUHXQOLNHO\WREHDEOH
WRSXOORIIWKHVDPHWULFNWZLFH
8QIRUWXQDWHO\DQ\KRSHWKDW3UHVLGHQW+RRYHUPLJKWIROORZWKURXJKRQWKH
QHFHVVDU\FRQVWUXFWLRQLPSOLFLWLQWKHUDWLILFDWLRQRIWKH/17ZDVGDVKHGDVWKH*UHDW
'HSUHVVLRQZRUVHQHGDQGUDYDJHGWKHILQDQFHVRIWKH$PHULFDQJRYHUQPHQW+RRYHU
ZDVLQDQ\HYHQWDGLHKDUGSDFLILVWZKRKDGDQHQGXULQJPLVWUXVWRIDSHUPDQHQW
PLOLWDU\HVWDEOLVKPHQW+HZDVFRPPLWWHGWRGLVDUPDPHQWDQGIHOWWKDWWKHZKROHEDVLVRI
WKHQDYDODUPVOLPLWDWLRQWUHDWLHVZDVZURQJKHDGHG:ULWLQJWR6HFUHWDU\RI6WDWH+HQU\
6WLPVRQMXVWEHIRUHWKH/1&+RRYHUH[SUHVVHGKLVRZQIHHOLQJDQGWKHIHHOLQJRIDJUHDW
SRUWLRQRI$PHULFDQVVD\LQJ³ZHVKDOOEHWZHHQXVKDYHLPSRVHGXSRQRXUVHOYHVVD\
WRQVRIQHZZDUVKLSVDWDQH[SHQVHRIVD\DWRQDWRWDOH[SHQGLWXUHRI
RYHUVRPHSDUWRIZKLFKDWOHDVWZRXOGEHPXFKEHWWHULQYHVWHGLQZRUNV
FRQWULEXWLQJWRUHDOKXPDQZHOIDUH«LQWKHVDPHEUHDWKZHDUHSURPLVLQJWKHZRUOGWKDW
DWWKDWGDWH>@ZHVKDOOXVHRXUEHVWHQGHDYRUVWRVLQNDFRQVLGHUDEOHSRUWLRQRIWKHVH
IOHHWV$OOWKLVLVLOORJLFDODQGLVWKHVLPSOHQHJDWLRQRIRXURZQDVSLUDWLRQVDQG,EHOLHYH
DOVRRISXEOLFRSLQLRQRQERWKVLGHVRIWKH$WODQWLF´ :KHQWKHIXOOHIIHFWVRIWKH
'HSUHVVLRQEHJDQWRUHYHUEHUDWHDFURVV$PHULFDLQ+RRYHUFHUWDLQO\VDZWKH
HQRUPRXVH[SHQVHDVVXSHUIOXRXV:KLOH+RRYHUDOORZHGDQ\FRQVWUXFWLRQWKDWKDG
DOUHDG\EHJXQXQGHU3UHVLGHQW&RROLGJH¶V³FUXLVHUELOO´WREHFRPSOHWHG+RRYHU
FDQFHOOHGWKHUHPDLQLQJVL[FUXLVHUVVWLOOXQEXLOWDQGZDUQHGWKH1DY\WKDWLWVEXGJHW
ZRXOGEHVODVKHGEHORZVOHYHOV $VWD[DQGFXVWRPVUHFHLSWVSOXPPHWHGDQGWKH
*UHJ.HQQHG\³'HSUHVVLRQDQG6HFXULW\$VSHFWV,QIOXHQFLQJWKH8QLWHG6WDWHV1DY\GXULQJWKH
+RRYHU$GPLQLVWUDWLRQ´'LSORPDF\DQG6WDWHFUDIW
5REHUW+/HYLQH7KH3ROLWLFVRI$PHULFDQ1DYDO5HDUPDPHQW1HZ<RUN*DUODQG
3XEOLVKLQJ,QF
WUHDVXU\EOHGGROODUV+RRYHUSULRULWL]HGGZLQGOLQJIHGHUDOIXQGVWRODUJHVFDOHSXEOLF
ZRUNVDQGUHOLHIHIIRUWVIRUGURXJKWZRUVHQHGUXUDODUHDV 6LQFHD8QLWHG6WDWHV
3UHVLGHQWVXEPLWVDEXGJHWIRUWKH\HDULQZKLFKKHOHDYHVRIILFHWKH8QLWHG6WDWHV1DY\
KDGQRKRSHIRUDQLQFUHDVHLQFRQVWUXFWLRQXQWLODWOHDVWWKHILVFDO\HDU'XHWRWKH
ORQJDQGDUGXRXVSURFHVVRIREWDLQLQJDSSURSULDWLRQVIURP&RQJUHVVHVSHFLDOO\PLOLWDU\
DSSURSULDWLRQVIURPDGHFLGHGO\QRQLQWHUYHQWLRQLVW&RQJUHVVDQGGXHWRWKHWLPH
FRQVXPLQJQDWXUHRIQDYDOFRQVWUXFWLRQLWVHOIWKH8QLWHG6WDWHVZDVVXUHWREH
QHJRWLDWLQJIURPDGHILFLWRQFHDJDLQLQ
7KHDUULYDORI)UDQNOLQ'HODQR5RRVHYHOWWRWKH:KLWH+RXVHLQ0DUFK
ZRXOGGUDVWLFDOO\DOWHUWKHIRUWXQHVRIWKH8QLWHG6WDWHV1DY\WKDWKDGIDOOHQWRDQHZ
DXVWHULW\ULGGHQORZ)RUPHUO\WKH$VVLVWDQW6HFUHWDU\RIWKH1DY\GXULQJ:RUOG:DU
2QHDQGFRXVLQWRWKHIDWKHURIWKHPRGHUQ8617HGG\5RRVHYHOW)'5SUHVHQWHGD
YLDEOHRSSRUWXQLW\IRUWKH1DY\WRDWODVWJHWWKHIXQGVLWQHHGHGWRUHDFKWUHDW\OHYHOV
:DUQLQJVIURPWKH1DY\'HSDUWPHQWUHDFKHGDIHYHUSLWFKVKRUWO\DIWHU5RRVHYHOW
DVVXPHGWKH3UHVLGHQF\OLNHO\ZLWKWKHLQWHQWLRQRIPDNLQJDQLPSUHVVLRQRQWKHIRUPHU
$VVLVWDQW6HFUHWDU\RIWKH1DY\,QD0D\PHPRUDQGXPWKH*HQHUDO%RDUGUHSRUWHG
WKDW³DYLWDOPLOLWDU\FRQVLGHUDWLRQRIQDYDOSROLF\LVWKHUHODWLYHVWUHQJWKDWZKLFKWKH
1DY\LVPDLQWDLQHGZLWKUHVSHFWWRRWKHUOHDGLQJQDYLHVRIWKHZRUOG«WKHSUHVHQW
UHODWLYHLQIHULRULW\RIWKH$PHULFDQ1DY\LVVRJUHDWDQGWKHSURWHFWLRQRIRXUQDWLRQDO
LQWHUHVWVLVVRVHULRXVO\MHRSDUGL]HGDVWREHSURYRFDWLYHRIDQDWLRQDOHPHUJHQF\IUDXJKW
ZLWKWKHJUDYHVWFRQVHTXHQFHVWRWKLVQDWLRQ´ 7KH%RDUGZDUQHGWKDWZRUOGFRQGLWLRQV
KDGGHWHULRUDWHGFRQVLGHUDEO\VLQFHDQGWKDWWKHUHIRUH³WKHFRPPHQFHPHQWRID
.HQQHG\³'HSUHVVLRQDQG6HFXULW\´
1$5*%R[*HQHUDO%RDUG6HULDO1R0D\
ODUJHEXLOGLQJSURJUDPLVQHFHVVDU\WRFRUUHFWWKH8QLWHG6WDWHVQDYDOLQIHULRULW\´ 7KH
GLVDUPDPHQWFRQIHUHQFHLQ*HQHYDZDVMXGJHGWREHDIXWLOHDIIDLUDQGQDYDOSODQQHUV
ZDUQHGRIWKHOLNHOLKRRGWKDW$PHULFD¶VQDYDOULYDOVZRXOGFRQWLQXHWREXLOGDWWKHLU
SUHVHQWRUHYHQDFFHOHUDWHGUDWHV$VZRXOGEHH[SHFWHGWKH%RDUGIUHTXHQWO\
UHFRPPHQGHGODUJHEXLOGLQJSURJUDPVWKDWZHOOH[FHHGHGWKHDYDLODEOHIXQGV ,QVSLWHRI)'5¶VFDPSDLJQSURPLVHVWREDODQFHWKHIHGHUDOEXGJHWDQGWR
DJJUHVVLYHO\SXUVXHDUPVFRQWUROWKHQHZ3UHVLGHQWLPPHGLDWHO\SURYHGDPHQDEOHWR
LQFUHDVHGQDYDOFRQVWUXFWLRQ 7KHQDYDOLVWV¶FKLHIDOO\LQ&RQJUHVV&KDLUPDQRIWKH
+RXVH1DYDO$IIDLUV&RPPLWWHH&DUO9LQVRQKDGSURSRVHGLQDODZWKDWZRXOG
PDQGDWHWKH8QLWHG6WDWHVWRUHDFKLWVPD[LPXPWUHDW\WRQQDJHDOORWPHQWE\
9LQVRQ¶VODZKDGODQJXLVKHGLQ&RQJUHVVXQGHUWKHXQIULHQGO\+RRYHU3UHVLGHQF\EXW
5RRVHYHOWSURYHGPXFKPRUHUHFHSWLYH7KH1DY\KDGDUJXHGIRUWKHSUHYLRXVWKUHH
\HDUVWKDWLQFUHDVHGQDYDOFRQVWUXFWLRQZDVGRXEO\EHQHILFLDOIRUWKH8QLWHG6WDWHVIRULW
VLPXOWDQHRXVO\LQFUHDVHG$PHULFDQVHFXULW\DQGSURYLGHGPXFKQHHGHGHPSOR\PHQWLQ
WKHJUHDWGRZQWXUQ,QQXPHURXVUHSRUWVDQGPHPRUDQGDWRWKH3UHVLGHQWWKH*HQHUDO
%RDUGDQGRWKHUQDYDORIILFLDOVZRXOGSRLQWWRWKHRIWFLWHGVWDWLVWLFWKDWSHUFHQWRI
VKLSEXLOGLQJFRVWVZHQWWRODERU &12:LOOLDP+6WDQGOH\PDGHWKHVDPHDUJXPHQW
LQQXPHURXVVSHHFKHVVXFKDVDVSHHFKEHIRUHWKH1HZ<RUN5RWDU\&OXELQLQ
ZKLFKKHFODLPHGWKDWSHUFHQWRIWKHPRQLHVZHQWWRODERUDQGWKDW³RQO\IRUW\SHUFHQW
RIWKHWRWDOFRVWLVVSHQWLQWKHVKLS\DUGZKHUHWKHVKLSLVEXLOWWKHRWKHUVL[W\SHUFHQWLV
,ELG
,ELG
7KRPDV&+RQH³7KH(YROXWLRQRIWKH86)OHHW´LQ)'5DQGWKH861DY\HG(GZDUG
-0DUROGD1HZ<RUN6W0DUWLQ¶V3UHVV
1$5*ER[1DYDO:DU&ROOHJH6WXG\³:KDW:LOOEHWKH)DWHRIWKH5DWLRLQÉ\
/LHXWHQDQW&RPPDQGHU'30RRQ-XO\SJ
VSHQWWKURXJKRXWWKHHQWLUHFRXQWU\IRUODERUDQGIRUUDZPDWHULDOV´ ,WZDVDOVRD
VWURNHRIOXFNIRUWKH1DY\WKDWWKHPDMRULW\RI$PHULFD¶VVKLSEXLOGLQJIDFLOLWLHV
KDSSHQHGWREHORFDWHGLQ'HPRFUDWLFVWURQJKROGVWKDWKDGVXIIHUHGEDGO\IURPWKH
'HSUHVVLRQ $VDUHVXOWRIWKHVHYDULRXVIDFWRUVDVZHOODV5RRVHYHOW¶VSHUVRQDO
DIIHFWLRQIRUWKH1DY\5RRVHYHOWFRPPLWWHGWKHZHLJKWRIWKHSUHVLGHQF\WRWKH9LQVRQ
$FW 5RRVHYHOWPDWHULDOO\GHPRQVWUDWHGKLVFRPPLWPHQWWRWKH1DY\ZLWKLQWKHILUVW
GD\VRIKLVSUHVLGHQF\E\LQFOXGLQJQDYDOFRQVWUXFWLRQIXQGVLQWKH1DWLRQDO
,QGXVWULDO5HFRYHU\$FWZKLFKSURYLGHGIRUODUJHSXEOLFZRUNVSURMHFWVDQGYDULRXV
ODERUSURWHFWLRQSURYLVLRQV6LJQHGLQWRODZRQ-XQHZLWKVROLGPDMRULWLHVIURP
ERWKFKDPEHUVRI&RQJUHVV1,5$SURYLGHGPLOOLRQ³WRWKH'HSDUWPHQWRIWKH1DY\
IRUWKHFRQVWUXFWLRQRIFHUWDLQYHVVHOVWKHFRQVWUXFWLRQZKHUHRIFRQIRUPVWRWKH/RQGRQ
1DYDO7UHDW\DQGKDVKHUHWRIRUHEHHQDSSURYHGE\PH´ 7KHVHIXQGVSURYLGHGIRU
QHZVKLSVLQFOXGLQJDQDLUFUDIWFDUULHUDQGVHYHQRIWKH´JXQFUXLVHUVWKDWKDGFDXVHG
VXFKFRQWURYHUV\DWWKH/1& :KLOHWKLVZDVZHOOVKRUWRIZKDWZDVUHTXLUHGWREULQJ
WKH861WRIXOOWUHDW\VWUHQJWKLWQRQHWKHOHVVJDYHWKH1DY\DPDMRUSODFHLQWKH
FRUQHUVWRQHOHJLVODWLRQRIWKH5RRVHYHOW3UHVLGHQF\DQGIRUWKHILUVWWLPHLQWZHOYH\HDUV
VHFXUHGWKHPDQDOO\LQWKH:KLWH+RXVH
)ROORZLQJWKHSDVVDJHRI1,5$&RQJUHVVPDQ9LQVRQODXQFKHGDUHLQYLJRUDWHG
FDPSDLJQWRSURPRWHKLVQDYDOOHJLVODWLRQ³6LQFHQRPDQFDQIRUHVHHWKHIXWXUHFOHDUO\
/2&0DQXVFULSW'LYLVLRQ6WDQGOH\3DSHUV%R[1DY\3UHVV5RRP7UDQVFULSW)HE
0F%ULGH7HFKQRORJLFDO&KDQJH5RRVHYHOWZDVD'HPRFUDWLF3UHVLGHQW
5RVHQ³7UHDW\1DY\´
([HFXWLYH2UGHURQ3XEOLF:RUNV$GPLQLVWUDWLRQ-XQH
1$5*%R[1DY\'HSDUWPHQW¶V2IILFHRIWKH-XGJH$GYRFDWH*HQHUDOPHPRIRU&KDLUPDQ&DUO
9LQVRQ0DUFK
LWPXVWEHHYLGHQWWKDWDQDWLRQWKDWUHTXLUHVDPLOLWDU\RUQDYDOIRUFHUHTXLUHVRQH
DGHTXDWHWRIXQFWLRQHIILFLHQWO\LQWKHKRXURIQHHG´9LQVRQVDLGLQDVSHHFKEHIRUH
&RQJUHVVLQHDUO\ ³$JDLQDQGDJDLQZHPXVWEHWDXJKWWKDWVROGLHUVFDQQRWEH
PDGHLQDGD\DQGWKDWLWWDNHV\HDUVWRFUHDWHVKLSV´ +HDOVRZDUQHGORXGO\RI
FRQVLGHUDEOHLQFUHDVHVLQ-DSDQHVHQDYDOVSHQGLQJDQGWKHLUPRXQWLQJYLRODWLRQVRIWKH
1LQH3RZHU7UHDW\%\-DQXDU\9LQVRQKDGUHVXEPLWWHGWKH%LOOWRDXWKRUL]HD
WUHDW\1DY\RQO\WKLVWLPHKHKDGWKHPRPHQWXPRIWKH1,5$EXLOGLQJSURJUDPEHKLQG
KLPDQGWKHLPSOLFLWVXSSRUWRIWKH3UHVLGHQW7KH9LQVRQ%LOOJHQHUDWHGDILUHVWRUPRI
FRQWURYHUV\IURPWKHLVRODWLRQLVWEORFLQ&RQJUHVVZKRGUHZRQ$PHULFDQFRQFHUQVWKDW
ODUJHVFDOHDUPVPDQXIDFWXULQJRIWKLVYHU\W\SHKDGOHG$PHULFDLQWR:RUOG:DU2QH
5HSRUWHGO\WKH9LQVRQ%LOOJHQHUDWHGOHWWHUVDGD\WRWKH:KLWH+RXVHSHUFHQWRI
WKHPQHJDWLYH $VZRXOGEHH[SHFWHG5RRVHYHOWEDFNHGRIIRQGLUHFWO\VXSSRUWLQJWKH
%LOODVLWZRXQGLWVZD\WKURXJK&RQJUHVVLQHDUO\)RUWXQDWHO\9LQVRQZDVD
VNLOOHGOHJLVODWRUDQGVHFXUHGWKHDOOHJLDQFHRIKHDY\ZHLJKWVOLNH6DP5D\EXUQLQWKH
+RXVHDQG3DUN7UDPPHOOLQWKH6HQDWH8OWLPDWHO\WKH9LQVRQ7UDPPHOO$FWVDLOHG
WKRXJKERWKFKDPEHUVSDVVLQJLQWKH6HQDWHE\DPDMRULW\RIRQ0DUFK
7KH9LQVRQ7UDPPHOO%LOOZHQWDORQJZD\WRHVWDEOLVKLQJDFRKHUHQW8QLWHG
6WDWHV1DYDOSROLF\DIWHUWKHFRQIXVLRQWKDWIROORZHGWKHRQVHWRI'HSUHVVLRQ\HWLWZDV
VWLOOOLPLWHGLQVFRSH$VDEDFNSHGDOOLQJ5RRVHYHOWH[SODLQHGWRWKH3UHVVRQ0DUFKD
IHZGD\VEHIRUHKHVLJQHGWKHELOOLQWRODZ³WKLVELOOLVUHDOO\LQLWVHVVHQWLDOVQRWKLQJ
PRUHWKDQDUHVROXWLRQWKDWLWLVVWLOOWKHSROLF\RIWKH8QLWHG6WDWHVWREXLOGXSWRWKH
-DPHV)&RRN&DUO9LQVRQ3DWULDUFKRIWKH$UPHG)RUFHV0DFRQ*$0HUFHU8QLYHUVLW\3UHVV
&RRN9LQVRQ
&RRN9LQVRQ
/RQGRQ1DYDO7UHDW\OLPLWVDQGKDYLQJSDVVHGWKDWUHVROXWLRQLWGHSHQGVRQWKHDFWLRQ
RIIXWXUH&RQJUHVVHVDVWRZKHWKHUWKHVKLSVZLOOEHDFWXDOO\VWDUWHGRUQRW´ 7KH1,5$
IXQGVZHUHEHWZHHQRQHWKLUGDQGRQHIRXUWKRIWKHDPRXQWUHTXLUHGWREULQJWKH861XS
WRIXOOXQGHUDJHVWUHQJWK9LQVRQ¶VHVWLPDWHVWHQGHGWREHORZHUWKDQWKH1DY\
'HSDUWPHQW¶V 7KH861¶VPRVWSHUVLVWHQWLQWHUZDUSUREOHPKDGEHHQDGGUHVVHGEXWLW
ZDVVWLOODORQJZD\IURPEHLQJVROYHG
7KXVZKLOHWKH1DY\ZDVSOHDVHGZLWKWKH1,5$PRQLHVDQGWKHSDVVDJHRIWKH
9LQVRQ%LOOLWZDVLUULWDWHGE\WKHFRQWLQXHGDEVHQFHRIDUHJXODUVWHDG\DQGSUHGLFWDEOH
IXQGIRUQDYDOFRQVWUXFWLRQ³7KHKDQGWRPRXWKZD\RIUXQQLQJWKH1DY\RIDJUHDW
FRXQWU\LVLQHIILFLHQWH[SHQVLYHDQGDOZD\VFDWFKHVXVDWWKHULJKWPRPHQWLQDVDG
SRVLWLRQ´&KLHIRI1DYDO2SHUDWLRQV:LOOLDP93UDWWZURWHLQ0DUFK 3UDWW
DUJXHGWKDW&RQJUHVVVKRXOG³>LQFRUSRUDWH@DOOIHGHUDOFRQVWUXFWLRQLQRQHEURDGSODQ«
WKHJUHDWYDULDEOHVDUHDOOLQRQHELOOPDNLQJWKHELJ&RQJUHVVLRQDOILJKWWKHUHRQZKLOH
WKHURXWLQHDSSURSULDWLRQVWKHEUHDGDQGEXWWHUSDVVWKURXJKFDXVLQJOHVVWDONDQGOHVV
ZDVWHRIWLPHLQ&RQJUHVV´ $*HQHUDO%RDUGUHSRUWLVVXHGVXEVHTXHQWWRWKHSDVVDJH
RI1,5$VHFRQGHGWKLVUHFRPPHQGDWLRQ:KLOHWKHUHSRUWFRQJUDWXODWHGWKH3UHVLGHQWIRU
WKHVXEVWDQWLDOVXPWKH%RDUGZDVQRQHWKHOHVVFRQFHUQHGWKDW³LQYLHZRIWKHOLPLWHG
QDWXUHRIWKHDXWKRUL]DWLRQIRUQDYDOFRQVWUXFWLRQFDUULHGLQWKH1DWLRQDO,QGXVWULDO
5HFRYHU\$FWZKLFKH[SLUHVDVDZKROHLQWZR\HDUVLWLVH[WUHPHO\GHVLUDEOHWKDWWKLVEH
VXSSOHPHQWHGE\SHUPDQHQWDXWKRUL]DWLRQLQVRPHIRUPIRUWKHFRQVWUXFWLRQRIQDYDO
(GJDU%1L[RQHG)UDQNOLQ'5RRVHYHOWDQG)RUHLJQ$IIDLUV9RO,,&DPEULGJH0$+DUYDUG
8QLYHUVLW\3UHVV3UHVVFRQIHUHQFH0DUFK
1$5*%R[&12:LOOLDP93UDWWWR6HF1DY&ODXGH6ZDQVRQ³7KH1DY\¶V1HHGV´0DUFK
,ELG
,ELG
YHVVHOVIRUWKH1DY\²DQGWKHLUDLUFUDIW²XSWRWKHOLPLWVDXWKRUL]HGE\WKH/RQGRQ
7UHDW\´ 7KHQDYDOIXQGVDWWDFKHGWR1,5$KDGEHHQLQFOXGHGE\H[HFXWLYHILDWUDWKHU
WKDQFRQJUHVVLRQDODFWLRQ5RRVHYHOWZDVXQOLNHO\WRULVNVXFKDPRYHDJDLQRQEHKDOIRI
WKH1DY\:KLOHWKHILUVW\HDURI5RRVHYHOW¶V3UHVLGHQF\SURYHGSURPLVLQJIRUWKH1DY\
WKHIXWXUHRIWKHIOHHWZDVVWLOOLQGRXEWDVORQJDVIXQGVIRUFRQVWUXFWLRQZHUHVWLOO
GHSHQGHQWXSRQWKHSDVVLQJZKLPVRI&RQJUHVVRUWKHRFFXSDQWRIWKH:KLWH+RXVH
1RQHWKHOHVVWKHSDVVDJHRIWKH1,5$DQG9LQVRQ7UDPPHOO$FWVODLGWKH
JURXQGZRUNIRUWKHIXWXUHRIQDYDODUPVOLPLWDWLRQ$IWHUDGHFDGHORQJVWUDWHJ\RI
³GLVDUPDPHQWE\H[DPSOH´WKH$PHULFDQJRYHUQPHQWDWODVWFRPPLWWHGWREXLOGWRWKH
UDWLROLPLWVDWWKHVDPHWLPHWKDW-DSDQZDVDWWHPSWLQJWRWKURZRIIWKHUDWLRV\VWHP
DOWRJHWKHU,QGHHGWKH-DSDQHVHFRPSODLQHGWKDWWKH9LQVRQ7UDPPHOO$FWFRQVWLWXWHGD
WKUHDWWR-DSDQHVHVHFXULW\DQGXVHGLWDVIXUWKHUHYLGHQFHIRUWKHQHHGWREULQJGRZQWKH
:DVKLQJWRQ7UHDW\ 7KHFKDVPEHWZHHQWKHVHWZRGLYHUJHQWQDWLRQDOSROLFLHVZRXOG
FRPHWRGHILQHWKHUHPDLQLQJ\HDUVRIWKHDUPVFRQWUROV\VWHP
7KHSLYRWRIWKH:DVKLQJWRQV\VWHPLQWKHPLGVWKHQOD\ZLWKWKH8QLWHG
.LQJGRP/LNHWKH8QLWHG6WDWHV%ULWDLQGHVLUHGWKHPDLQWHQDQFHRIWKHVWDWXVTXRLQWKH
:HVWHUQ3DFLILF<HWXQOLNH$PHULFD%ULWDLQ¶VPDLQSRLQWRIYXOQHUDELOLW\OD\LQWKH
(XURSHDQZDWHUVRQKHUGRRUVWHSQRWKHUGLVWDQWSRVVHVVLRQVLQWKH)DU(DVW:KLOHWKH
0DF'RQDOGJRYHUQPHQWKDGWULHGKDUGWRFRXUW$PHULFDQRSLQLRQDWWKH/1&WKH
GDUNHQLQJRIWKH(XURSHDQVFHQHFRPSURPLVHG%ULWDLQ¶VFRPPLWPHQWWRWKHIULHQGVKLSRI
WKH8QLWHG6WDWHVDVDQHQGLQLWVHOI%RWK$PHULFDDQG-DSDQKDGDPSOHPRWLYDWLRQWR
1$5*%R[*HQHUDO%RDUG6HULDO1R-XO\
)586,*UHZWR+XOO-XO\*UHZFRPPHQWHGWKDWWKH-DSDQHVHUHDFWLRQZDVD
SHUYHUVHRQHJLYHQWKDWWKH$FWZDVDPRGHVWUHSODFHPHQWSURJUDPDWDWLPHZKHQWKH-DSDQHVHZHUH
ERPELQJ&KLQHVHFLWLHV7KHRXWVSRNHQDPEDVVDGRURSLQHGWKDWWKH-DSDQHVHZHUHZRUULHGWKDWD861DW
IXOOUDWLRVWUHQJWKZRXOGOLPLWWKHLUSODQVIRUH[SDQVLRQ
VHHNDSDFWZLWKWKH%ULWLVK%ULWDLQPHDQZKLOHKDGJRRGUHDVRQVWRDFFHSWHLWKHU
SDUW\²DSDFWZLWK-DSDQZRXOGVHFXUHWKH(PSLUHIURP6LQJDSRUHZHVWZDUGVZKLOHD
SDFWZLWK$PHULFDFRXOGSODXVLEO\FRQWDLQSRWHQWLDO-DSDQHVHDJJUHVVLRQ7KH
LUUHFRQFLODEOHSROLFLHVRI$PHULFDDQG-DSDQPHDQWWKDWWKH%ULWLVKZRXOGKDYHWR
GHILQLWHO\SLFNDVLGHDQGDOLHQDWHWKHRWKHU,QDQLQWHUQDWLRQDOV\VWHPZLWKWKUHHQHDU
HTXDOSOD\HUVDQ\FRPELQDWLRQRIWZRSUHVHQWVDQRYHUZKHOPLQJIRUFH(YHQPRUHWKDQ
WKHVKLSVLWEXLOWWKHSROLF\RIWKH8QLWHG6WDWHVWRZDUGV*UHDW%ULWDLQLQWKHFRPLQJ
QDYDOFRQIHUHQFHZRXOGGHFLGHWKHIDWHRIWKH3DFLILFDQGWKHJOREDOEDODQFHRISRZHU
$OPRVWLPPHGLDWHO\KRZHYHUWURXEOHDURVHZLWKWKH%ULWLVK7KHEXLOGLQJ
SURJUDPDXWKRUL]HGYLDWKH9LQVRQ7UDPPHOO$FWHPSKDVL]HGWKHFRQVWUXFWLRQRIKHDY\
FUXLVHUVWKHWRQYHVVHOVWKDWKDGFDXVHGVRPXFKWURXEOHDWWKHODVWFRQIHUHQFH
7KH861ZDVDQ[LRXVWREXLOGWRLWVIXOODOORWPHQWLQWKLVFDWHJRU\EHFDXVHQDYDO
VWUDWHJLVWVKDGGHHPHGWKHKHDY\FUXLVHUVWUDWHJLFDOO\YLWDOLQWKH3DFLILFWKHDWHUDQG
EHFDXVHLWZDVWKHRQHYHVVHOFDWHJRU\LQZKLFKWKH8QLWHG6WDWHVKHOGDWRQQDJH
DOORWPHQWVXSHULRULW\RYHUDQ\RWKHUQDYDOSRZHU,Q-XO\WKH%ULWLVK(PEDVV\
FDEOHGDQREMHFWLRQWRWKH86EXLOGLQJSURJUDPWR6HFUHWDU\RI6WDWH+XOO:KLOHWKH
%ULWLVKQRWHFRQFHGHGWKH86ZDVZLWKLQLWVWUHDW\ULJKWV³LWZDVWKHKRSHRI+LV
0DMHVW\¶V*RYHUQPHQWWKDWGXULQJWKH'LVDUPDPHQW&RQIHUHQFH«WKHUHZRXOGEHQR
FRQVWUXFWLRQRIZKDWDPRXQWVWRDODUJHQHZH[SHQVLYHW\SHH[FHHGLQJFRQVLGHUDEO\DQ\
VL[LQFKFUXLVHUQRZLQH[LVWHQFH´7KHQRWHH[SUHVVHGFRQFHUQWKDWWKH86SURJUDP
ZRXOGSURYRNHDTXDOLWDWLYHFUXLVHUUDFHZLWK-DSDQZKLFKKDGDQQRXQFHGVLQFHWKH
SDVVDJHRI1,5$WKDWLWLQWHQGHGWRKDVWHQWKHFRQVWUXFWLRQRILWVWRQKHDY\
FUXLVHUV7KHQRWHLQVLQXDWHGWKDWWKHSURJUDPZDVQRWLQJRRGIDLWKVLQFHDWWKH
FRQIHUHQFH6HFUHWDU\RI6WDWH6WLPVRQKDGVDLGWKDW³µKHWKRXJKWWKDWLQSUDFWLFHLWZDV
YHU\XQOLNHO\WKDWWKH8QLWHG6WDWHVZRXOGDFWXDOO\EXLOGDVL[LQFKJXQWRQ
FUXLVHU´ 7KLVSURYRNHGDQLUULWDWHGUHSO\IURP+XOOZKRUHVSRQGHGLQ6HSWHPEHUWKDWWKH
EXLOGLQJSURJUDPZDVVLPSO\DPHDVXUHWDNHQWREULQJWKH8QLWHG6WDWHVXSWRLWVWUHDW\
TXRWDVVLQFHXQOLNHWKH8QLWHG.LQJGRPDQG-DSDQ$PHULFDKDGDWWHPSWHGDSROLF\RI
GLVDUPDPHQWE\H[DPSOHDQGZDVVLJQLILFDQWO\XQGHUVWUHQJWK)XUWKHUPRUHWKHVWDWHPHQW
UHJDUGLQJWKHSUREDELOLW\RIWKH86FRQVWUXFWLQJWRQFUXLVHUV³FRXOGRQO\EH
YLHZHGDVDQH[SUHVVLRQRISHUVRQDOH[SHFWDWLRQUDWKHUWKDQDVWDWHPHQWRIFRQVLGHUHG
SROLF\´,QIDFW6WDWH'HSDUWPHQWUHFRUGVWHVWLILHGWRUHSHDWHGVWDWHPHQWVE\86
GHOHJDWHVDWWKH/1&WKDWWKHLU1DY\LQWHQGHGWREXLOGFUXLVHUVWR³WKHPD[LPXPDOORZHG
XQLWWRQQDJH´RIWRQV)LQDOO\WKHDFFXVDWLRQWKDW$PHULFDULVNHGDQDYDOUDFH
ZLWK-DSDQE\LWVDFWLRQVZDVIDOODFLRXVJLYHQWKDW-DSDQKDGDOUHDG\DQQRXQFHGLWV
WRQFUXLVHUSURJUDPEHIRUHWKHSDVVDJHRIWKH1,5$+XOOFRQFOXGHGE\VXJJHVWLQJWKDW
WKH8QLWHG6WDWHVKDGKLVWRULFDOO\GHPRQVWUDWHGWKHJUHDWHVWFRPPLWPHQWWR³DFWXDO
GLVDUPDPHQWÚHPLQGLQJWKH%ULWLVKWKDW3UHVLGHQW+RRYHU¶VVXJJHVWLRQRIDTXDQWLWDWLYH
UHGXFWLRQRISHUFHQWLQDOOFDWHJRULHVKDGEHHQUHMHFWHGE\DOOSDUWLHVDWWKHODVW
FRQIHUHQFHLQFOXGLQJWKH8. )RUPHU6HFUHWDU\RI6WDWH6WLPVRQWKRXJKJHQHUDOO\DQ$QJORSKLOHHPHUJHG
IURPUHWLUHPHQWWRSURWHFWKLVOHJDF\³,KDYHFDUHIXOO\H[DPLQHGWKHUHFRUGRIWKH1DYDO
&RQIHUHQFH´6WLPVRQZURWHWRWKH6WDWH'HSDUWPHQWLQ1RYHPEHU³,ILQGQRWKLQJLQDQ\
ZD\WRVXEVWDQWLDWHHLWKHUGLUHFWO\RUE\LQIHUHQFHHLWKHUWKHVWDWHPHQWPDGHE\WKH
,ELG
)586,+XOO0HPR6HSW
3ULPH0LQLVWHURUWKDWFRQWDLQHGLQWKH%ULWLVKPHPRUDQGXP2QWKHFRQWUDU\,ILQGWKDW
WKHVHUHFRUGVDVZHOODVWKHFLUFXPVWDQFHVVXUURXQGLQJWKHHQWLUHQHJRWLDWLRQVPDNHD
GLUHFWO\FRQWUDU\LQIHUHQFHSUDFWLFDOO\XQDYRLGDEOH´ 6WLPVRQZHQWRQWRFLWHQXPHURXV
LQVWDQFHVZKHQKHRURWKHUGHOHJDWHVGLUHFWO\LQIRUPHGWKHLU%ULWLVKFRXQWHUSDUWVRIWKH
8QLWHG6WDWHV¶LQWHQWLRQWRFRQVWUXFWWKHODUJHVWSRVVLEOHYHVVHOLQHDFKFDWHJRU\
$OWKRXJK6WLPVRQHPSKDVL]HGWKDW³,IHHOYHU\GHHSO\WKHLPSRUWDQFHRIWKHIUDQNDQG
IULHQGO\UHODWLRQVZKLFKZHUHHVWDEOLVKHGE\WKH%ULWLVKDQG$PHULFDQJRYHUQPHQWV
WKURXJKRXWWKHQHJRWLDWLRQRIWKLV7UHDW\´KHZDVSHHYHGE\WKH%ULWLVKPDQLSXODWLRQRI
WKHUHFRUGV :LWKWKHSUHOLPLQDU\FRQYHUVDWLRQVIRUWKHQH[WFRQIHUHQFHGXHWREHKHOG
LQWKHQHDUIXWXUHWKHHSLVRGHZDVDSRRUVWDUWIRU$QJOR$PHULFDQUHODWLRQV
:LWKWKH*HQHUDO'LVDUPDPHQW&RQIHUHQFHRQJRLQJDQGDWUHDW\PDQGDWHGQDYDO
FRQIHUHQFHVFKHGXOHGLQWKHQHDUIXWXUHWKHQHZDGPLQLVWUDWLRQWRRNVWRFNRI$PHULFD¶V
DUPVOLPLWDWLRQSROLF\-D\3LHUSRQW0RIIDWWKHKHDGRIWKH6WDWH'HSDUWPHQW¶V'LYLVLRQ
RI:HVWHUQ(XURSHDQ$IIDLUVZDVFRQFHUQHGDERXW5RRVHYHOW¶VLQWHUIHULQJLQWKHPDWWHU
RQWKHEDVLVRIKLVH[SHULHQFHZLWKWKH861³3UHVLGHQW5RRVHYHOWKDVJURZQSHUVRQDOO\
LQWHUHVWHGLQGLVDUPDPHQWEXW,GRQ¶WWKLQNKHDSSUHFLDWHVWKHGLIILFXOWLHVRUWKH(XURSHDQ
SV\FKRORJLHVKHLVXSDJDLQVW´0RIIDWZURWHLQKLVGLDU\LQ0DUFK³,DPYHU\
PXFKDIUDLGWKDWLIZHDUHQRWFDUHIXOWKHUHZLOOEHDVWXEEHGWRH´ )RUWXQDWHO\WKH
3UHVLGHQWDQGWKH6WDWH'HSDUWPHQWVHOHFWHG1RUPDQ+'DYLVWRKHDGXSWDONVDWWKH
IRUWKFRPLQJSUHOLPLQDU\GLVFXVVLRQVZLWKWKH%ULWLVK'DYLVKDGEHHQLQWLPDWHO\LQYROYHG
/2&0DQXVFULSW'LYLVLRQ'DYLV3DSHUV%R[6WLPVRQWR+XOO1RY
,ELG
1DQF\+DUYLVRQ+RRNHUHG7KH0RIIDW3DSHUV6HOHFWLRQVIURPWKH'LSORPDWLF-RXUQDOVRI-D\
3LHUUHSRQW0RIIDW&DPEULGJH0$+DUYDUG8QLYHUVLW\3UHVV
LQWKH*HQHUDO'LVDUPDPHQW&RQIHUHQFHLQ*HQHYDVLQFHDQGKDGEHHQWKRURXJKO\
EULHIHGRQERWKWKHSROLWLFDODQGWHFKQLFDOVLGHRIDUPVOLPLWDWLRQ
'DYLVZDVKLJKO\UHJDUGHGDVDGLSORPDW8QGHUVHFUHWDU\RI6WDWH:LOOLDP
3KLOOLSVFRPPHQWHGWKDWKHKDGDUHPDUNDEOHFRPPDQGRIWKHWHFKQLFDOIDFWVDQGILJXUHV
ZKLFKZHUHWREHLQGLVSHQVDEOHLQWKHQHJRWLDWLRQV +HZDVDOVRDQRWHG$QJORSKLOH
DQGLQWKH\HDUVDKHDGKHZRXOGPDNHFRXQWOHVVVWDWHPHQWVERWKSXEOLFDQGSULYDWH
DGYRFDWLQJFORVH$QJOR$PHULFDQUHODWLRQVDVWKHRQO\PHDQVWRSUHYHQWZDU:LWKD
EDFNJURXQGLQSULYDWHEXVLQHVVYHQWXUHVDQGEDQNLQJ'DYLVKDGVSHQWKLVUHFHQW\HDUVDV
DQ$PHULFDQGHOHJDWHWRWKH*HQHUDO'LVDUPDPHQW&RQIHUHQFHLQ*HQHYD2YHUWKH
FRPLQJ\HDUV'DYLVDVVXPHGDQLPSUHVVLYHGHJUHHRILPSRUWDQFHDVWKHDGPLQLVWUDWLRQ¶V
SRLQWPDQLQDUPVFRQWUROGHOLEHUDWLRQV,IKHKDGDIDXOWLWOD\LQDWHQGHQF\WRSODFHWRR
PXFKLPSRUWDQFHXSRQGLSORPDWLFH[FKDQJHVDQGQRWHQRXJKXSRQRWKHUIDFWRUVVXFKDV
SROLWLFDORUPLOLWDU\FRQVLGHUDWLRQV0RIIDWEHOLHYHGWKDW³1RUPDQ'DYLV¶RQO\ZHDNQHVV
DVDQHJRWLDWRU´ZDVKLV³EHOLHIWKDWLIKHFDQFRQYLQFHWKHPDQZLWKZKRPKHLV
QHJRWLDWLQJWKHSUREOHPLVVROYHG+HWHQGVWRRYHUORRNWKHIRUFHRIFLUFXPVWDQFHVDQG
WKHSRZHURISXEOLFRSLQLRQV´ $*HQHUDO%RDUGEULHILQJIURP)HEUXDU\
FRQWDLQHGFULWLFLVPRI'DYLVLQDVLPLODUYHLQWKRXJKLWVPRWLYDWLRQVZHUHGLIIHUHQW7KH
EULHILQJZDVVRIWO\VFDWKLQJRI'DYLV¶FKDUDFWHUVD\LQJWKDWKH³LVHQMR\LQJWR\LQJZLWK
GLSORPDF\LQKLVUHWLUHPHQWIURPEDQNLQJ´7KHUHSRUWIUHWWHGWKDW'DYLVZDVVSUHDGVR
WKLQDFURVVVRPDQ\GLIIHUHQWILHOGVWKDWLW³PDNHVRQHGRXEWLIKHFDQJLYHKLVEHVWHIIRUWV
WRDOO´:KLOHWKHEULHILQJQRWHGWKDW'DYLVGHQLHGWKHGHVLUHWRJUHDWO\UHGXFHWKH861LQ
WKHQDPHRISDFLILVPWKHDXWKRUQRWHGWKDW³WKHVHYLHZVPLJKWFKDQJHLIWKHUHZHUH
1L[RQ5RRVHYHOW,,'DYLVWR5RRVHYHOW-XQH
+RRNHU0RIIDW3DSHUV
RSSRUWXQLW\WRJHWDQDJUHHPHQWZKLFKLVWKHWKLQJQHDUHVWKLVKHDUW´ 7KH%RDUG
KRZHYHUZDVVLPSO\QHUYRXVWKDW'DYLV¶DIILQLW\IRUWKH%ULWLVKZRXOGUHVXOWLQ
QHJRWLDWLRQVWKDWIDYRUHGWKH5R\DO1DY\DVVRPH%RDUGPHPEHUVEHOLHYHGDOOWKH
SUHYLRXVWUHDWLHVKDGGRQH,QIDFW'DYLV¶FRPELQDWLRQRIH[SHULHQFHGHIWQHJRWLDWLQJ
VNLOOVDQGRSHQQHVVWRFRRSHUDWLRQZLWKWKH%ULWLVKZRXOGPDNHKLPWKHSHUIHFW86
GHOHJDWHWRWKHFRQIHUHQFH
7KH1DY\LQVLVWHGRQPDLQWDLQLQJFORVHUHODWLRQVZLWK6WDWH'HSDUWPHQWRIILFLDOV
VLQFHLWZDVIHOWLQVRPHQDYDOFLUFOHVWKDW³ODFNRIFRRSHUDWLRQEHWZHHQWKH6WDWHDQG
1DY\'HSDUWPHQWVLQWKHSDVWKDVMHRSDUGL]HGWKHLQWHUHVWVRIWKH8QLWHG6WDWHVLQ
FRQQHFWLRQZLWKQDYDODUPDPHQWV3UHVVXUHXSRQWKH6WDWH'HSDUWPHQWEURXJKWWREHDUE\
ZHOORUJDQL]HGDQGVWURQJO\HQWUHQFKHGSDFLILVWRUJDQL]DWLRQVKDVKDGDYHU\GHFLGHG
HIIHFW8QGRXEWHGO\WKLVSUHVVXUHZLOOEHH[HUWHGDJDLQ´ :LWKELODWHUDOWDONVVFKHGXOHG
ZLWKWKH8QLWHG.LQJGRPIRU'DYLVPHWZLWKPHPEHUVRIWKH*HQHUDO%RDUGLQ
1RYHPEHUWRGLVFXVVWKH861¶VSRVLWLRQHVSHFLDOO\DVUHJDUGHGWKH%ULWLVK7KH
DGPLUDOVHPSKDVL]HGWKDWLWZDVLPSHUDWLYHIRUWKH861WREXLOGXSWRWUHDW\OHYHOVDV
VRRQDVSRVVLEOHRUHOVH$PHULFD³ZRXOGEHLQDKRSHOHVVSRVLWLRQQRZIURPDWUDGLQJ
SRLQWRIYLHZ´'DYLVDVVXUHGWKH%RDUGWKDWIURPSULYDWHWDONVZLWK5RRVHYHOWKHZDV
VXUHWKH3UHVLGHQWZDVGHGLFDWHGWREXLOGLQJDWUHDW\1DY\DQGZRXOGVHHNRQO\DWRNHQ
UHGXFWLRQDWWKHFRQIHUHQFHIRU³JRRGSV\FKRORJLFDOHIIHFW´,QVSLWHRIVRPHJUXPEOLQJ
UHJDUGLQJWKH³VWXSLGQRWH´WKH%ULWLVKKDGVHQWUHJDUGLQJWKHWRQFUXLVHUVPRVWRI
WKHDWWHQGHHVDWWKHPHHWLQJZHUHUHFRQFLOHGWRFORVHUUHODWLRQVZLWKWKH%ULWLVK$GPLUDO
:LOOLDP'/HDK\H[SUHVVHGWKHRSLQLRQWKDW³(QJODQGDQGWKH8QLWHG6WDWHVZRXOGDQG
1$5*%R[*HQHUDO%RDUG0HPR³1DYDO&RQIHUHQFH²&RPPHQWVDQG6XJJHVWLRQV´
)HE
,ELG
VKRXOGEHWRJHWKHU´DQGWKDWLQFDVHRIZDU³WKHRYHUZKHOPLQJRSLQLRQLQ(QJODQGZRXOG
EHZLWKXVDQGWKDWWKH\ZRXOGFRPHWRRXUDVVLVWDQFH´ $GPLUDO:LOOLDP+6WDQGOH\
WKH&12DQGIXWXUHGHOHJDWHDWWKHFRQIHUHQFHH[SUHVVHGVLPLODUVHQWLPHQWV
UHJDUGLQJFRRSHUDWLRQZLWKWKH%ULWLVK'DYLVZDVWKHPRVWYRFDORQWKHQHHGWRVHFXUH
JRRGUHODWLRQVZLWKWKH%ULWLVKDWWKHXSFRPLQJFRQIHUHQFH*LYHQWKHDJJUHVVLYHPRYHV
E\-DSDQDQGWKHZHDNQHVVRIWKH86SRVLWLRQLQWKH)DU(DVWHVSHFLDOO\ZLWK3KLOLSSLQH
LQGHSHQGHQFHORRPLQJKHEHOLHYHGLWZDV³QHFHVVDU\WRJHW%ULWDLQRQRXUVLGH´ $UHSRUWIURPWKH3UHVLGHQWRIWKH1DYDO:DU&ROOHJH$GPLUDO0F1DPHHLQ
)HEUXDU\VHHPHGWRFRQILUPWKHJHQHUDOIHHOLQJZLWKLQWKH861WKDWWKHXQVHWWOHG
VLWXDWLRQLQWKH3DFLILFZRXOGUHTXLUH$QJOR$PHULFDQFRRSHUDWLRQ7KHPHPRFRQFOXGHG
WKDW-DSDQKDGEHFRPHVRHQWUHQFKHGZLWKLQLWVVSKHUHWKDWDQ\ZDUEHWZHHQWKH,-1DQG
WKH861DORQHZRXOG³LQYROYHXVLQORVVHVHQWLUHO\RXWRISURSRUWLRQWRDQ\SRVVLEOH
JDLQ´2QO\E\FRPELQLQJWKHVWUHQJWKRIWKH861ZLWK%ULWDLQ¶V5R\DO1DY\FRXOG86
LQWHUHVWVLQWKH)DU(DVWEHSURWHFWHGDWDUHDVRQDEOHFRVW*LYHQ%ULWDLQ¶VVXEVWDQWLDOO\
JUHDWHULQWHUHVWVLQWKHUHJLRQLQGXFLQJFRRSHUDWLRQRXJKWQRWWREHDGLIILFXOWWDVNIRUWKH
8QLWHG6WDWHV³7KHPRUHFOHDUO\8.XQGHUVWDQGVWKDWWKLVZLOOEHRXUSROLF\WKHVXUHU
ZHZLOOEHRIREWDLQLQJMRLQWDFWLRQLIDQGZKHQLWPD\EHFRPHQHFHVVDU\´WKHUHSRUW
QRWHG 7KH1:&UHSRUWZDVQRWXQHTXLYRFDOO\VXSSRUWLYHRIWKH8.²DPRQJRWKHU
WKLQJVLWUHFRPPHQGHGOHDYLQJWKHEXUGHQRIWKHFRQIHUHQFH¶VSRVVLEOHIDLOXUHRQ
1$5*%R[*HQHUDO%RDUG³0HPRRQWDONRI1RUPDQ'DYLVEHIRUH*HQHUDO%RDUG´
1RY
,ELG
1$5*%R[3UHVLGHQWRIWKH1DYDO:DU&ROOHJHWR*HQHUDO%RDUG³6WXG\RQ&RQIHUHQFH
IRU)XUWKHU/LPLWDWLRQRI1DYDO$UPDPHQWV´)HE
%ULWDLQ¶VVKRXOGHUV ²EXWLQJHQHUDODWUHQGWRZDUGVDQDFFRUGZLWKWKH8.ZDV
XQGHUZD\ZLWKLQWKH861DVWKHFRQIHUHQFHQHDUHG
7KHOLPLWVRIWKH1DY\¶VGHVLUHIRUFRRSHUDWLRQZHUHTXLFNO\HVWDEOLVKHG,Q
0DUFK'DYLVZHQWWR/RQGRQIRULQIRUPDOWDONVZLWK3ULPH0LQLVWHU0DF'RQDOG
UHJDUGLQJQDYDOGLVDUPDPHQW7KH3ULPH0LQLVWHUUHYHDOHGWKDWFHQWUDOWR%ULWDLQ¶V
SODWIRUPWRWKHXSFRPLQJFRQIHUHQFHZDVDVXEVWDQWLDOUHGXFWLRQLQWKHXQLWWRQQDJHRI
EDWWOHVKLSVIURPWRQVDVLQWKH:DVKLQJWRQ7UHDW\WRDOLPLWRISHUKDSV
WRQVDQGDJXQFDOLEHUOLPLWRILQFKHVIURPLQFKHV 7KLVVXJJHVWLRQGDWHGEDFNDV
IDUDVWKH*HQHYD1DYDO&RQIHUHQFHLQDQGZDVSDUWRIWKHSUHVHQW%ULWLVKDJHQGDLQ
WKH*HQHUDO'LVDUPDPHQW&RQIHUHQFHEXWWKH3ULPH0LQLVWHUFRQILUPHGWKDWLWZRXOG
FRQWLQXHWREHDFHQWUDOSODWIRUPRIWKH8.IRUWKHWDONV
7KH%RDUGZDVWHGQRWLPHIRUPLQJDUHVSRQVH$0DUFKUHSRUWVWDWHGWKDW³D
UHGXFWLRQLQWKHJXQSRZHURIWKHEDWWOHVKLSLQFUHDVHVWKHSURSRUWLRQDWHYDOXHRIOHVVHU
W\SHVRIYHVVHOV´7KHUHSRUWDOVRSODFHGJUHDWHUYDOXHRQWKHSRVVHVVLRQRIUHIXHOLQJ
VWDWLRQVJLYHQWKDWVPDOOHUYHVVHOVJHQHUDOO\KDGVKRUWHUFUXLVLQJUDGLL*LYHQWKDWWKDW
EDVHVDQGDX[LOLDULHVZHUHWKH51¶VJUHDWHVWVWUHQJWKDQGWKH861¶VJUHDWHVWZHDNQHVV
WKH%RDUGLQWHUSUHWHGWKH8.¶VLQVLVWHQFHRQEDWWOHVKLSWRQQDJHUHGXFWLRQDVDVHOI
LQWHUHVWHGSOR\WRVWUHQJWKHQLWVKDQGDWWKHFRVWRI$PHULFDQVHDSRZHU 7KH%RDUG
DOVREHOLHYHGWKDWWKHSURKLELWLYHO\KLJKFRVWRIODUJHXQLWEDWWOHVKLSVPDGHWKHYHVVHOW\SH
WKHVROHGRPDLQRIJUHDWSRZHUV,IWKHXQLWFRVWZDVWRRIDUGLPLQLVKHGWKHUHZDVDULVN
WKDWDVOHZRIOHVVHUQDYDOSRZHUVRXWVLGHRIWKHSUHVHQWWUHDW\ZRXOGFKDOOHQJHWKH
,ELG
)586,'DYLVWR5RRVHYHOW0DUFK
1$5*%R[*HQHUDO%RDUG6HULDO1R(0DUFK
VLJQDWRULHVDQGFRPSOLFDWHWKHDOUHDG\SHULORXVQDYDOVLWXDWLRQ $IROORZXSUHSRUWUH
HPSKDVL]HGWKHQHHGIRUDFRQWLQXHGSROLF\RISDULW\ZLWKWKH51ZKLOHQRWLQJWKDWLWV
ODUJHUPHUFKDQWIOHHWDQGEDVHV³WKURZWKHEDODQFHRIQDYDOSRZHUZKHQFRPEDWDQWIOHHWV
DUHHTXDOVWURQJO\LQIDYRURI*UHDW%ULWDLQ´ $VIDUDVWKH-DSDQHVHZHUHFRQFHUQHG
$PHULFD¶VWHUULWRULDOLQWHUHVWVZHUHVWULFWO\ORFDODQGWKHUHIRUHGLGQRWMXVWLI\WKHLQFUHDVH
LWKDGDVNHGIRU*LYHQWKHVHIDFWVWKH%RDUGUHFRPPHQGHGWKDWWKH8QLWHG6WDWHVLQVLVW
RQWKHPDLQWHQDQFHRIWKHVWDWXVTXRDVIDUDVWKHUDWLRVZHUHFRQFHUQHG,QGHHGWKH
%RDUGHYHQDUJXHGWKDW³,IDQ\FKDQJHLVWREHPDGHLWVKRXOGLQHTXLW\EHWRWKH
DGYDQWDJHRIWKH8QLWHG6WDWHVDVUHVSHFWV*UHDW%ULWDLQEHFDXVHRIWKHZHLJKWRIKHU
PHUFKDQWIOHHWDQGV\VWHPRIEDVHVDVUHVSHFW-DSDQEHFDXVHRIWKHXQZDUUDQWHGO\
KLJKUDWLRDOORZHGE\WKH/RQGRQ7UHDW\LQDX[LOLDU\FUDIW´ (YHQLIWKH1DY\ZDV
FRPLQJDURXQGWRWKHWKHRU\RIVWUDWHJLF$QJOR$PHULFDQFRRSHUDWLRQLQWKH3DFLILFLQ
SUDFWLFHWKHUHODWLRQVKLSZDVVWLOORQXQFHUWDLQJURXQG
:LWKWKHVLWXDWLRQLQWKH3DFLILFKLJKO\XQVWDEOHVLQFHWKH-DSDQHVHDQQH[DWLRQRI
0DQFKXULDWKHUHZDVLQFUHDVLQJSUHVVXUHIURPPDQ\TXDUWHUVIRUWKH8QLWHG6WDWHVWR
FOHDUO\GHILQHLWV)DU(DVWHUQSROLF\DQGHVWDEOLVKGHILQLWHOLPLWVRQWKHYLRODWLRQVLWZRXOG
WROHUDWHIURPWKH-DSDQHVH7KH1DY\ZDVRQHVXFKHQWLW\GHPDQGLQJDFODULILFDWLRQRI
LQWHQW&126WDQGOH\KDGDOUHDG\UHTXHVWHGWKDWWKHDGPLQLVWUDWLRQUHJXODUL]H86SROLF\
DKHDGRIWKHFRQIHUHQFHDQGKHZRXOGEHFRPHDSHUVLVWHQWYRLFHIRUWKLVUHTXHVWLQ
WKH\HDUVDKHDG $GPLUDO0F1DPHH¶VUHSRUWLQ)HEUXDU\H[SUHVVHGDVLPLODUFRQFHUQ
,ELG
,ELG
,ELG7KHFRPPHQWUHIHUVWRWKHUDWLRH[FHSWLRQPDGHIRUOLJKWFUXLVHUVDQGGHVWUR\HUVIRU-DSDQDW
WKH/RQGRQ&RQIHUHQFH
6WDQGOH\KDGEHHQSUHVHQWDVDGHIDFWR*HQHUDO%RDUGPHPEHUGXULQJ'DYLV¶PHHWLQJZLWKWKH%RDUG
DQGKHKDGYRLFHGKLVFRQFHUQUHJDUGLQJ86SROLF\DWWKLVPHHWLQJ
+HEHOLHYHGWKDW3KLOLSSLQH,QGHSHQGHQFHDQGWKHSURVSHFWRI86UHFRJQLWLRQRI
0DQFKXNXRUHSUHVHQWHGWZRLQYDOXDEOHEDUJDLQLQJFKLSVLQQHJRWLDWLRQVZLWKERWKWKH
%ULWLVKDQGWKH-DSDQHVH7KHLUYDOXHFRXOGQRWEHUHDOL]HGKRZHYHUXQWLO$PHULFD
³>GHILQHG@RXUQDWLRQDOREMHFWLYHLQQHJRWLDWLRQV²VKDOOZHKROGRXWIRUD1DY\FDSDEOH
RIH[HUFLVLQJFRQWUROLQWKH:HVWHUQ3DFLILFRUVKDOOZHOLPLWRXUDLPVWRFRQWUROWKH
(DVWHUQ3DFLILFDQGWKH:HVWHUQ$WODQWLF´ 7KLVZDVDIXQGDPHQWDOTXHVWLRQRISROLF\
WKDWWKH8QLWHG6WDWHVKDGQRW\HWGHILQLWLYHO\DQVZHUHGIRULWVHOI²ZDVWKH861WREH
XVHGVWULFWO\IRUWKHGHIHQVHRIWKH$PHULFDQKRPHODQGRUZDVLWWREHXVHGWRIXUWKHU
$PHULFDQLQWHUHVWVDQGLQIOXHQFHDURXQGWKHJOREH")RUWKH861LWZDVYLWDOWKDW
SROLF\PDNHUVVROLGLI\ORQJWHUP$PHULFDQDLPV
7KHORXGHVWYRLFHIRUWKHFODULILFDWLRQRI$PHULFDQSROLF\ZDVWKH6WDWH
'HSDUWPHQW¶VKHDGRIWKH'LYLVLRQRI)DU(DVWHUQ$IIDLUV6WDQOH\.+RUQEHFN2Q$SULO
+RUQEHFNLVVXHGDOHQJWK\PHPRUDQGXPWR6HFUHWDU\+XOORXWOLQLQJWKH
FKDOOHQJHV$PHULFDIDFHGLQWKH3DFLILF+RUQEHFNEHOLHYHGWKDWWKH-DSDQHVHZHUH
DQ[LRXVWRUHPRYHWKH86DQG8.DVIDFWRUVLQWKH:HVWHUQ3DFLILFLQRUGHUWRIUHHWKHLU
KDQGIRUWKHLUSROLF\RI³PDQLIHVWGHVWLQ\´RQWKH$VLDQPDLQODQG7KH-DSDQHVHZHUH
HDJHUWRPDLQWDLQ$QJOR$PHULFDQLQGLIIHUHQFHWRWKHLU&KLQDSROLF\ZKLFKWKH\
EHOLHYHGWKH\KDGDFKLHYHGE\WKHLUODUJHO\LJQRUHGDQQH[DWLRQRI0DQFKXULDDQGWR
VHFXUHUHFRJQLWLRQRI0DQFKXNXRDVDIXUWKHUDQFHRIWKHLUDPELWLRQIRUD³0RQURH
'RFWULQHIRU$VLD´7KHSUREOHPZLWKGHFLGLQJKRZWRSURFHHGRQWKHVHYDULRXVLVVXHV
ZDVWKDW³WKH8QLWHG6WDWHVKDVQRµ)DU(DVWHUQ3ROLF\¶DVDWKLQJVHSDUDWHIURPDQG
GLIIHUHQWIURPRXUIRUHLJQSROLF\LQJHQHUDO´7KHVRFDOOHG³VSHFLDOSROLFLHV´RIWKH)DU
1$5*%R[3UHVLGHQWRIWKH1DYDO:DU&ROOHJHWR*HQHUDO%RDUG³6WXG\RQ&RQIHUHQFH
IRU)XUWKHU/LPLWDWLRQRI1DYDO$UPDPHQWV´)HE
(DVW²VXFKDVWKH2SHQ'RRUDQGWKH+D\'RFWULQH ²ZHUHUHDOO\MXVWJHQHUDOSROLFLHV
RIWKH8QLWHG6WDWHV*RYHUQPHQW²WKDWRIIUHHPDUNHWVDQGVHOIGHWHUPLQDWLRQ
UHVSHFWLYHO\²WKDWGLGQRWDFFRXQWIRUWKHVSHFLILFFLUFXPVWDQFHVRIWKH:HVWHUQ3DFLILF
+RUQEHFNFRPSRVHGDOLVWRISURSRVDOVIRUDFOHDU86SROLF\ZKLFKDPRQJRWKHUWKLQJV
UHFRPPHQGHGWKDWWKH86UHIXVHWRUHFRJQL]H0DQFKXNXRUHIXVHWRQHJRWLDWHRQWKH
-DSDQHVHLPPLJUDWLRQLVVXHDQGDGKHUHULJLGO\WRWKHFXUUHQWUDWLRV(VVHQWLDOO\KH
GHVLUHGWRIRUPXODWHDGHILQLWH86SROLF\RQDQXPEHURIOLNHO\VFHQDULRVZKLFKZRXOG
DULVHLQWKHFRPLQJ\HDUVZLWK-DSDQ&ODULW\RIREMHFWLYHVZDVYLWDOVLQFHWKH86DQG
-DSDQ³DUHRXWVWDQGLQJO\WKHWZRJUHDWSRZHUVRQWKH3DFLILF2FHDQERWKDUH\RXWKIXO
DQGYLJRURXVERWKDUHJURZLQJDQGQHLWKHUKDVUHDFKHGWKHSHDNRILWVGHYHORSPHQWLQ
WKHPDWWHURIYDULRXVIXQGDPHQWDOFRQFHSWVWKHWZRQDWLRQVGLIIHUDQGLQWKHPDWWHURI
QDWLRQDOHQGRZPHQWWKHWZRFRXQWULHVDUHXQHTXDOWKHUHLVERXQGWREHFRPSHWLWLRQ
EHWZHHQWKHP«´ *LYHQWKHOLNHOLKRRGRIFRQIOLFWDQGWKHFXUUHQWO\XQVHWWOHGVLWXDWLRQ
LQWKH3DFLILF+RUQEHFNXUJHGWKHDGPLQLVWUDWLRQWRFODULI\LWVSROLF\
7KH5RRVHYHOWDGPLQLVWUDWLRQKRZHYHUZDVQRWIRUWKFRPLQJ7KH3UHVLGHQWGLG
HQGRUVHWKHPDLQWHQDQFHRIWKH:DVKLQJWRQUDWLRVDVDGHILQLWH86SROLF\ZKHQKHKDG
HQGRUVHGWKH9LQVRQ7UDPPHOO$FWLQ0DUFK %H\RQGWKLVWKHDGPLQLVWUDWLRQGLG
OLWWOHRIZKDW+RUQEHFNRUWKHDGPLUDOVUHTXHVWHG:DOGR+HLQULFKVKDVZULWWHQWKDW
5RRVHYHOWUHPDLQHGGHOLEHUDWHO\YDJXHRQKLVIRUHLJQSROLF\LQWHQWLRQVDVDPHDQVWR
$QDQFLOODU\GLUHFWLYHWRWKH2SHQ'RRUHVWDEOLVKHGE\6HFUHWDU\RI6WDWH-RKQ+D\ZKLFK
HVWDEOLVKHG³7KHSROLF\RIWKHJRYHUQPHQWRIWKH8QLWHG6WDWHVLVWRVHHNDVROXWLRQZKLFKPD\EULQJDERXW
SHUPDQHQWVDIHW\DQGSHDFHWR&KLQDSUHVHUYH&KLQHVHWHUULWRULDODQGDGPLQLVWUDWLYHHQWLW\SURWHFWDOO
ULJKWVJXDUDQWHHGWRIULHQGO\SRZHUVE\WUHDW\DQGLQWHUQDWLRQDOODZDQGVDIHJXDUGIRUWKHZRUOGWKH
SULQFLSOHRIHTXDODQGLPSDUWLDOWUDGHZLWKDOOSDUWVRIWKH&KLQHVH(PSLUH´)URP7KRPDV)0LOODUG³7KH
$%&VRIWKH+D\'RFWULQH´7KH:HHNO\5HYLHZRIWKH)DU(DVW
1L[RQ5RRVHYHOW,,+RUQEHFNWR+XOO$SULO
)UDQNOLQ'5RRVHYHOW7KH3XEOLF3DSHUVDQG$GGUHVVHVRI)UDQNOLQ'5RRVHYHOW9RO,,,HG6DPXHO
,5RVHQPDQ1HZ<RUN5DQGRP+RXVH3UHVLGHQWLDOVWDWHPHQWLVVXHGDWVLJQLQJRI9LQVRQ
1DY\%LOO0DUFK
FRQVHUYHSRZHU7KH3UHVLGHQW¶V³VHFUHF\REIXVFDWLRQFRPSDUWPHQWDOL]DWLRQRI
VXERUGLQDWHVDQGYHLOLQJRILQWHQWLRQVHQKDQFHGWKHP\VWLTXHRISRZHUDQGNHSWKLP
DORRIIURPWKHEXUHDXFUDWLFSURFHVVUDWKHUWKDQDSULVRQHURILW´ 5RRVHYHOWZRXOGQRW
EHKDVWHQHGLQWRFRPPLWWLQJWRDSROLF\E\6WDWH'HSDUWPHQWEXUHDXFUDWVRULPSDWLHQW
DGPLUDOV+HSUHIHUUHGDIOH[LEOHSROLF\LQERWKGRPHVWLFDQGIRUHLJQDIIDLUVWKDWDGDSWHG
WRFKDQJLQJFRQGLWLRQV +LVJRYHUQLQJVW\OHZDVHQWLUHO\DWRGGVZLWKWKHEXUHDXFUDWLF
PLQGVHWWKDWGHVLUHGGHILQLWHSUHSDUHGUHVSRQVHVIRUOLNHO\GHYHORSPHQWV8QWLODWOHDVW
WKHHQGRIWKHGHFDGHWKHSUHFLVHSDUDPHWHUVRI86SROLF\LQWKH:HVWHUQ3DFLILFZRXOG
UHPDLQXQGHILQHG
7KHFRQWLQXHGODFNRIFODULW\IURPWKHDGPLQLVWUDWLRQZDVDOOWKHPRUHYH[LQJWR
WKH1DY\'HSDUWPHQWZLWKWKHSDVVDJHRIWKH7\GLQJV0F'XIILH$FWLQ0DUFK7KH
$FWSURYLGHGIRUWKHFRPSOHWHLQGHSHQGHQFHRIWKH3KLOLSSLQHVDIWHUDSHULRGRIWHQ\HDUV
EHJLQQLQJZLWKWKHGUDIWLQJRIDFRQVWLWXWLRQDQGWKHFUHDWLRQRIDUHSUHVHQWDWLYH
JRYHUQPHQWE\3KLOLSSLQHLQGHSHQGHQFHKDGDOUHDG\EHHQGHFLGHGLQ-DQXDU\
ZKHQ&RQJUHVVKDGRYHUULGGHQ3UHVLGHQW+RRYHU¶VYHWRWRPDLQWDLQ$PHULFDQFRQWURO
RYHUWKHLVODQGQDWLRQ 7KH7\GLQJV0F'XIILH$FWSXWDGHILQLWHWLPHIUDPHRQWKH
QDWLRQ¶VLQGHSHQGHQFH+RZHYHULQWKHPLGVWRIDVWXEERUQ'HSUHVVLRQ&RQJUHVV
VKRZHGQRLQWHUHVWLQSURYLGLQJIRUWKHVHFXULW\RIDGLVWDQWDUFKLSHODJR7KH1DY\
VWULQJHQWO\REMHFWHGWR3KLOLSSLQHLQGHSHQGHQFHRQVHYHUDOJURXQGV0RVWLPPHGLDWHO\
DQGGLUHFWO\WKH%RDUGZDUQHGWKDWDQ$PHULFDQH[LWIURPWKH3KLOLSSLQHVZRXOGUHPRYH
DFRQVLGHUDEOHUHVWUDLQWRQ-DSDQHVHIUHHGRPRIDFWLRQDQGHPEROGHQLWVH[SDQVLRQLVPLQ
0DUROGD)'5DQGWKH861DY\
:DUUHQ.LPEDOO7KH-XJJOHU)UDQNOLQ5RRVHYHOWDV:DUWLPH6WDWHVPDQ3ULQFHWRQ3ULQFHWRQ
8QLYHUVLW\3UHVV
3HO]5DFHWR3HDUO+DUERULQWKH+RXVHLQWKH6HQDWH
$VLD $PRUHJHQHUDOEXWHTXDOO\ZRUU\LQJLPSOLFDWLRQZDVWKHEORZLWGHDOWWRRQHRI
WKH1DY\¶VSULPDU\MXVWLILFDWLRQVIRUPDLQWDLQLQJDIOHHWVHFRQGWRQRQHWKHFODLPWKDW
$PHULFDKHOGRYHUVHDVUHVSRQVLELOLWLHVKDGORQJEHHQWKHIDOOEDFNDUJXPHQWIRUWKH
SRVVHVVLRQRIDKLJKHUUDWLRWKDQWKH-DSDQHVH$VWKHQH[WFRQIHUHQFHQHDUHGDQGZLWK
-DSDQPRUHGHWHUPLQHGWKDQHYHUWRVHFXUHDKLJKHUUDWLR$PHULFD¶VEDUJDLQLQJSRVLWLRQ
ZDVIXUWKHUZHDNHQHGE\WKLV$FW7KHRQO\GHILQLWHSROLF\WKH86FRPPLWWHGWRLQWKH
)DU(DVWZDVRQHGHWULPHQWDOWRWKH1DY\¶VLQWHUHVW
)RUWXQDWHO\WKH%ULWLVKVLGHRIWKHHTXDWLRQDSSHDUHGSURPLVLQJ,QLWLDOPHHWLQJV
EHWZHHQ'DYLVDQGYDULRXV8.RIILFLDOVZHUHIULHQGO\DQGDJUHHDEOH$WDQ$SULO
PHHWLQJZLWK5REHUW&UDLJLH%ULWDLQ¶VGLVDUPDPHQWH[SHUWDQG$GPLUDO&KDUOHV/LWWOH
WKH'HSXW\&KLHIRIWKH1DYDO6WDIIERWKSDUWLHVDJUHHGWKDWWKHXSFRPLQJFRQIHUHQFH
ZRXOGKDYHWRSURGXFHDFWXDOWRQQDJHUHGXFWLRQVUDWKHUWKDQMXVWOLPLWDWLRQ 7KH\DOVR
DJUHHGWKDWDQLQFUHDVHWRWKH-DSDQHVHUDWLRZDVXQDFFHSWDEOHDQGXQMXVWLILDEOHDQG
ZRXOGEHUHVLVWHGE\ERWKDWWKHFRQIHUHQFH 9DULRXVRWKHULVVXHVZHUHDGGUHVVHG
LQFOXGLQJWKH%ULWLVKSURSRVDOIRUDGHFUHDVHLQEDWWOHVKLSXQLWWRQQDJHDQGWKH
LQWUDQVLJHQFHRIWKH)UHQFKRQWKHVXEPDULQHLVVXHZKLFKZRXOGOLNHO\IRUFHDQLQFUHDVH
LQGHVWUR\HUWRQQDJH 7KHWRQFUXLVHULVVXHZDVDOVRDGGUHVVHGZLWK&UDLJLH
TXLFNWRPROOLI\'DYLVRYHUWKHFRQWURYHUVLDOQRWHRIVHYHUDOPRQWKVEHIRUHVD\LQJ³WKH
QRWHZDVVHQWLQWKHPRVWIULHQGO\VSLULW´DQGWKDWWKHUHZDVQHYHUDQ\GRXEWWKDWWKH86
KDGWKHULJKWWREXLOGLQWKLVFDWHJRU\7KH%ULWLVKKDGPHUHO\KRSHGWRSUHYHQWDUDFHLQD
UHODWLYHO\QHZFDWHJRU\RIVKLSDQGVWLFNZLWKWKHOHVVH[SHQVLYHOLJKWFUXLVHUIRUUHDVRQV
0LOOHU:DU3ODQ2UDQJH
/2&0DQXVFULSW'LYLVLRQ'DYLV3DSHUV%R[0HPRUDQGXPRIFRQYHUVDWLRQEHWZHHQ&UDLJLH/LWWOH
%LQJKDPDQG'DYLV$SULO
,ELG
,ELG
RIHFRQRP\'DYLVUHSOLHGWKDWWKH8QLWHG6WDWHVKDGUHIUDLQHGIRUVHYHUDO\HDUVIURP
EXLOGLQJWKHKHDY\FUXLVHUVWKDWWKH\KDGIRXJKWIRULQDQGKDGDXWKRUL]HGWKHPRVW
UHFHQWSURJUDPRQO\DIWHU-DSDQKDGODLGGRZQWZRWRQFUXLVHUV+HDOVRSRLQWHG
RXWWKDWWKH%ULWLVKDUJXPHQWIRUHFRQRP\UHJDUGLQJWKHVPDOOHUFUXLVHUXQLWVL]HZDV
GRXEWIXOVLQFHWKHSHUWRQFRVWRIWRQFUXLVHUVZDVOHVVWKDQWKDWRIWKH%ULWLVK
WRQFUXLVHU&UDLJLHPHUHO\VDLGWKDW$PHULFDQVWHQGHGWREHPRUHFRQFHUQHGZLWK
XQLWVL]HZKHUHDVWKHSULPDU\%ULWLVKFRQFHUQZDVZLWKQXPEHUV (YHQWKLVKHDWHG
LVVXHUDLVHGIHZREMHFWLRQVIURPHLWKHUSDUW\'DYLVUHSRUWHGWR5RRVHYHOWRSWLPLVWLFDOO\
WKDW³,IHHOWKHUHLVQRWJRLQJWREHDQ\SDUWLFXODUGLIILFXOW\ZLWKWKH%ULWLVKRYHUWKH
WHFKQLFDOTXHVWLRQVWKHPVHOYHV´ 5REHUW%LQJKDPWKH86$PEDVVDGRUWR%ULWDLQODUJHO\FRQILUPHG'DYLV¶
LPSUHVVLRQV7KH$PEDVVDGRUZDVSUHVHQWZLWK'DYLVDWWKH$SULOPHHWLQJDQGKDG
DOVRPHWZLWKWKH)LUVW/RUGRIWKH$GPLUDOW\6LU%ROWRQ(\UHV0RQVHOOLQ0DUFK
0RQVHOOFRQILGHGWR%LQJKDPWKDW³RXUJHQHUDOVLWXDWLRQSDUWLFXODUO\RXU-DSDQHVH
VLWXDWLRQPDGHLWKLJKO\GHVLUDEOHIRUERWKFRXQWULHVWRFRRSHUDWHLQGHDOLQJZLWKWKH
ZKROHQDYDOVLWXDWLRQ«´:KHQWKHWRSLFRIWKHKHDY\FUXLVHUDURVH0RQVHOO³H[SUHVVHG
KLPVHOIDVKHDUWLO\DJUHHLQJ´WR%LQJKDP¶VDVVHUWLRQWKDWERWKQDWLRQVRXJKWWR³EHDEOH
WRFDUU\RXWRXUQDYDOSURJUDPVDORQJWKHOLQHVEHVWVXLWHGWRRXURZQFRXQWULHVZLWKRXW
VXVSLFLRQFRPSHWLWLRQRUKRVWLOLW\«´ ³,EHOLHYHLWLVSUREDEOHWKDWWKH%ULWLVKZLOO
ZRUNVDWLVIDFWRULO\ZLWKXVLQFRQQHFWLRQZLWKWKHQDYDOFRQIHUHQFH´%LQJKDPZURWHRQ
$SULOWRWKH3UHVLGHQW7KHUHFHQWPHQDFLQJDFWLRQVDQGVWDWHPHQWVE\-DSDQDJDLQVW
,ELG
1L[RQ5RRVHYHOW,,'DYLVWR5RRVHYHOW$SULO
6LPSVRQ$QJOR$PHULFDQ1DYDO5HODWLRQV%LQJKDPWR5RRVHYHOW0DUFK
&KLQDKDG³PDGHWKLVFRRSHUDWLRQWKHPRUHSUREDEOH´ 7KHVLPXOWDQHRXVO\
GHWHULRUDWLQJVHFXULW\VLWXDWLRQLQERWKWKH$WODQWLFDQG3DFLILFSROHVRIWKH(PSLUHKDG
WKH%ULWLVKGHHSO\FRQFHUQHGDQGWKH\ZHUHDZDUHWKDWWKH\ODFNHGWKHVWUHQJWKDORQHWR
UHSHODWWDFNVLQERWKTXDUWHUV³,DPFRQYLQFHGWKDWDOOWKRXJKWIXOSHRSOHKHUHEHOLHYHWKDW
WKHRQO\KRSHIRUSHDFHLQWKHZRUOGOLHVLQFRRSHUDWLRQEHWZHHQWKH%ULWLVKDQG
RXUVHOYHVDQGWKDWWKH\HDJHUO\GHVLUHLW´%LQJKDPFRQWLQXHG³7KH\ZDQWSHDFHDV
HDUQHVWO\DQGVLQFHUHO\DVZHZDQWLWDQGZHDUHLQDEHWWHUSRVLWLRQWRGHDOZLWKWKHP
QRZWKDQLQDOOWKHORQJSHULRGVLQFH,KDYHNQRZQWKHP´ 7KHVROHFDYHDWWKDW%LQJKDPQRWHGZDVWKDWWKH%ULWLVKJRYHUQPHQWZLVKHGWR
DYRLGWKHDSSHDUDQFHRIDQ$QJOR$PHULFDQIURQWLQDGYDQFHRIWKHFRQIHUHQFH+H
ZDUQHGWKDW³%ULWLVKRIILFLDORSLQLRQKDVFU\VWDOOL]HGYHU\GHILQLWHYLHZVLQUHJDUGWRWKH
-DSDQHVHSUREOHP$V,XQGHUVWDQGWKHVH,EHOLHYHWKDWXQWLOWKHPHQDFHRI-DSDQHVH
SROLF\LVPRUHDFWXDOO\SUHVVLQJWKDQDWSUHVHQWZKHQHYHQWVLQWKH)DU(DVWDUH
RYHUVKDGRZHGKHUHE\WKHWKUHDWVLQKHUHQWLQWKH(XURSHDQVLWXDWLRQ%ULWDLQZRXOGEH
DJDLQVWDQ\DSSHDUDQFHQRZRIVXFK$QJOR$PHULFDQFRRSHUDWLRQDQGFRHUFLRQYLVjYLV
-DSDQDVDOOHJHGO\ZRXOGVWUHQJWKHQWKHKDQGVRIWKHPLOLWDULVWVLQ-DSDQDQGZHDNHQWKH
FLYLOLDQHOHPHQWZKLFKLVUHSRUWHGO\UHFRYHULQJSROLWLFDOVWUHQJWK´ $YRLGLQJWKH
DSSHDUDQFHRIRXWULJKW$QJOR$PHULFDQFRRSHUDWLRQWRWKH-DSDQHVHEHFDPHDUHJXODU
UHIUDLQIURPWKH%ULWLVKGHOHJDWLRQLQWKH\HDUVDKHDG1RQHWKHOHVVRQWKHZKROHWKHZD\
VHHPHGFOHDUIRUDQ$QJOR$PHULFDQDFFRUGDWWKHFRQIHUHQFH
7KHSURVSHFWVZHUHQRWWUXO\DVIDYRUDEOHDV'DYLV%LQJKDPDQGRWKHUV
SUHVXPHGKRZHYHU1HLWKHUVLGHWUXO\JUDVSHGWKHIXOOLQWHQWLRQVRIWKHRWKHU2Q$SULO
1L[RQ5RRVHYHOW,,%LQJKDPWR5RRVHYHOW$SULO
,ELG
)586,%LQJKDPWR+XOO0D\
'DYLV+XOODQG3UHVLGHQW5RRVHYHOWPHWWRGLVFXVVJHQHUDO$PHULFDQVWUDWHJ\IRUWKH
XSFRPLQJFRQIHUHQFH5RRVHYHOWH[SUHVVHGZLOOLQJQHVVIRU$PHULFDQDWWHQGDQFHDWD
FRQIHUHQFHLQLQVSLWHRIWKHRSLQLRQIURPVRPHTXDUWHUVWKDWWKH-DSDQHVHSXVKIRU
SDULW\ZRXOGUHQGHUDQ\VXFKPXOWLODWHUDOPHHWLQJSRLQWOHVVDQGSRVVLEO\GDPDJLQJ 7KH3UHVLGHQWMXGJHGWKDWWKH8QLWHG6WDWHVVKRXOGKDYHQRWURXEOHZLWKWKH%ULWLVKLQWKH
FRPLQJFRQIHUHQFHDQGWKDW$PHULFDVKRXOGXVHWKLVDQWLFLSDWHGXQLW\WRLWVDGYDQWDJHLQ
GHDOLQJZLWK-DSDQ+HEHOLHYHGWKDW$PHULFDVKRXOGDVNIRUDQH[WHQVLRQRIWKHUDWLRVIRU
WHQ\HDUVDVZHOODVDQDFURVVWKHERDUGUHGXFWLRQRIWZHQW\SHUFHQWLQDOOFDWHJRULHV
$VVXPLQJWKDW%ULWDLQZDVDPHQDEOHDQGWKDWWKH\FRXOGZLQWKH)UHQFKDQG,WDOLDQVDV
ZHOOWKHQDOOWKHSUHVVXUHZRXOGEHXSRQ-DSDQWRDOWHULWVGHPDQGVRUHOVHDVVXPHIXOO
UHVSRQVLELOLW\IRUWKHFRQIHUHQFH¶VIDLOXUH ,WZDVEHOLHYHGWKDW$PHULFD¶VFRPPLWPHQW
WRWKHVWDWXVTXRLQDGGLWLRQWRSXWWLQJDEVROXWHUHGXFWLRQRQWKHWDEOHZRXOGSXWLWLQD
IDYRUDEOHQHJRWLDWLQJSRVLWLRQDQGDQXQDVVDLODEOHPRUDOSRVLWLRQ
8QIRUWXQDWHO\$PHULFDQSROLF\PDNHUVZHUHQRWDZDUHRIWKHH[WHQWRIWKHJXOI
EHWZHHQWKHLUDLPVDQGWKRVHRIWKH%ULWLVKJRYHUQPHQW7KH$GPLUDOW\DQGWKH'HIHQVH
5HTXLUHPHQWV&RPPLWWHH'5&KDGMXGJHGWKDWWKHULVLQJWKUHDWVLQ(XURSHDQG$VLD
KDGQHFHVVLWDWHGDQH[SDQVLRQRIWKH51¶VFUXLVHUIOHHW%ULWDLQ¶VQDYDOVWUDWHJ\ZDV
H[SODLQHGLQD$SULO$GPLUDOW\PHPRUDQGXPZKLFKVWDWHGWKDWWKHSULPDU\%ULWLVK
IOHHWFRPSULVHGRIWKHOLRQ¶VVKDUHRIWKHQDWLRQ¶VFDSLWDOVKLSVZDVWRSURYLGH³FRYHU´
IRUDZLGHO\GLVSHUVHGQHWZRUNRIFRORQLHVE\FRQWDLQLQJWKHHQHP\¶VPDLQIOHHW
+RZHYHUJLYHQWKHKLVWRULFSUREOHPRIVPDOOHUXQLWVEHLQJGLVSHUVHGIRUFRPPHUFH
UDLGLQJDQGFRPPXQLFDWLRQVGLVUXSWLRQPRELOHHVFRUWVTXDGURQVZHUHQHFHVVDU\7KH
/2&0DQXVFULSW'LYLVLRQ'DYLV3DSHUV%R[0HPRUDQGXPRIFRQYHUVDWLRQEHWZHHQ5RRVHYHOWDQG
'DYLV$SULO
,ELG
UHSRUWQRWHGWKDW³,QWKHODVW\HDUVRXUQDYDOVHFXULW\KDVEHHQVHULRXVO\MHRSDUGL]HG
VRWKDWWKHGHVSDWFKWRWKH(DVWRIDIOHHWVXIILFLHQWWRPHHWWKDWRI-DSDQ«ZRXOGOHDYHXV
ZLWKDVWUHQJWKLQ(XURSHDQDQG+RPH:DWHUVGHILQLWHO\LQIHULRUWRWKHVWURQJHVW
(XURSHDQ1DYDO3RZHU´ 7KHLPPHQVHJHRJUDSK\EHWZHHQ%ULWDLQ¶VWZRPDLQWKUHDWV
*HUPDQ\DQG-DSDQDVZHOODVWKHGXDOUROHRIFUXLVHUVDVHVFRUWVDQGDVDX[LOLDULHVWRWKH
IOHHWZRXOGUHTXLUHDFRQVLGHUDEOHLQFUHDVHLQWKHQXPEHURIFUXLVHUVUHTXLUHGIRUQDWLRQDO
VHFXULW\%DVHGRQYDULRXVFDOFXODWLRQVWKH'5&UHFRPPHQGHGDIRUFHRIQRWOHVVWKDQ
FUXLVHUVWRWDOOLQJWRQV²DKXJHLQFUHDVHRYHUWKHWRQOLPLWHVWDEOLVKHG
E\WKH/17DQGWKHVDPH%ULWLVKILJXUHWKDWKDGWRUSHGRHGWKH1DYDO&RQIHUHQFH
DQGFDXVHGDGHHSUXSWXUHLQ$QJOR$PHULFDQUHODWLRQV 0RUHWRWKHSRLQWLW
UHSUHVHQWHGDQDSSUR[LPDWHO\SHUFHQWLQFUHDVHLQWRQQDJHLQWKHFUXLVHUFDWHJRU\DWD
WLPHZKHQWKH$PHULFDQGHOHJDWLRQZDVLQVWUXFWHGWRREWDLQDQRYHUDOOSHUFHQW
GHFUHDVHLQIOHHWVWUHQJWK
7KHUHZDVDOVRDVPDOOEXWSRZHUIXODQGYHU\YRFDO%ULWLVKPLQRULW\ZKRZHUH
RSSRVHGWRWKHVRUWRI$QJOR$PHULFDQDFFRUGWKDW0DF'RQDOGKDGVRXJKWDWWKHODVW
FRQIHUHQFH0DQ\RIWKHVHPHQUHVLGHGLQWKH8.7UHDVXU\DQGEDONHGDWWKHVWDJJHULQJ
FRVWVRIPDLQWDLQLQJIOHHWVFDSDEOHRIILJKWLQJLQERWKWKH$WODQWLFDQGWKH3DFLILFLQWKH
PLGVWRIWKH'HSUHVVLRQ3URPLQHQWDPRQJWKHVHZDV:DUUHQ)LVKHUWKH3HUPDQHQW
8QGHUVHFUHWDU\RIWKH7UHDVXU\+HEHOLHYHGWKDWWKHPRVWSUXGHQWFRXUVHRQERWK
VHFXULW\DQGILQDQFLDOOLQHVZDVWRVHHNDQXQGHUVWDQGLQJZLWKWKH-DSDQHVHDQGUHPRYH
DQ\]RQHRIRYHUODSLQWKH3DFLILF2Q-DQXDU\)LVKHUXUJHGWKH*RYHUQPHQWWR
JHW³EDFNWRVRPHWKLQJOLNHRXUIRUPHUUHODWLRQVZLWK-DSDQÚHIHUULQJWRWKH
6LPSVRQ$QJOR$PHULFDQ1DYDO5HODWLRQV$GPLUDOW\VWDIIPHPR$SULO
6LPSVRQ$QJOR$PHULFDQ1DYDO5HODWLRQV
$QJOR-DSDQHVH$OOLDQFHZKLFKKDGVHFXUHG3DFLILFVHFXULW\LQWKHILUVWGHFDGHVRIWKH
WZHQWLHWKFHQWXU\:KLOHWKLVZRXOGFHUWDLQO\LQYROYHGDPDJLQJRUHYHQGHVWUR\LQJ
%ULWDLQ¶VUHODWLRQVKLSZLWK$PHULFDLWZDVDJRRGWUDGHRIIJLYHQWKDWLWZRXOGIUHHWKH
5R\DO1DY\WRIRFXVRQWKHQDWLRQ¶VXOWLPDWHSRWHQWLDOHQHP\*HUPDQ\ZKLOHDOVR
VWDYLQJRIIXQGXHQDYDOH[SDQVLRQUHTXLVLWHIRUDWZRRFHDQZDU%ULWDLQFRXOGGUDZLWV
GHIHQVLYHOLQHDW6LQJDSRUHZLWKRXWVDFULILFLQJDQ\UHDOSRZHURULQWHUHVWWKHUHE\)LVKHU
ZDVFRQWHPSWXRXVRIWKHHIIHFWWKLVZRXOGKDYHRQ$PHULFDVD\LQJLWFRXOG³FLUFOHWKH
JOREHZLWKVKLSVLIWKH\ZDQW«DQGZDLWDQGVHHIRUKRZPDQ\\HDUVWKHSROLWLFDOO\DOO
SRZHUIXO0LGGOH:HVWZLOOFRQWLQXHWRDFTXLHVFHLQSD\LQJDIDQWDVWLFELOOUHODWHGWRQR
UHDOUHTXLUHPHQWEXWSULPDULO\WRLQGXOJHWKHEUDJJDGRFLRRI<DKRRGRP´ )LVKHUZDVE\IDUWKHPRVWH[WUHPHDPRQJ%ULWDLQ¶VKLJKHVWRIILFLDOVEXWKHZDV
QRWHQWLUHO\DORQH)LUVW6HD/RUG(UQOH&KDWILHOGZKLOHQRWQHDUO\VRDQWL$PHULFDQLQ
KLVRXWORRNDV)LVKHUZDVGLVSRVHGWRDVLPLODUYLHZSRLQWDVIDUDVJHQHUDOVWUDWHJ\ZHQW
,Q-XQHMXVWEHIRUHWKHSUHOLPLQDULHVEHJDQLQ/RQGRQ&KDWILHOGZURWHWR)LVKHU
,DJUHHZLWK9DQVLWWDUW>3HUPDQHQW8QGHUVHFUHWDU\DWWKH)RUHLJQ2IILFH@WR
WKHH[WHQWWKDWZHGRQRWZDQWWRSURPSW-DSDQDWWKHH[SHQVHRIDKRVWLOH
DQGMHDORXV86$WWKHVDPHWLPH,DPHQWLUHO\ZLWK\RXWKDWZHGRQRWZDQW
WRWLHRXUVHOYHVDVZHKDYHGRQHLQWKHSDVWWRWKH86EHFDXVHVKHLV
XQUHOLDEOHDQGGRHVQRWNQRZKHURZQPLQGDQGKHUVWDWHVPHQGRQRWNQRZ
WKHPLQGRIWKHLURZQFRXQWU\1RWKLQJWKDWLVVDLGE\WKH3UHVLGHQWRUDQ\
RIWKHLU6WDWHVPHQFDQHYHUEHDFFHSWHGDWPRUHWKDQLWVIDFHYDOXHDVZHDOO
NQRZ:KHWKHURXUGLSORPDF\FDQVWHHUVRGLIILFXOWDFRXUVHDVVHHPVWREH
QHFHVVDU\EHWZHHQWKH86$DQG-DSDQ,GRQRWNQRZEXWLIRXUUHFHQW
H[DPSOHRIWU\LQJWRVWHHUDFRXUVHEHWZHHQ)UDQFHDQG*HUPDQ\LVWREH
WUXVWHGLWGRHVQRWVHHPYHU\KRSHIXO« 3HO]5DFHWR3HDUO+DUERU
6LPSVRQ$QJOR$PHULFDQ1DYDO5HODWLRQV&KDWILHOGWR)LVKHU-XQH
:KLOH&KDWILHOGZDVQRWQHDUO\VRH[WUHPHLQKLVYLHZVDV)LVKHUKHQRQHWKHOHVV
KDGOLWWOHIDLWKWKDWDFRQYHQWLRQDOFRQIHUHQFHDORQJWKHOLQHVRIWKHRQHVKHOGLQ
:DVKLQJWRQLQRU/RQGRQLQZRXOGSURGXFHXVHIXOUHVXOWV/LNH)LVKHU
&KDWILHOGZDVLQIDYRURIFHUWDLQSROLWLFDOXQGHUVWDQGLQJVEHWZHHQQDWLRQVLQFOXGLQJ
-DSDQWKDWZRXOGDOORZHDFKQDWLRQWREXLOGZKDWWKH\FRXOGMXVWLI\$VIRUWKH86
&KDWILHOGEHOLHYHGWKDW³7KHUHDUHLQKHUHQWGLIIHUHQFHVEHWZHHQXVDQGWKH86RYHU1DYDO
PDWWHUVDQG,GRQRWVHHKRZZHFDQJHWDJUHHPHQWZLWKWKHPXQOHVVZHDUHZLOOLQJWR
VDFULILFHRXUVHFXULW\RUWKH\DUHZLOOLQJWRVDFULILFHWKHLUSULGH´ &KDWILHOGDQG)LVKHU
ERWKH[SUHVVHGD%ULWLVKFULWLFLVPWKDWKDGEHHQSUHYDOHQWDWSDVWFRQIHUHQFHVWKH
DFFXVDWLRQWKDW$PHULFDKDGQRUHDOQDYDOUHTXLUHPHQWRUFHUWDLQO\QRQHWKDWMXVWLILHG
SDULW\ZLWKWKH51DQGWKDWKHUPDLQWHQDQFHRIDODUJH1DY\ZDVVWULFWO\IRUWKHSXUSRVH
RISUHVWLJH7RWKHVHFULWLFV$PHULFD¶VDFWXDOFRPPLWPHQWWRILJKWLQJVHHPHGVOLJKWDQG
WKHSURPLVHVRILWVVWDWHVPHQZHUHWKXVVXVSHFW7RWKHPGHIXVLQJDUHDOWKUHDWKDGIDU
PRUHYDOXHWKDQDFTXLULQJWKHIULHQGVKLSRIDGRXEWIXODOO\KRZHYHUSRZHUIXOLWPLJKW
EH
2Q0D\WKH%ULWLVK)RUHLJQ2IILFHIRUPDOO\LQYLWHGWKH$PHULFDQGHOHJDWLRQ
IRUSUHOLPLQDU\WDONVWREHKHOGLQHDUO\-XQHLQDGYDQFHRIWKH-DSDQHVHGHOHJDWLRQ 7KH%ULWLVKGHVLUHGWRKROGELODWHUDOWDONVZLWKERWKSRZHUVRYHUWKHVXPPHULQRUGHUWR
JDLQDVHQVHRIDOOWKHSRVLWLRQVEHIRUHWKHVFKHGXOHGFRQIHUHQFHLQ7KHUHZDVVRPH
FRQFHUQRQWKH$PHULFDQVLGHWKDWWKHLQYLWDWLRQVWHPPHGIURPD%ULWLVKVWUDWHJ\WRLQVHUW
LWVHOIEHWZHHQWKH8QLWHG6WDWHVDQG-DSDQHQDEOLQJWKHPWRGLFWDWHWHUPVWRHDFK
VHSDUDWHO\'DYLVWKRXJKWWKHVHQVLEOHPRYHZDVWRKDYHWULSDUWLWHSUHOLPLQDULHV
,ELG
)586,%LQJKDPWR+XOO0D\
³2WKHUZLVHZHPD\EHMRFNH\HGLQWRDSRVLWLRQZKHUHWKH%ULWLVKZLOOEHDFWLQJDVD
PHGLDWRUEHWZHHQWKH-DSDQHVHDQGRXUVHOYHVLQWHUSUHWLQJWRWKH-DSDQHVHRXUSRVLWLRQ
DQGWRXVWKH-DSDQHVHSRVLWLRQDQGWKHUHE\JHWWLQJDOOWKHEHQHILWVRIWKHµKRQHVW
LQDFFXUDFLHV¶´ 1RQHWKHOHVVDVWKHKRVWQDWLRQWKH6WDWH'HSDUWPHQWFRQFHGHGWKDWLW
ZDVWKH%ULWLVKJRYHUQPHQW¶VSUHURJDWLYHWRRUJDQL]HWKHFRQIHUHQFHLQWKHPDQQHUWKH\
VDZILW
$VWKHSUHOLPLQDULHVRSHQHGWKH861ZDVLQDPRUHIDYRUDEOHSRVLWLRQLQWHUPV
RIIOHHWFRPSRVLWLRQWKDQLWKDGEHHQLQWKHSUHYLRXVWZRFRQIHUHQFHV,QWKH861
KDGEHHQEDGO\XQGHUVWUHQJWKLQFUXLVHUVDQGZDVKDQGLO\RXWPDWFKHGLQWKLVFDWHJRU\E\
ERWKWKH%ULWLVKDQGWKH-DSDQHVH7KHJUHDWJDSEHWZHHQWKH861DQGWKH,-1LQFUXLVHUV
ZDVDFHQWUDOUHDVRQZK\WKHWUHDW\KDGSURGXFHGVXFKDYLROHQWUHDFWLRQLQ-DSDQGHVSLWH
WKH,-1SRVVHVVLQJDJUHDWHUQXPEHURIFUXLVHUVLQUHDOLW\WKH8QLWHG6WDWHVZDVJUDQWHG
WKHULJKWWREXLOGDIOHHWLQWKHVDPHUDWLRVWKDWJRYHUQHGFDSLWDOVKLSV %\-XQHRI
UHDOLW\KDGFRPHPXFKFORVHUWRWKHRU\HYHQLIWKHWZRZHUHQRW\HWFRQJUXRXV,Q
WHUPVRIVKLSVEXLOWEXLOGLQJDQGDSSURSULDWHGIRUZKLFKZRXOGEHXQGHUDJHE\WKHWLPH
WKH/RQGRQ7UHDW\ZRXOGH[SLUHLQ'HFHPEHUWKH8QLWHG6WDWHVSRVVHVVHGRQH
PLOOLRQWRQVWKH%ULWLVKPLOOLRQWRQVDQGWKH-DSDQHVHWRQV7KH861KDG
FUXLVHUVDIORDWRUDSSURSULDWHGIRUWKH%ULWLVKZLWKRYHUDJHFUXLVHUVDQGWKH
-DSDQHVH 0XFKRIWKH86FUXLVHUIOHHWVWLOORQO\H[LVWHGLQWKHRU\DQGLQQXPHURXV
LQVWDQFHVLQWKHLQWHUZDUSHULRG&RQJUHVVKDGD[HGWKHVHSDSHUIOHHWV +RZHYHUDVWKH
)586,'DYLVWR+XOO-XQH
%DHU6HD3RZHU
1$5*%R[*HQHUDO%RDUG5HSRUW³7UHDW\OLPLWHGFODVVHVQRZEXLOWZKLFKZLOOEHXQGHUDJH
'HFHPEHUSOXVWKRVHQRZEXLOGLQJRUDSSURSULDWHGIRU´-XQH
3UHVLGHQW&RROLGJHKDGFXWWKUHHRIWKHHLJKWFUXLVHUVDSSURSULDWHGIRULQWKHEXGJHW\HDU
0F%ULGH7HFKQRORJLFDO&KDQJH)RUILVFDO\HDUVDQG3UHVLGHQW+RRYHUILUVWKDOYHGWKHQ
*HQHUDO%RDUGQRWHGLQ0DUFKXQOLNHWKHSUHYLRXV/RQGRQ&RQIHUHQFH³E\YLUWXHRI
UHFHQWEXLOGLQJSURJUDPVWKH8QLWHG6WDWHVZLOOEHLIQRWWRWKH/RQGRQ7UHDW\OLPLWV
ZLWKLQUHDVRQDEOHDWWDLQPHQWWKHUHRI«,QFRQVHTXHQFHWKHVWDWXVTXRZLOOLQLWVHOI
SUHVHQWQREDVLVIRUDUJXPHQWE\DQ\QDWLRQIRUFKDQJHLQWKHWUHDW\UDWLRV´ 7KHSROLF\
VKLIWWKDWRFFXUUHGXQGHU5RRVHYHOWZDVDYHU\UHDORQHZLWKUHDOFRQVHTXHQFHVLQIRUHLJQ
DIIDLUV(YHQLILWKDGEHHQMXVWLILHGSULPDULO\DVDPHDQVWRFRPEDWXQHPSOR\PHQWWKH
EXLOGLQJSURJUDPWKDW5RRVHYHOWDXWKRUL]HGGHHSO\DIIHFWHGWKHDUHQDRILQWHUQDWLRQDO
DFWLYLW\LQZKLFKWKH8QLWHG6WDWHVZDVPRVWHQJDJHG*LYHQWKH3UHVLGHQW¶VSHUVRQDO
LQWHUHVWLQDUPVFRQWURODQGKLVJHQHUDOLQWHUQDWLRQDOLVWOHDQLQJVLWVHHPVOLNHO\WKDW
5RRVHYHOW¶VHQWKXVLDVPIRUWKH9LQVRQ7UDPPHOO$FWZDVGHULYHGDWOHDVWLQSDUWIURPD
ELGWRVWUHQJWKHQ$PHULFD¶VKDQGDWWKHQH[WFRQIHUHQFH
7KHSUHOLPLQDU\FRQYHUVDWLRQVEHJDQRQ-XQHDW'RZQLQJ6WUHHW3ULPH
0LQLVWHU0DF'RQDOGZDVSUHVHQWDORQJZLWK)LUVW/RUG(\UHV0RQVHOO&UDLJLHDQG
$GPLUDO/LWWOH'DYLVDQG%LQJKDPZHUHSUHVHQWIRUWKH8QLWHG6WDWHVDORQJZLWK
HPEDVV\FRXQVHORU5D\$WKHUWRQDQG&KDLUPDQRIWKH*HQHUDO%RDUG$GPLUDO/HLJK
UHSUHVHQWLQJWKH8610DF'RQDOGRSHQHGE\VD\LQJWKDWWKHZRUOGZDVPXFKFKDQJHG
IURPWKHODVWFRQIHUHQFHDQGWKDWFRQGLWLRQVZRXOGQHHGWREHDOWHUHGDFFRUGLQJO\+H
FRQWLQXHGWRVD\WKDWLQ-DSDQKDGWULHGWRSOD\WKH86DQG8.RIIHDFKRWKHUIRULWV
RZQEHQHILWEXWWKDWWKHHIIRUWKDGIDLOHG³EHFDXVHZHPDLQWDLQHGDQH[FHOOHQWOLDLVRQ´
+HVWUHVVHGWKHQHHGIRUFRQWLQXHGFORVHDQGIUDQN$QJOR$PHULFDQFRPPXQLFDWLRQLQ
WKHPRQWKVDQG\HDUVDKHDG%RWKSDUWLHVDJUHHGWKDWLWZDVKLJKO\OLNHO\WKDW-DSDQ
ZRXOGDQQRXQFHLWVDEURJDWLRQRIWKH:DVKLQJWRQ7UHDW\E\WKHHQGRIZKLFK
FDQFHOOHGQDYDOFRQVWUXFWLRQWDNLQJDODUJHELWHRXWRI&RROLGJH¶V³FUXLVHUELOO´%DHU6HD3RZHU
1$5*%R[*HQHUDO%RDUG6HULDO1R(0DUFK
JLYHQWKHWZR\HDUV¶QRWLFHWKHWUHDW\UHTXLUHGZRXOGOHDYHWKHQDYDOV\VWHPZLWKRXW
OLPLWDWLRQE\WKHHQGRIZKHQWKH/RQGRQ7UHDW\DOVRH[SLUHG7KHUHZDVDOVR
JHQHUDODJUHHPHQWWKDW-DSDQZDVLQDVWURQJHUSRVLWLRQWKDQHYHUEHIRUHDQGWKDWWKH8.
DQG86ZRXOGKDYHWRVWDQGWRJHWKHUWRUHVLVWLWVFODLPWRDQLQFUHDVHLQWKHUDWLRVDQGWR
DQ\DOWHUDWLRQWRWKH1LQH3RZHU7UHDW\ 7KHPRRGRIWKHSUHOLPLQDULHVVRXUHGKRZHYHUZKHQWKH%ULWLVKODLGRXWWKHLU
VSHFLILFSURSRVDOV2Q-XQHLQDGGLWLRQWRH[SODLQLQJWKHLUSODQVIRUDTXDOLWDWLYH
UHGXFWLRQRIEDWWOHVKLSVWRWRQVDQGLQFKJXQVWKH%ULWLVKDOVRH[SODLQHGWKHLU
FUXLVHUSURSRVDOV7KHLUSURSRVDOZDVWKUHHIROGWKDWDLQFKFUXLVHUVVKRXOGEH
DEROLVKHGEWKDWKHDY\WRQLQFKFUXLVHUVEHOLPLWHGLQQXPEHUDQGDIIL[HGWR
WKH:DVKLQJWRQUDWLRDQGFWKDWIXWXUHFUXLVHUVEHOLPLWHGTXDOLWDWLYHO\WRWRQV
DQGLQFKJXQV)XUWKHUPRUHWKH%ULWLVKDOVRLQIRUPHGWKH86RIWKHLULQWHQWLRQWRVHHND
IOHHWRIFUXLVHUVFRPSULVHGRIXQGHUDJHYHVVHOVDQGRYHUDJH$WKHUWRQREMHFWHG
WRWKLVFRQVLGHUDEOHLQFUHDVHDQGFRXOGLGHQWLI\QRVSHFLILFVLWXDWLRQZKLFKKDGDULVHQ
WKDWFRXOGMXVWLI\LW$WKHUWRQVDLGWKDWWKHSURSRVDODPRXQWHGWRDWRQQDJHLQFUHDVHRI
SHUFHQWZLWKRXWHYHQFRXQWLQJWKHLQWHQGHGUHWHQWLRQRIWKHRYHUDJHYHVVHOV$GPLUDO
/LWWOHUHSOLHGWKDWWKHFUXLVHUWRQQDJHOLPLWDJUHHGWRDWWKH/RQGRQ&RQIHUHQFH
WRQVIRUWKH%ULWLVKZDVLQWHQGHGWRSURYLGHIRULQGLYLGXDOXQLWV*LYHQWKHODUJHU
VKLSVEXLOWE\RWKHUQDWLRQVUHIHUULQJQRWVRVXEWO\WRWKHWRXFK\LVVXHRIWKH86KHDY\
FUXLVHUSURJUDP/LWWOHH[SODLQHGWKDWWRSURYLGHIRUXQGHUDJHFUXLVHUVWKHPLQLPXP
QHFHVVDU\WRQQDJHZDVWRQV7KHUHIRUHWKHLQFUHDVHZDVRQO\WUXO\WRQV
1$5*%R[1RWHVRQ/RQGRQPHHWLQJHQFORVHGLQ0HPRIURP/HLJKWR6WDQGOH\*HQHUDO
%RDUG-XO\
RUVKLSVZKLFKKHKRSHGZRXOGEHVHHQLQ$PHULFDDVDPRGHVWDQGMXVWLILDEOH
LQFUHDVH 7KHUHDFWLRQIURPWKH$PHULFDQGHOHJDWLRQZDVRQHRIGLVEHOLHIDQGKRVWLOLW\1RW
RQO\ZDVWKH%ULWLVKSRVLWLRQLUUHFRQFLODEOHZLWK5RRVHYHOW¶VGLUHFWLYHRIDSHUFHQW
UHGXFWLRQEXWLWHQWDLOHGDQLQFUHDVHLQWKHFDWHJRU\IRUZKLFKWKH86KDGORQJVWDWHGLW
KDGWKHOHDVWQHHGIRU7DNHQLQFRPELQDWLRQZLWKWKHGUDVWLFFXWVWRWKHXQLWWRQQDJHRI
EDWWOHVKLSVLWDSSHDUHGWRWKH$PHULFDQGHOHJDWHVWKDWWKH%ULWLVKSURSRVDOZDVHQWLUHO\
VHOIVHUYLQJSOD\LQJWRWKHLUVWUHQJWKVDQGRIIHULQJQRUHFRPSHQVHIRUWKHZHDNQHVVHVLW
H[SRVHGLQ$PHULFDQVHDSRZHU'DYLVZKRZDVJHQHUDOO\SUR%ULWLVKH[SUHVVHGRXWUDJH
DWWKHFUXLVHUQXPEHUV³7KHSRVLWLRQWDNHQE\WKH%ULWLVKODVW7KXUVGD\LQVXEPLWWLQJ
WKHLUQDYDOSURJUDPLVVRFRPSOHWHO\GLIIHUHQWIURPZKDWWKH\LQGLFDWHGLWZRXOGEHLQ
WKHLUFRQYHUVDWLRQVZLWK%LQJKDPDQGPHODVW$SULO´'DYLVZURWHWR+XOO³DQGVR
XQDFFHSWDEOHIURPRXUSRLQWRIYLHZDVDEDVLVIRUDWUHDW\WKDWZHKDYHDOOFRPHWRWKH
FRQFOXVLRQDIWHUIXOOFRQVLGHUDWLRQWKDWZHVKRXOGWHOO0DF'RQDOGIUDQNO\WKDWWKH
SRVVLELOLW\RIDJUHHPHQWRQVXFKDEDVLVDVWKDWLQGLFDWHGLVVRUHPRWHWKDWZHIHHOLW
ZRXOGVHUYHQRXVHIXOSXUSRVHWRFRQWLQXHIXUWKHUZLWKWKHGLVFXVVLRQVRQVXFKDEDVLV´
,WZDVLQFRQFHLYDEOHJLYHQWKHWURXEOHWKDWSUHYLRXVDGPLQLVWUDWLRQVKDGIRXQGLQVHHNLQJ
UDWLILFDWLRQRISUHYLRXVWUHDWLHVWKDWWKH6HQDWHZRXOGSDVVDQ\GRFXPHQWFRQWDLQLQJVXFK
FRVWO\LQFUHDVHV 2Q-XQH5RRVHYHOWEHFDPHGLUHFWO\LQYROYHGLQWKHGHEDFOHDQGVHQW'DYLVD
QRWHKHZLVKHGSDVVHGRQWRWKH3ULPH0LQLVWHU7KH3UHVLGHQWVDLGWKDWWKHIXWXUHRI
PRGHUQFLYLOL]DWLRQGHSHQGHGRQDGHFUHDVHRIDUPVUDWKHUWKDQDQLQFUHDVHDQGWKDWD
1$5*5HFRUGV5HODWLQJWR'LVDUPDPHQW%R[1RWHVRQSUHSDUDWLRQVIRUWKH1DYDO
&RQIHUHQFH-XQH
)586,'DYLVWR+XOO-XQH
SHUFHQWUHGXFWLRQZDVWKH8QLWHG6WDWHV¶ERWWRPOLQHIRUWKHFRQIHUHQFH5RRVHYHOW
EHOLHYHGWKDW0DF'RQDOGZDVEHLQJPDQLSXODWHGE\PLOLWDULVWVDQGELJ1DY\HQWKXVLDVWV
LQKLVFRXQWU\DQGXUJHGKLPWRUHVLVWWKHSUHVVXUHRIWKH$GPLUDOW\+HLQIRUPHG
0DF'RQDOGWKDWWKH86GHOHJDWLRQZRXOGQRWGHOYHLQWRPRUHWHFKQLFDOGLVFXVVLRQV³XQWLO
WKHQDYDOQDWLRQVDJUHHRQWKHELJEDVLFSULQFLSOH´RIDEVROXWHUHGXFWLRQV 9HU\
TXLFNO\WKHELODWHUDOWDONVORRNHGWREHLQGRXEW
7KH%ULWLVKIRUWKHLUSDUWGHIHQGHGWKHLUSRVLWLRQE\SRLQWLQJRXWWKDW%ULWDLQ¶V
VHFXULW\FRQFHUQVZHUHERWKJUHDWHUDQGPRUHQXPHURXVWKDQLQ$WWKHWLPHRIWKH
/1&WKH8.OLNHWKH86KDGUHDOO\RQO\-DSDQWREHFRQFHUQHGDERXWDVDQDYDOWKUHDW
,QWKHSDVW\HDUWKHUHKDGDULVHQLQFUHDVLQJWKUHDWVSRWHQWLDORUDFWXDOLQERWKWKH1RUWK
6HDDQGWKH0HGLWHUUDQHDQ7KHUHZDVDOVRWKHDGGHGIDFWRUWKDWWKH86ZLWKGUDZDOIURP
WKH3KLOLSSLQHVFDVWGRXEWRQ$PHULFDQSROLF\LQWKH3DFLILF%ULWLVKSROLF\PDNHUVZHUH
OHVVFRQILGHQWWKDQHYHUWKDWWKH86ZRXOGVWDQGZLWKWKHPLQFDVHRIWURXEOHLQWKH
3DFLILF 7KH%ULWLVKDOVRFODLPHGWKDW$PHULFDQSDUDPHWHUVIRUUHGXFWLRQZHUHWRR
QDUURZ7KH86GHOHJDWLRQVRXJKWWRQQDJHUHGXFWLRQVROHO\E\GHFUHDVLQJWKHQXPEHURI
XQLWV7KH%ULWLVKZKRVHIDUIOXQJUHVSRQVLELOLWLHVUHTXLUHGDJOREDOSUHVHQFHQHHGHGWKH
VDPHQXPEHURIXQLWVRUPRUHEXWZLVKHGWRUHGXFHDQGUHJXODWHWKHPD[LPXPWRQQDJH
RIHDFKXQLW(\UHV0RQVHOOVDLGWKDWLIDOOWKH%ULWLVKTXDOLWDWLYHUHVWULFWLRQVZHUH
DGRSWHGWKDWLWZRXOGDPRXQWWRDQDSSUR[LPDWHO\SHUFHQWUHGXFWLRQLQRYHUDOO
WRQQDJH $PHULFDQVWUDWHJ\LQWKH3DFLILFKRZHYHUKDGORQJUHTXLUHGODUJHYHVVHOV
ZLWKODUJHFUXLVLQJUDGLLDQGWKHUHIRUHWKHTXDOLWDWLYHURDGWRUHGXFWLRQZDVXQDFFHSWDEOH
)586,5RRVHYHOWWR'DYLV-XQH
)586,%LQJKDPWR+XOO-XQH
1$5*%R[1RWHVRQ/RQGRQPHHWLQJHQFORVHGLQ0HPRIURP/HLJKWR6WDQGOH\*HQHUDO
%RDUG-XO\
WRWKH8QLWHG6WDWHV,WZDVDV&UDLJLHKDGVDLGWKH%ULWLVKZHUHPRUHFRQFHUQHGZLWK
QXPEHUVZKHUHDVWKH$PHULFDQVZHUHPRUHFRQFHUQHGZLWKXQLWVL]H7KLVIXQGDPHQWDO
GLVFRQQHFWZDVFDXVLQJIDUPRUHSUREOHPVWKDQWKH86GHOHJDWLRQKDGDQWLFLSDWHG
2Q-XQH'DYLVLQIRUPHGWKH%ULWLVKWKDWWKHLUSURSRVDOVKDG³JUHDWO\VXUSULVHG
DQGVKRFNHGWKH$PHULFDQ'HOHJDWLRQDVZHOODVWKH*RYHUQPHQWDW:DVKLQJWRQ´DQG
WKDW³7KH8QLWHG6WDWHVZDVXQZLOOLQJWRWDNHWKHPDVDEDVLVIRUGLVFXVVLRQ´ 'DYLV
DFFXVHGWKH%ULWLVKRIIDOVHIDLWKVD\LQJWKDWZKHQKHKDGPHW&UDLJLHDQG/LWWOHLQ$SULO
WKH\KDGJLYHQWKHLPSUHVVLRQWKDW³WKHYLHZVRIWKHWZR*RYHUQPHQWVZHUHVXIILFLHQWO\
FORVHWRMXVWLI\WKHLQDXJXUDWLRQRIWKHSUHVHQWSUHOLPLQDU\FRQYHUVDWLRQVÉXWKDG
QHJOHFWHGDQ\PHQWLRQRIWKH³ODUJHLQFUHDVHLQFUXLVHUWRQQDJH´ZKLFKWKH\PXVWKDYH
NQRZQWKH86ZRXOGUHMHFW0DF'RQDOGUHSOLHGWKDWKHZLVKHGWKH8QLWHG6WDWHVZRXOG
WDNH%ULWDLQ¶VVHFXULW\SUREOHPVPRUHVHULRXVO\DQGRIIHUFRQFUHWHDOWHUQDWLYHVDVWRKRZ
WRIL[LW'DYLVKHOGWKHDGPLQLVWUDWLRQOLQHDQGVDLGWKDWWKHGHOHJDWLRQFRXOGQRWGHOYH
LQWRWHFKQLFDOQHJRWLDWLRQVXQWLOWKHSULQFLSOHRIUHGXFWLRQZDVDFFHSWHGE\WKH%ULWLVK
7KHWDONVZHUHVXVSHQGHGIRUVHYHUDOGD\VWKHUHDIWHU 7KHSUREOHPOD\DWOHDVWLQSDUWZLWK$PHULFDQH[SHFWDWLRQV7KH86GHOHJDWLRQ
DSSURDFKHGWKHSUHOLPLQDULHVZLWKPXFKWKHVDPHDWWLWXGHDVWKH\KDGWKH
FRQIHUHQFHVLQFHLQWKHLQWHUYHQLQJIRXU\HDUVOLWWOHKDGFKDQJHGLQWHUPVRI$PHULFDQ
VHFXULW\SUREOHPV7KH861ZDVDOPRVWVROHO\IRFXVHGRQ-DSDQDV$PHULFD¶VHYHQWXDO
QDYDOHQHP\7KHHYHUHYROYLQJ:DU3ODQ2UDQJHWKH-RLQW$UP\DQG1DY\ZDUSODQWR
1$5*5HFRUGV5HODWLQJWR'LVDUPDPHQW%R[1RWHVRQSUHSDUDWLRQVIRUWKH1DYDO
&RQIHUHQFH-XQH
,ELG
GHIHDW-DSDQLQWKH3DFLILFGRPLQDWHGVWUDWHJLFWKLQNLQJLQWKH1DY\'HSDUWPHQW 1HDUO\HYHU\IOHHWH[HUFLVHFRQGXFWHGLQWKHLQWHUZDUSHULRGKDGWKH3DFLILFDVLWV
SURVSHFWLYHEDWWOHILHOGDQGWKH-DSDQHVHDVWKHSURVSHFWLYHHQHP\ 7KHUHZDVDOVRWKH
FRQWHQWLRXVLVVXHRIQDYDOUHTXLUHPHQWV$OWKRXJKWKH1DY\'HSDUWPHQWIUHTXHQWO\
WRXWHG$PHULFD¶VGHSHQGHQFHRQWUDGHDQGLPSRUWVRIUDZPDWHULDOVZKHQMXVWLI\LQJ
QDYDOH[SHQGLWXUHVWRWKHDGPLQLVWUDWLRQRUWKHSRSXODFHZLWKLQWKH'HSDUWPHQWWKLVYLHZ
ZDVQRWDOZD\VKHOG:ULWLQJWR$GPLUDO/HLJKZKRZDVWRUHSUHVHQWWKH1DY\DWWKH
SUHOLPLQDULHV*HQHUDO%RDUGPHPEHU:LOOLDP/5RGJHUVRSLQHGWKDWDVORQJDVWKH
861FRXOGSUHVHUYHLWVFRPPHUFHZLWK6RXWK$PHULFDDQGDVIDUZHVWDV+DZDLL
$PHULFDZRXOGUHPDLQUHODWLYHO\VHOIVXIILFLHQWIRULWVGRPHVWLFHFRQRP\³7KHVH
VRXWKHUQFRXQWULHVIXUQLVKDOPRVWDOOWKHUDZSURGXFWVZHGRQRWKDYHRXUVHOYHVEXW
ZKLFKZHPXVWKDYHIRU$PHULFDQLQGXVWULHV´5RGJHUVZURWHWR/HLJKLQ)HEUXDU\³$Q
HTXLWDEOHUDWLRRIQDYLHVIRUWKH8QLWHG6WDWHVLVRQHLQZKLFKERWKKHUPHUFKDQWIOHHW
DQGKHU1DY\DUHGRPLQDQWLQ1RUWKDQG6RXWK$PHULFDQZDWHUV´ 5RGJHUVMXGJHGWKH
FXUUHQWUDWLRVZHUHVXIILFLHQWWRPDLQWDLQUHJLRQDOKHJHPRQ\DQGWRGLVVXDGHDQ\
RYHUVHDVLQWHUORSHUVDQGWKHUHIRUHEHOLHYHGWKHVWDWXVTXRVKRXOGEHPDLQWDLQHG
7KH%ULWLVKZHUHPXFKPRUHH[SRVHG1RWRQO\GLGWKH\VKDUHWKHORQJUDQJH
WKUHDWRI-DSDQEXWLWVRZQQHDUDEURDGZDVILOOHGZLWKVWURQJSRWHQWLDOHQHPLHV(DUOLHU
LQWKH\HDUWKH'5&KDGLGHQWLILHG*HUPDQ\DVWKH8.¶V³XOWLPDWHSRWHQWLDOHQHP\
DJDLQVWZKLFKRXUµORQJUDQJH¶'HIHQFHSROLF\PXVWEHGLUHFWHG´DQGWKDWQDWLRQOD\RQ
0LOOHU:DU3ODQ2UDQJH'HVSLWHIRUPXODWLQJVRPHK\SRWKHWLFDOZDUSODQVIRUFRQIOLFWZLWK
%ULWDLQLQWKH$WODQWLFDOPRVWDOOVWUDWHJLFWKLQNLQJZDVGHGLFDWHGWRWKH3DFLILFWKHDWHU
)HONHU7HVWLQJ$PHULFDQ6HD3RZHU
1$5*%R[$GPLUDO5/5RGJHU¶VPHPRFRQFHUQLQJ*HQHUDO%RDUG6HULDO1R
-DQ
%ULWDLQ¶VGRRUVWHS )XUWKHUPRUH%ULWDLQZDVPXFKPRUHREYLRXVO\GHSHQGHQWRQ
LPSRUWVIRUEDVLFIXQFWLRQLQJWKDQWKH8QLWHG6WDWHVZDV7KH8.ZDVIDUIURPEHLQJ
VHOIVXIILFLHQWLQIRRGWRVD\QRWKLQJRIUDZPDWHULDOVIRULWVLQGXVWU\,WVLPSRUWVFDPH
IURPHYHU\FRUQHURILWVIDUIOXQJHPSLUHDQGUHTXLUHGE\IDUWKHZRUOG¶VODUJHVWPHUFKDQW
PDULQH7KHVHWUDQVSRUWVKLSVUHTXLUHGSURWHFWLRQRYHUWKHORQJVHDURXWHVWKDWFURVVHG
WKURXJKPDQ\GDQJHURXVZDWHUV7KHGLIIHUHQFHEHWZHHQWKHWZRRXWORRNVZDVFOHDU7KH
8QLWHG6WDWHVZDVJHQHUDOO\FRQWHQWZLWKWKHQDYDOVWDWXVTXRLQRUGHUWRPDLQWDLQLWVRZQ
VHFXULW\DQGYLHZHGDUPVOLPLWDWLRQSULPDULO\DVDPHDQVRIUHGXFLQJH[SHQGLWXUHVWR
FRPEDWWKH*UHDW'HSUHVVLRQ%ULWDLQZDVLQFUHDVLQJO\DQ[LRXVDERXWDQRWKHUJOREDO
FRQIOLFWDQGYLHZHGDUPVOLPLWDWLRQSULPDULO\DVDPHDQVWRPDQDJLQJQDYDO
XQFHUWDLQWLHVYLDERWKTXDOLWDWLYHDQGTXDQWLWDWLYHUHVWULFWLRQV%ULWLVKDQG$PHULFDQ
VHFXULW\HVWLPDWLRQVWKHUHIRUHZHUHZRUOGVDSDUWDQGSRRUELODWHUDOFRPPXQLFDWLRQKDG
UHYHDOHGWKHJDSDWDWLPHZKHQWKHWZRQDWLRQVKDGSODQQHGWRFRRUGLQDWHVWUDWHJ\
DJDLQVWWKH-DSDQHVH
$PHULFDQRIILFLDOVH[SUHVVHGJUDYHGLVDSSRLQWPHQWZLWKWKH%ULWLVKSURSRVDOV
+XOOFRQVLGHUHGWKH8.¶VQXPEHUVWREHXQDFFHSWDEOHDQGLWVGLYHUJHQFHIURP$PHULFDQ
DLPVWRRJUHDWWREHEULGJHG $PEDVVDGRU%LQJKDPUHFRPPHQGHGWKDWWKHWDONVEH
EURNHQRIIVLQFHWKH\ZHUHFOHDUO\JRLQJQRZKHUHDQGZRXOGVHUYHRQO\WRPDNHWKH
-DSDQHVHVXVSLFLRXV 7KHIRUPDOSUHOLPLQDULHVZHUHVXVSHQGHGZLWKRXWDQ\
FRPSURPLVHRUSURJUHVVEHLQJPDGH
,QWHUHVWLQJO\WKH1DY\GHPRQVWUDWHGPRUHIRUEHDUDQFHZLWKWKH%ULWLVKWKDQWKHLU
FRXQWHUSDUWVLQ6WDWH$GPLUDO/HLJKUHPDLQHGLQ/RQGRQDQGPHWSULYDWHO\ZLWK$GPLUDO
&$%³,PSHULDO'HIHQVH3ROLF\±5HSRUWRI'HIHQFH5HTXLUHPHQWV&RPPLWWHH´0DUFK
)586,+XOOWR%LQJKDP-XQH
)586,%LQJKDPWR+XOO-XO\
/LWWOHRQVHYHUDOPRUHRFFDVLRQV2Q-XO\/HLJKWROG/LWWOHWKDWWKH861³GLGZLVKYHU\
PXFKWRFRPHWRDIULHQGO\XQGHUVWDQGLQJZLWKWKHPWKDWWKHLUILJXUHVIRULQFUHDVHG
WRQQDJHZHUHPXFKKLJKHUWKDQZHKDGDQ\LGHDWKH\ZRXOGEH´DQGWKDWWKH
DGPLQLVWUDWLRQZDVHDUQHVWO\VHHNLQJDSHUFHQWUHGXFWLRQ/LWWOHUHSOLHGWKDWZKLOH
WKHUHZHUHGLIILFXOWLHVEHWZHHQWKHPKHZDVFRQILGHQWWKDWWKHWZRQDWLRQVZRXOGFRPH
WRDQXQGHUVWDQGLQJEHIRUHWKHFRQIHUHQFH 7KH)LUVW6HD/RUG&KDWILHOGWROG
/HLJKRQ-XO\WKDWWKHLU3ODQV'LYLVLRQKDGFDUHIXOO\VWXGLHGWKHJOREDOVLWXDWLRQDQG
KHKRSHGWKDWWKH8QLWHG6WDWHVFRXOGEHV\PSDWKHWLFWR%ULWDLQ¶VQXPHURXV
YXOQHUDELOLWLHV+HDVVXUHG/HLJKWKDWWKHLUSODQVKDGJLYHQQR³WKRXJKWRIGHIHQVH
DJDLQVWWKH8QLWHG6WDWHV´ /HLJKUHSRUWHGKLVPHHWLQJVZLWKWKH%ULWLVKIDYRUDEO\WR&126WDQGOH\DQG
6HFUHWDU\RIWKH1DY\6ZDQVRQ+HVDLGWKDW³%ULWLVKRIILFLDOVZHUHPRVWFRUGLDODQG
IULHQGO\DQGRQHYHU\RFFDVLRQHYLGHQFHGWKHLUGHVLUHIRUFRRSHUDWLRQZLWKWKH8QLWHG
6WDWHV«´ 7KHPDLQWHQDQFHRIWKHSDULW\SULQFLSOHZDVQRWLQTXHVWLRQDQG%ULWLVKIOHHW
QHHGVZHUHRFFDVLRQHGHQWLUHO\E\-DSDQHVHDQG)UHQFKEXLOGLQJQRWE\WKHUHFHQWVSDWH
RI86FRQVWUXFWLRQ+HIXUWKHUPRUHEHOLHYHGWKDWWKH%ULWLVKZHUHDQ[LRXVIRUDUHQHZDO
RIWKHWUHDWLHVEXWWKDWWKH$GPLUDOW\¶VYLHZVWKRXJKVXSUHVVHGLQZHUHDJDLQLQ
WKHDVFHQGDQWDQGZRXOGIRUFHDODSVHLQWKHWUHDWLHVEHIRUHDQ³XQVDWLVIDFWRU\
UHQHZDO´ :KLOH/HLJKGLGKROGWKHYLHZWKDWWKH8.¶VLQVLVWHQFHRQWKHWRQ
EDWWOHVKLSVWHPPHGIURPDGHVLUH³WRGHWHUXVIURPDFTXLULQJYHVVHOVLQGLYLGXDOO\
1$5*%R[1RWHVRQ/RQGRQPHHWLQJHQFORVHGLQ0HPRIURP/HLJKWR6WDQGOH\*HQHUDO
%RDUG0HPRRI$GPLUDO/HLJK¶VPHHWLQJZLWK$GPLUDO/LWWOH-XO\
1$5*%R[1RWHVRQ/RQGRQPHHWLQJHQFORVHGLQ0HPRIURP/HLJKWR6WDQGOH\*HQHUDO
%RDUG0HPRRI$GPLUDO/HLJK¶VPHHWLQJZLWK$GPLUDO&KDWILHOG-XO\
1$5*%R[*HQHUDO%RDUG/HLJKWR6ZDQVRQ-XO\
,ELG
VXSHULRUWRWKHLUV´DQGWRUHWDLQLWVGHIDFWRVWDWXVDVWKHZRUOG¶VSUHHPLQHQW1DY\KHZDV
QRQHWKHOHVVJHQHUDOO\IDYRUDEOHWRZDUGVDQ$QJOR$PHULFDQDFFRUG+HEHOLHYHGWKDWWKH
86VKRXOGDFFHSW%ULWDLQ¶VLQYLWDWLRQWRFRQWLQXHWDONVLQ2FWREHUEHFDXVHRIWKHFOHDU
YDOXHRI³PXWXDOVXSSRUWÉHWZHHQWKHQDWLRQVWR³VXEGXH-DSDQHVHDVSLUDWLRQV´/HLJK¶V
RWKHUFRQFHUQOD\ZLWKWKHSRVVLELOLW\WKDWDQ$PHULFDQDEVHQFHPLJKWPDNHWKH%ULWLVK
³PRUHLQFOLQHGWRµWUDGH¶ZLWKWKH-DSDQHVHSDUWLFXODUO\LQYLHZRIRXUREYLRXVO\FROG
UHFHSWLRQRIWKHLURZQILJXUHV´ 7KH&KDLUPDQRIWKH*HQHUDO%RDUGDERG\RIDGPLUDOVXVXDOO\ODEHOHGLQWKH
KLVWRULRJUDSK\DVDQDWLRQDOLVWLFDQG$QJORSKRELFKDYHQZDVDOVRFRQVLGHUDEO\PRUH
HQWKXVLDVWLFDERXWWKHSURVSHFWRIFRRSHUDWLQJZLWKWKH%ULWLVKWKDQZDVWKH6WDWH
'HSDUWPHQW7KH1DY\¶VZLOOLQJQHVVWRGHDOZLWKWKH%ULWLVKGHULYHGDWOHDVWLQSDUWIURP
LQFUHDVLQJO\GLUHZDUQLQJVIURP21,$-XO\UHSRUWVWDWHGWKDWQHDUO\DOORI-DSDQ¶V
QDYDOSODQQLQJZDVGLUHFWHGDJDLQVWWKH8QLWHG6WDWHV7KH-DSDQHVHMXGJHGWKDWWKH\
FRXOGODUJHO\LJQRUHWKH(XURSHDQSRZHUVLQFOXGLQJ%ULWDLQGXHWRWKHKLJKXQVHWWOHG
DQGFRPSOH[QDYDOVLWXDWLRQLQWKDWVSKHUH7KH-DSDQHVHZRXOGVHWWOHIRUQRWKLQJOHVV
WKDQSDULW\DWWKHQH[WFRQIHUHQFHWKHUHSRUWSUHGLFWHGDQGIDLOXUHWRDFKLHYHWKDWZRXOG
UHQGHUIXUWKHUQHJRWLDWLRQVXVHOHVVLQWKHH\HVRI-DSDQHVHSROLF\PDNHUV 86
$PEDVVDGRU-RVHSK&*UHZLQ7RN\RUHSRUWHGWKDWWKH-DSDQHVH)OHHW)DFWLRQKDG
ZKLSSHGXSSXEOLFVXSSRUWWRVXFKDQH[WHQWWKDW³LWLVGRXEWIXOLIDQ\-DSDQHVH
UHSUHVHQWDWLYHFRXOGVLJQDQHZWUHDW\RQWKHEDVHVRIWKHSUHVHQWUDWLRVDQGDYRLG
DVVDVVLQDWLRQRQKLVUHWXUQWR-DSDQ´ *UHZDOVRQRWHGLQ-XO\WKDW-DSDQHVHQDYDO
H[SHQGLWXUHVKDGLQFUHDVHGSHUFHQWRYHUWKHODVW\HDUVFRPSDUHGWRDSDOWU\
,ELG
/2&0DQXVFULSW'LYLVLRQ'DYLV3DSHUV%R[1DYDO$WWDFKp-DSDQ5HSRUW1R-XO\
/2&0DQXVFULSW'LYLVLRQ'DYLV3DSHUV%R[*UHZWR+XOO6HSWHPEHU
SHUFHQWLQFUHDVHIRUWKH861DQGDQHWGHFUHDVHLQVSHQGLQJIRUWKH51 $OOWKHZKLOH
WKHUKHWRULFIURP-DSDQHVHRIILFLDOVZDVEHFRPLQJPRUHDQGPRUHEHOOLJHUHQW,Q2FWREHU
$GPLUDO+LELQRVSRNHEHIRUHDQDXGLHQFHRILQ2VDNDZDUQLQJRIWKHGDQJHURIDQ
$PHULFDQDWWDFNDQGDVVXULQJWKHSHRSOHRIWKHXOWLPDWHYLFWRU\RIWKH,-17KHLPSROLWLF
VSHHFKDOVRODLGRXWSODQVIRUFRQWLQXHGH[SDQVLRQRI-DSDQHVHLQIOXHQFHRQPDLQODQG
&KLQDDQGVSRNHRIWKHIHDUWKDWWKH(XURSHDQVKHOGIRUWKHLUQDWLRQ )DFHGZLWKWKH
GLIILFXOWDQGGHWHULRUDWLQJUHDOLWLHVRIWKH3DFLILFLQDPRUHYLVFHUDOVHQVHWKDQWKH
GLSORPDWVRIWKH6WDWH'HSDUWPHQWWKHUHZHUHVRPHLQWKH1DY\SXVKLQJIRUFORVHWLHV
ZLWK%ULWDLQHYHQDVWKHFLYLOLDQVEDFNHGDZD\
+RZHYHU/HLJK¶VVHQVHWKDWWKHGLVDVWURXVSUHOLPLQDULHVLQ-XQHKDGHQFRXUDJHG
FHUWDLQ%ULWLVKSROLF\PDNHUVWR³WUDGH´ZLWKWKH-DSDQHVHZDVXQIRUWXQDWHO\FORVHWRWKH
PDUN:ULWLQJWR)RUHLJQ6HFUHWDU\-RKQ6LPRQLQ6HSWHPEHU&KDQFHOORURIWKH
([FKHTXHU1HYLOOH&KDPEHUODLQVDLG³$VIRUWKH86$GRQ¶WOHWXVEHEURZEHDWHQE\
KHU6KHZLOOQHYHUUHSD\XVIRUVDFULILFLQJRXULQWHUHVWVLQRUGHUWRFRQFLOLDWHKHU«´
&KDPEHUODLQEHOLHYHGWKDW'DYLV¶DWWLWXGHDWWKHSUHOLPLQDULHVZDV³RQO\DUHSHWLWLRQRID
SURFHGXUHZLWKZKLFKZHKDYHEHFRPHYHU\IDPLOLDU´)LUVWWKH$PHULFDQVZRXOG
HPSKDVL]HWKHJUHDWDGYDQWDJHVWKDWZRXOGDFFUXHLIWKHWZRQDWLRQVZRUNHGWRJHWKHUDQG
LQWKLVVSLULWZRXOGLQGXFHWKH%ULWLVKWROD\EDUHWKHLUSODQVZLWKRXWUHYHDOLQJWKHLURZQ
³:KHQZHKDYHODLGDOORXUFDUGVRQWKHWDEOHWKH\VKDNHWKHLUKHDGVVDGO\DQGH[SUHVV
WKHLUUHJUHWIXOFRQYLFWLRQWKDW&RQJUHVVZLOOKDYHQRWKLQJWRGRZLWKXVXQOHVVZHFDQ
PDNHWKHPDQRIIHUWKDWZLOOVXLWWKHPEHWWHU´ 7R&KDPEHUODLQLWVHHPHGFOHDUWKH
1$5*%R[1DYDO$WWDFKp/RQGRQ5HSRUW1R0D\
/2&0DQXVFULSW'LYLVLRQ'DYLV3DSHUV%R[1DYDO$WWDFKp-DSDQ5HSRUW1R1RY
'RFXPHQWVRQ%ULWLVK)RUHLJQ3ROLF\6HFRQG6HULHV9RO;,,,+HUHDIWHU'%)3HG:10HGOLFRWW
HWDO/RQGRQ+HU0DMHVW\¶V6WDWLRQDU\2IILFH&KDPEHUODLQWR6LPRQ6HSWHPEHU
$PHULFDQVZHUHPDQLSXODWLQJ%ULWDLQ¶VYXOQHUDELOLW\WRVHUYHWKHLURZQLQWHUHVWV
&KDPEHUODLQOLNH)LVKHUVHHPHGWRIDYRUDQXQGHUVWDQGLQJZLWKWKH-DSDQHVHWKDWZRXOG
IUHHWKHQDWLRQRILWV3DFLILFYXOQHUDELOLWLHV 7UHDVXU\RIILFLDOVZHUHGLVSRVHGWRWKLVYLHZKRZHYHUDIWHUWKH-XQHWDONVD
VLPLODURSLQLRQSHUPHDWHGRWKHUDUHDVRIWKH%ULWLVK*RYHUQPHQW-RKQ6LPRQZDVDOVR
FRPLQJDURXQGWRWKHSRVVLELOLW\RI³WUDGLQJ´ZLWK-DSDQDWWKHH[SHQVHRI$QJOR
$PHULFDQUHODWLRQV³2XU$PHULFDQIULHQGVPD\ZHOOEHVLQFHUHLQVD\LQJWKDWWKH\GRQRW
PLQGKRZELJD1DY\ZHKDYH´6LPRQVDLGLQ-XQH³>7@KHLUUHDOFRQFHUQLVWKDWWKH
%ULWLVKQHHGVVKRXOGQRWHQFRXUDJH-DSDQWREXLOGD1DY\VRELJDVWRWKUHDWHQ$PHULFD
,WPD\EHWKHUHIRUHWKDWWKHRQO\KRSHZRXOGEHIRUDSUHOLPLQDU\$QJOR-DSDQHVH
QHJRWLDWLRQZKLFKIL[HGWKH-DSDQHVH1DY\DWDUHDVRQDEOHOHYHODQGWKHQWRIDFHWKH
$PHULFDQVZLWKWKHSURVSHFWRIORVLQJWKLVDGYDQWDJHLIWKH\GRQRWILQGLWSRVVLEOHWR
DJUHHRQWKH>KLJKHU@%ULWLVKOHYHO´ ([DVSHUDWHGE\WKH$PHULFDQUHIXVDOWRDFFHSW
%ULWLVKILJXUHVWKHUHZHUHVRPHLQWKH)2ZKREHOLHYHGWKHRQO\ZD\WRFRUUDOWKH8QLWHG
6WDWHVZDVWRPDQLSXODWHLWVDQ[LHW\RYHU-DSDQ
(YHQ5REHUW&UDLJLHZKRKDGEHHQDOHDGLQJYRLFHIRUFRQFLOLDWLRQZLWKWKH
$PHULFDQVDWWKHODVWFRQIHUHQFHH[SUHVVHGKLVGRXEWVDVWRWKHIXWXUHRIWKHUHODWLRQVKLS
+HZDVFRQILGHQWWKDW5RRVHYHOWZDVSHUVRQDOO\LQWHUHVWHGLQHVWDEOLVKLQJJRRGUHODWLRQV
ZLWK%ULWDLQDQGWKDWKHZDVJHQHUDOO\LQWHUQDWLRQDOLVWLQKLVRXWORRN+RZHYHUKH
EHOLHYHGWKDWWKH3UHVLGHQW³LVVXUURXQGHGE\PHQZKRWU\WRQDUURZZKDWZRXOG
QRUPDOO\EHDEURDGYLVLRQLQIRUHLJQDIIDLUV´$PRQJWKHVHQDUURZPLQGHGPHQKH
FRXQWHG1DY\6HFUHWDU\6ZDQVRQZKRKHGHHPHGD³GLHKDUGELJQDY\LVWZKREHOLHYHV
'%)3QG6HULHV9RO;,,,)RUHLJQ2IILFH0HPR2FW
0F.HUFKHU*UHDW%ULWDLQ3UH(PLQHQW
LQEOXVWHUDQGWKHELJVWLFN´DQGUDWKHUXQIDLUO\1RUPDQ'DYLVZKRKHWKRXJKW³WHQGHG
WRHPSKDVL]HUDWKHUWKDQWRPRGHUDWH0U5RRVHYHOW¶VQDWXUDOLQFOLQDWLRQWRORRNDWWKLV
TXHVWLRQWKURXJKGRPHVWLFVSHFWDFOHV´:KLOHKHEHOLHYHGWKDWWKHSXVKIRUDQ$QJOR
-DSDQHVHXQGHUVWDQGLQJZDVDGDQJHURXVLOOXVLRQKHGLGQRWVHHKRZWRSURFHHGZLWKWKH
$PHULFDQV 7KH86GHOHJDWLRQZDVLQYLWHGWRWULODWHUDOSUHOLPLQDU\GLVFXVVLRQVIRU2FWREHU
'HVSLWHWKHPLVJLYLQJVRIVRPHZLWKLQWKH6WDWH'HSDUWPHQWWKHWDONVZRXOGJRIRUZDUG
$WDPHHWLQJEHWZHHQWKH6WDWHDQG1DY\'HSDUWPHQWVLQ6HSWHPEHU&126WDQGOH\
LQVLVWHGWKDWLWZDVVWLOOSRVVLEOHWRLQFOXGH-DSDQLQDQDUPVOLPLWDWLRQVFKHPH
5HJDUGOHVVRIWKH³FKDXYLQLVWLF´WDONIURPWKH-DSDQHVHTXDUWHURIODWH6WDQGOH\ZDV
FRQILGHQWWKDWWKH-DSDQHVHZRXOGQRWOLJKWO\WKURZWKH:DVKLQJWRQ7UHDW\RXW6WDQGOH\
DOVRXUJHGWKH6WDWH'HSDUWPHQWWRGHILQH$PHULFD¶V)DU(DVWHUQSROLF\HFKRLQJ
+RUQEHFN¶VHDUOLHUSOHD:KHQWKHGLVFXVVLRQVKLIWHGWR86VWUDWHJ\UHJDUGLQJ%ULWDLQDOO
QDYDORIILFHUVSUHVHQWEHOLHYHGWKDW$PHULFDRXJKWWRFRPHWRDQXQGHUVWDQGLQJZLWKWKH
8. 7KHHDUO\SUHOLPLQDULHVKDGJRWWHQRIIWRDURWWHQVWDUW%RWKVLGHVRIWKH$QJOR
$PHULFDQUHODWLRQVKLSSDUWHGLQ-XQHUHPDUNDEO\VRXUHGE\WKHSURVSHFWVRIWKHUHODWLRQV
EHWZHHQWKHLUWZRQDWLRQV*LYHQWKHJURZLQJRYHUODSLQLQWHUHVWVDQGYXOQHUDELOLWLHVLQ
WKH3DFLILFEHWZHHQWKH86DQG8.DQGWKHRSWLPLVPWKDWH[LVWHGLQERWKFDPSVMXVW
SULRUWRWKH-XQHWDONVWKHUHYHUVDOZDVDUHPDUNDEOHRQH7KHEUHDNLQWKHUHODWLRQVKLSLV
DWHVWDPHQWWRWKHGLIILFXOW\RIDUPVFRQWURO7KH86DQG8.ZHUHJHQHUDOO\RQIULHQGO\
WHUPVLQDQGWKHVHFXULW\RIERWKQDWLRQVZDVLQWLPDWHO\UHODWHGWRWKHVWUHQJWKRIWKH
'%)3QG6HULHV9RO;,,,)RUHLJQ2IILFH0HPR$XJXVW
/2&0DQXVFULSW'LYLVLRQ'DYLV3DSHUV%R[0HPRRIPHHWLQJEHWZHHQ6WDWH'HSDUWPHQWDQG
1DY\'HSDUWPHQW6HSWHPEHU
RWKHU,IQHJRWLDWLRQVFRXOGEHGHUDLOHGXQGHUFRQGLWLRQVVXFKDVWKHVHLWFDOOVLQWR
TXHVWLRQWKHYLDELOLW\RIDUPVFRQWUROEHWZHHQQDWLRQVZKLFKDUHLQWKHPLGVWRIDKRVWLOH
FRPSHWLWLRQRILQWHUHVWV²LQRWKHUZRUGVWKHVRUWRILQWHUQDWLRQDOUHODWLRQVKLSVWKDWPLJKW
DFWXDOO\EHVWDELOL]HGE\DQDUPVFRQWURODJUHHPHQW
+RZHYHUWKHHSLVRGHPLJKWQRWEHLQGLFDWLYHRIWKHGLIILFXOW\RIDUPVFRQWURO
VLPSO\EHFDXVHLWZDVLQPDQ\ZD\VD³EHVWFDVHVFHQDULR´LQZKLFKWRWHVWLWV
DSSOLFDWLRQ,QGHHGWKHFORVHQHVVRIWKHUHODWLRQVKLSPLJKWKDYHDFWXDOO\ZRUNHGWRWKH
GHWULPHQWRIQHJRWLDWLRQV7KHODFNRISUHVVXUHRQDQ\SDUWLFXODUVHFXULW\LVVXH²QHLWKHU
WKH$PHULFDQVQRUWKH%ULWLVKSURMHFWHGWKHLUEXLOGLQJSURJUDPVZLWKWKHRWKHULQPLQG²
HQFRXUDJHGWKHSDUWLHVWRTXLEEOHRQPDWWHUVRIFRPSDUDWLYHO\VPDOOLPSRUWDQFH7KH86
GHOHJDWLRQREMHFWHGLQWKHVWURQJHVWWHUPVWRDUHODWLYHO\PRGHVWLQFUHDVHRIQHZ
FUXLVHUVWRWKH51DWDWLPHRIFOHDULQVWDELOLW\7KH%ULWLVKRQWKHRWKHUKDQGLQVLVWHGRQ
DGUDPDWLFUHGXFWLRQWRWKHXQLWWRQQDJHRIEDWWOHVKLSVWKDWWKH\PXVWKDYHNQRZQZRXOG
EHXQDFFHSWDEOHWRWKH8QLWHG6WDWHVDQGLPSUDFWLFDEOHLQDSSOLFDWLRQJLYHQWKHEXLOGLQJ
SURJUDPVRIRWKHUQDWLRQV +ROGLQJELODWHUDOWDONVDWWKLVVWDJHLQWKHSUHOLPLQDULHVZDV
FOHDUO\DQHUURU7KHFRQJUXLW\RIWKHWZRSRVLWLRQVVHUYHGRQO\WRKLJKOLJKWWKH
GLIIHUHQFHV$QH[WHUQDOIDFWRUZDVQHHGHGWRRYHUFRPHWKHVHUHODWLYHO\VOLJKW
GLVDJUHHPHQWV,WPD\EHWKDWDUPVFRQWUROLVH[FHHGLQJO\GLIILFXOWZKHQQRVSHFLILF
VHFXULW\LVVXHLVSUHVHQWDVZDVWKHFDVHEHWZHHQWKH86DQG8.'LIIHULQJWDFWLFV
VWUDWHJLHVDQGFRQFHUQVFDQRQO\EHKDUPRQL]HGLIWKHVWDNHVGHPDQGLW
7KHUHLVDOVRWKHSUREOHPRITXDQWLI\LQJVHFXULW\LQDUPVFRQWURODJUHHPHQWV,QD
FDVHZKHUHIHZVHFXULW\FRQFHUQVH[LVWDVEHWZHHQWKH86DQG8.DULJLGIUDPHZRUNIRU
)UDQFHDQG,WDO\ZHUHERWKFRQVWUXFWLQJEDWWOHVKLSVDWWKH:DVKLQJWRQ7UHDW\PD[LPXPRIWRQV
-DSDQKDGJLYHQQRVLJQWKDWLWZRXOGDJUHHWRWKHWRQFDSHLWKHU
DUPVFRQWUROLVOLNHO\WREHGHWULPHQWDO,WLVSUREDEOHIRULQVWDQFHWKDWWKH86ZRXOG
KDYHUHJLVWHUHGOLWWOHFRPSODLQWRYHUD%ULWLVKFRQVWUXFWLRQSURJUDPIRUFUXLVHUVLID
SUHH[LVWLQJWUHDW\KDGQRWDIIL[HGWKHQXPEHUVRIFUDIWDOORWWHGWRHDFK4XDQWLI\LQJ
VHFXULW\FDQFUHDWHDFRPSHWLWLYHSV\FKRORJ\EHWZHHQQDWLRQVZKHUHQRQHPLJKW
RWKHUZLVHH[LVW
:KDWHYHUWKHFDVHWKHHDUO\OHDGXSWRWKHVHFRQG/17ZDVKLJKO\SUREOHPDWLF
IRUWKH$QJOR$PHULFDQUHODWLRQVKLS7KH%ULWLVKREMHFWLRQVWRWKH9LQVRQ7UDPPHOO$FW
KDGEHHQIROORZHGE\$PHULFDQREMHFWLRQVDWWKH-XQHSUHOLPLQDULHV7KHWULODWHUDO
SUHOLPLQDULHVSURPLVHGWRDGGWKH-DSDQHVHSURSRVDOLVVXHGDWWKH*HQHYDFRQIHUHQFHLQWR
WKHGLVFXVVLRQ7KHLQWURGXFWLRQRIDUHDODQGSUHVHQWVHFXULW\SUREOHPLQWKH3DFLILF
ZRXOGEHWKHWUXHWHVWRIWKHVWUHQJWKRIWKH$QJOR$PHULFDQUHODWLRQVKLSDQGWKHDELOLW\
RI$PHULFDQSROLF\PDNHUVWRFRPPLWWRLQWHUQDWLRQDODJUHHPHQWV
&+$37(5$5(62/87,2172&223(5$7,21
7KHVHFRQGURXQGRISUHOLPLQDU\GLVFXVVLRQVZDVVFKHGXOHGIRU2FWREHULQ
/RQGRQ7KLVWLPHWKHWDONVZHUHWRLQFOXGHWKH-DSDQHVHWKRXJKWKHQHJRWLDWLRQVZHUH
WRUHPDLQRQHRQRQHDIIDLUVEHWZHHQWKHWKUHHSUHPLHUQDYDOSRZHUV-DSDQUHSUHVHQWHG
WKHFOHDUDQGSUHVHQWVHFXULW\FRQFHUQWKDWZDVODFNLQJLQWKHELODWHUDOSUHOLPLQDULHVRYHU
WKHVXPPHU7KHDGGLWLRQRI-DSDQ¶V*HQHYDSURSRVDOZRXOGDGGSHUVSHFWLYHWRWKHQDYDO
VFHQHDQGHPSKDVL]HWKHEURDGVLPLODULWLHVLQWKH$QJOR$PHULFDQVWUDWHJLFRXWORRN
UDWKHUWKDQWKHLQFRQJUXLWLHV
,QWKHHDUO\IDOORIKRZHYHU$PHULFDQSROLF\PDNHUVZHUHVWLOOUHFRYHULQJ
IURPWKHGLVDSSRLQWLQJQHJRWLDWLRQVZLWKWKH%ULWLVKDQGWU\LQJWRGHWHUPLQHWKHEHVWZD\
IRUZDUG,QDQ2FWREHUPHHWLQJEHWZHHQ5RRVHYHOW6WDQGOH\DQG0RIIDWWKH&12
UDLVHGWKHSRVVLELOLW\WKDWD³VOLJKWLQFUHDVHLQWRQQDJH´DERYHFXUUHQWWUHDW\OLPLWVPLJKW
³IDFLOLWDWHDQDJUHHPHQWZLWKWKH%ULWLVKDQG-DSDQHVH´HVSHFLDOO\LQYLHZRIWKHIRUPHU¶V
ORQJVWDQGLQJUHTXHVWIRUDODUJHUFUXLVHUIOHHW5RRVHYHOWHPSKDWLFDOO\UHMHFWHGWKH
QRWLRQVD\LQJWKDWWKH8QLWHG6WDWHVPXVWKROGWRDFRQVLVWHQWSROLF\RIUHGXFWLRQLQ
DGGLWLRQWROLPLWDWLRQ $VKHH[SODLQHGLQDPHPRUDQGXPWR1RUPDQ'DYLVFRPSRVHG
GXULQJWKHFRXUVHRIWKH2FWREHUPHHWLQJ5RRVHYHOWUHIXVHGWRVXEPLWDWUHDW\WRWKH
6HQDWHWKDWFDOOHGIRUODUJHUQDYLHV7KH3UHVLGHQWZDVFOHDUO\FRQYLQFHGWKDWDKDUGOLQH
DJDLQVW%ULWLVKFUXLVHUUHTXHVWVZDVSROLWLFDOO\XQDYRLGDEOHHYHQLILWUDQFRQWUDU\WR
$PHULFD¶VVHFXULW\LQWHUHVWV1RQHWKHOHVV5RRVHYHOWZDVSUHSDUHGWRFRPHGRZQIURP
KLVLQVLVWHQFHXSRQDSURSRUWLRQDOSHUFHQWUHGXFWLRQLQWKHQDYDOWRQQDJHRIWKHWKUHH
SRZHUV7KH3UHVLGHQWFRQFHGHGWRDPRUHPDOOHDEOH³ILIWHHQSHUFHQWRUWHQSHUFHQWRU
+RRNHU0RIIDW3DSHUV
ILYHSHUFHQW´LI%ULWDLQDQG-DSDQUHMHFWHGKLVSURSRVDO,IQRUHGXFWLRQZKDWVRHYHUFRXOG
EHDJUHHGWRWKHQ5RRVHYHOWLQVWUXFWHGWKDW'DYLVPHUHO\VHHNWRH[WHQGWKHFXUUHQW
WUHDWLHVDVWKH\H[LVWHG %H\RQGWKHVHYDJXHSDUDPHWHUV5RRVHYHOWEUHH]LO\IORDWHGWKH
SRVVLELOLW\RID86SOHGJHVWDWLQJWKDW³ZHZRXOGQRWLQWLPHRISHDFHPDLQWDLQLQWKH
3DFLILFDIOHHWJUHDWHUWKDQWKDWRI-DSDQ´6WDQGOH\VDLGWKDWZKLOHWKLVZRXOGKDYHQR
VHULRXVFRQVHTXHQFHVIURPD³SXUHO\GHIHQVLYHSRLQWRIYLHZ´LWZRXOGIDWDOO\
FRPSURPLVH$PHULFDQLQWHUHVWVLQWKH3DFLILFDQGOLNHO\GULYH%ULWDLQWRDFRQFLOLDWRU\
XQGHUVWDQGLQJZLWKWKH-DSDQHVH 7KHLGHDZDVSURPSWO\GURSSHGPDUNLQJD
FRQVLGHUDEOHGHFOLQHLQWKHSHUVRQDOLQYROYHPHQWRIWKH3UHVLGHQWLQWKHFRQIHUHQFH$IWHU
WKHIDOORIWKH6WDWHDQG1DY\'HSDUWPHQWVZRXOGKDQGOHPRVWRIWKHEXVLQHVVRI
WKHFRQIHUHQFHODUJHO\LQGHSHQGHQWRIWKH:KLWH+RXVH
,QWKHIDOORIERWK'HSDUWPHQWVEHJDQWRVHULRXVO\TXHVWLRQWKHYDOXHRI
SHUSHWXDWLQJWKH:DVKLQJWRQV\VWHP,QVSLWHRIDJHQHUDOZLOOLQJQHVVWRZRUNZLWKWKH
%ULWLVKVRPHYRLFHVZLWKLQWKH1DY\YLHZHGDQ\FRQWLQXDWLRQRIDWUHDW\V\VWHPWKDW
LQYROYHG-DSDQWREHGLVDGYDQWDJHRXVWR86LQWHUHVWVDQGWR86QDYDOVWUDWHJ\$
PHPRUDQGXPLVVXHGE\WKH1DY\'HSDUWPHQWWRWKHGHOHJDWLRQLQ/RQGRQODUJHO\
FRQFXUUHGZLWKWKLVYLHZ³:HVKRXOGFRQVWDQWO\WDNHVWRFNRIWKHIDFWWKDWXQGHUQR
FLUFXPVWDQFHVFDQDWUHDW\RIQDYDOOLPLWDWLRQEHWRWKH8QLWHG6WDWHVDQXQPL[HG
EOHVVLQJ´WKHPHPRUDQGXPEHJDQ³7KH8QLWHG6WDWHVZRXOGEHEHWWHURIIZLWKD
WHUPLQDWLRQRIQDYDOOLPLWDWLRQVWKDQDQHZDJUHHPHQWIRUWKHREWDLQLQJRIZKLFKZH
/2&0DQXVFULSW'LYLVLRQ'DYLV3DSHUV%R[5RRVHYHOWWR'DYLV2FWREHU
+RRNHU0RIIDW3DSHUV
ZRXOGKDYHSDLGDQHZDQGKLJKSULFH«´ 2IWKHWRQVRIFXUUHQWJOREDOQDYDO
FRQVWUXFWLRQWKHODUJHVWDPRXQWWRQVEHORQJHGWRWKH8QLWHG6WDWHVE\GLQWRI
1,5$DQGWKH9LQVRQ7UDPPHOO$FW,QVHFRQGSODFHFDPH%ULWDLQDWWRQVDQG
LQDUDWKHUGLVWDQWWKLUGZDV-DSDQZLWKWRQV 8QGHUWKHVHWHUPVLWZDV
ULGLFXORXVDQGGLVDGYDQWDJHRXVWRQHJRWLDWHIRUOLPLWDWLRQZLWKDULYDOWKDWZDVFOHDUO\
EHQWRQH[SDQVLRQLQDFUXFLDODUHDRI$PHULFDQLQWHUHVW7KHRQO\UHDVRQ$PHULFDPLJKW
WRWHPSWHGWRDQLOODGYLVHGDQGGLVDGYDQWDJHRXVFRPSURPLVHZLWK-DSDQZRXOGEHIURP
SROLWLFDOSUHVVXUHIURPWKHLVRODWLRQLVWEHQWRIWKHSRSXODFH<HWWKH1DY\DUJXHG³WKDW
WKH$PHULFDQSHRSOHDUHQRWGHPDQGLQJQDYDOOLPLWDWLRQRUGLVDUPDPHQWDVWKH\ZHUHLQ
DQGDWLQWHUYDOVGXULQJWKHHQVXLQJGHFDGHWKDWWKH\DUHH[DVSHUDWHGZLWKDQG
VXVSLFLRXVRI-DSDQDQGWKDWWKHPDMRULW\RIWKHPZRXOGSUREDEO\DFFHSWZLWKDVHQVHRI
UHOLHIZKDWDIHZRQO\FULWLFVPLJKWFDOODµIDLOXUH¶DW/RQGRQ´ 7KH861KDGORQJKDUERUHGDODUJHEORFRIRIILFHUVZKRZHUHKRVWLOHWRDUPV
OLPLWDWLRQ\HWVLQFHWKH:1&HFRQRP\PLQGHG3UHVLGHQWVKDGIDYRUHGWKHSURWUHDW\
6WDWH'HSDUWPHQWRYHU³ELJ1DY\´HQWKXVLDVWV$OUHDG\5RRVHYHOWKDGSURYHQWREHD
GLIIHUHQWVRUWRI3UHVLGHQWDQGLWDSSHDUHGWKDW6WDWHZDVFRPLQJDURXQGWRWKHDQWLWUHDW\
IDFWLRQORQJSUHVHQWZLWKLQWKH1DY\'HSDUWPHQW$Q2FWREHUPHPRUDQGXPIURPWKH
)DU(DVWHUQ'LYLVLRQRIWKH6WDWH'HSDUWPHQWXUJHG³ZHVKRXOGGLYHVWRXUVHOYHVRIDQ\
FRQFHSWLRQWKDWWKHZRUOGPXVWKDYHDWUHDW\RIQDYDOOLPLWDWLRQ:KHUHQDWLRQDO
FRQFHSWLRQVDWWLWXGHVSROLFLHVREMHFWLYHVDQGDFWLRQVDUHVRGLIIHUHQWDVRQWKHRQH
/2&0DQXVFULSW'LYLVLRQ'DYLV3DSHUV%R[1DY\'HSDUWPHQWPHPR³1DYDO&RQIHUHQFH
6XJJHVWLRQVIRUFRQVLGHUDWLRQRIWKH$PHULFDQ*RYHUQPHQWDQGWKH$PHULFDQ&RQIHUHHVLQ5HODWLRQ
7KHUHWR´2FWREHU
1$5*%R[1DYDO$WWDFKp/RQGRQ6HULDO1R2FW
/2&0DQXVFULSW'LYLVLRQ'DYLV3DSHUV%R[1DY\'HSDUWPHQWPHPR³6XJJHVWLRQVIRU
FRQVLGHUDWLRQRIWKH$PHULFDQ*RYHUQPHQWDQGWKH$PHULFDQ&RQIHUHHVLQ5HODWLRQ7KHUHWR´2FWREHU
KDQGWKRVHRI*UHDW%ULWDLQDQGWKH8QLWHG6WDWHVDQGRQWKHRWKHUKDQGWKRVHRI-DSDQ
KDYHEHHQVKRZQGXULQJWKHODVWWKUHH\HDUVWREHWKHYHU\SULQFLSOHRIOLPLWDWLRQRI
DUPDPHQWEHFRPHVRITXHVWLRQDEOH²LIQRWRIGHQLDEOH²YDOXH´ -DSDQZDVFOHDUO\
EHQWRQDEURDGSROLF\RIH[SDQVLRQLQ(DVW$VLDWKHPHPRUDQGXPFRQWLQXHGDQGZDV
WU\LQJWRVHFXUHDUDWLRWKDWFRXOGEHVWVXSSRUWDZDURIDJJUHVVLRQ6LQFH³*UHDW%ULWDLQ
DQGWKH8QLWHG6WDWHVHDFKKDYH«QRWHYHQDSSURDFKHGWKHOLPLWVRIWKHLUFDSDFLW\´LQ
QDYDODUPDPHQWVZKHUHDV-DSDQKDG³DOPRVWUHDFKHGWKDWOLPLW´LWIROORZHGWKDW³WKH
-DSDQHVHKDYHPXFKPRUHWRJDLQE\QDYDOOLPLWDWLRQ´WKDQHLWKHUWKH86RU8. :KLOH
WKLVUHPDLQHGWKHGHFLGHGRSLQLRQRIWKHGLYLVLRQKHDGHGE\6WDQOH\+RUQEHFN
VRPHWKLQJRIDKDZNZLWKLQWKHGHSDUWPHQWWKLVRSLQLRQUDSLGO\SHUPHDWHGDOOWKHZD\WR
6HFUHWDU\+XOO%\1RYHPEHU+XOOKDGFRQFOXGHGWKDW³SUDFWLFDOO\QRFKDQFHH[LVWVRI
EULGJLQJWKHGHILQLWHGLVDJUHHPHQWEHWZHHQWKH-DSDQHVHGHOHJDWLRQRQWKHRQHKDQGDQG
WKH%ULWLVKDQGRXUVHOYHVRQWKHRWKHU´DQGWKHUHIRUHKHMXGJHGLWEHVWWRDOORZWKH
-DSDQHVHWRDEURJDWHWKH:DVKLQJWRQWUHDW\ZLWKRXWDQ\QHJRWLDWLRQIURPWKH$PHULFDQ
GHOHJDWLRQ +LVWRULFDOO\WKHFKDPSLRQVRIQDYDODUPVFRQWUROWKH6WDWH'HSDUWPHQW
ZDVFRDOHVFLQJDURXQGWKHRSLQLRQWKDWWKHIXWXUHRIWKH:DVKLQJWRQV\VWHPZDVDWEHVW
XQOLNHO\DQGDWZRUVWGHWULPHQWDOWRWKH8QLWHG6WDWHV
7KXVDIWHUWKHKRVWLOHDQGXQKHOSIXO$QJOR$PHULFDQPHHWLQJVRYHUWKHVXPPHU
WKH8QLWHG6WDWHVGHOHJDWLRQDUULYHGLQ/RQGRQLQ2FWREHUIRUWKHSUHOLPLQDU\
FRQYHUVDWLRQVZLWKDJURZLQJFRQVHQVXVDPRQJSROLF\PDNHUVWKDWWKHFRQIHUHQFHZDVQRW
ZRUWKWKHHIIRUW7KH$PHULFDQGHOHJDWHVWKHPVHOYHVOHGE\WKHHYHURSWLPLVWLF1RUPDQ
/2&0DQXVFULSW'LYLVLRQ'DYLV3DSHUV%R['LYLVLRQRI)DU(DVWHUQ$IIDLUVPHPR³1DYDO
&RQIHUHQFH/RQGRQ3UHOLPLQDU\&RQYHUVDWLRQV´2FW
,ELG
)586,+XOOWR'DYLV1RY
'DYLVKDGQRWVXUUHQGHUHGWRWKHQRWLRQWKDWWKHLUPLVVLRQZDVSRLQWOHVV&HUWDLQO\WKH
LQLWLDOVWDWHPHQWVIURPWKH-DSDQHVHTXDUWHUFRQILUPHGWKHPLVJLYLQJVRI6WDWHDQGWKH
1DY\,QDPHHWLQJEHWZHHQWKHGHOHJDWLRQVRQ2FWREHU0DWVXGDLUDEHJDQE\
UHLWHUDWLQJWKH-DSDQHVHGHVLUHIRUDFRPPRQXSSHUOLPLW³5HGXFWLRQRIQDYDOVWUHQJWKE\
PHDQVRIUDWLRVQRORQJHUVDWLVILHVWKHIHHOLQJRISUHVWLJHDQGWKHVHFXULW\RIWKH-DSDQHVH
QDWLRQ´0DWVXGDLUDFRQWLQXHGVWDWLQJGHILQLWLYHO\WKDW-DSDQZRXOGRQO\DJUHHWRD
SURSRVDOWKDWVXSHUVHGHGWKHH[LVWLQJWUHDWLHV 0DWVXGDLUDZHQWRQWRVD\WKDWWKH
UHODWLYH³VHOIVXIILFLHQF\´RIWKH8QLWHG6WDWHVRIIHUHGSRRUMXVWLILFDWLRQIRUD1DY\
SHUFHQWODUJHUWKDQWKH,-1DQGFUHDWHGDQHHGOHVVDIIURQWWRWKHSUHVWLJHRI-DSDQ,IWKH
DVSLUDWLRQVRIWKH-DSDQHVHSHRSOHZDVVDWLVILHG³WKH\ZLOOIHHOPRUHSDFLILFDQGZLOOEH
LQDEHWWHUSRVLWLRQWRFRRSHUDWH´LIWKH-DSDQHVHDVSLUDWLRQVDUHIUXVWUDWHGDWKLUGWLPH
WKHQWKHSHDFHZRXOGEHLPSHULOOHG $GPLUDO<DPDPRWRWKHFKLHI-DSDQHVHQDYDO
DGYLVRUDGGHGWKDWWHFKQRORJLFDOSURJUHVVRYHUWKHSDVWWZHOYH\HDUVKDGUHQGHUHGWKHROG
ILJXUHVLQVXIILFLHQWWRPDLQWDLQ-DSDQHVHVHFXULW\²DFODLPWKDWZRXOGEHFRPHFRPPRQ
IURPWKH-DSDQHVHGHOHJDWLRQRYHUWKHIROORZLQJPRQWKV 'DYLVPDGHIHZDWWHPSWVWR
UHEXWWKH-DSDQHVHFODLPVDWWKLVLQLWLDOPHHWLQJXVLQJLWLQVWHDGDVDQRSSRUWXQLW\WR
MXGJHWKHLUWUXHLQWHQWLRQV
7KLVSUHOLPLQDU\PHHWLQJDSSHDUHGWRFRQILUPWKHSHVVLPLVPRISROLF\PDNHUVLQ
:DVKLQJWRQ³7KDWWKH-DSDQHVHDUHSUHSDULQJWKHJURXQGIRUDSUREDEOHZDONRXWLV
VXJJHVWHGE\WKHULJLGLW\DQGVFRSHRIWKHSRVLWLRQZKLFKWKH\WDNH´8QGHUVHFUHWDU\RI
6WDWH:LOOLDP3KLOOLSVZURWHWR'DYLVUHVSRQGLQJWRKLVUHSRUWRIWKHPHHWLQJWKH
/2&0DQXVFULSW'LYLVLRQ'DYLV3DSHUV%R[0HPRRIPHHWLQJEHWZHHQWKH$PHULFDQDQG
-DSDQHVHGHOHJDWLRQV2FW
,ELG
,ELG
SUHYLRXVGD\7KH-DSDQHVHZRXOGGLVFXVVQRWKLQJEXWWKHLURZQDVSLUDWLRQVDQGRIIHUHG
QRMXVWLILFDWLRQRWKHUWKDQ³PDQLIHVWGHVWLQ\´LQ$VLD 7KHPHHWLQJZDVHQRXJKWR
GDPSHQ'DYLV¶VSLULWVDVZHOO0RIIDWUHSRUWHGWKDW³,GHWHFWLQWKHWRQHRI1RUPDQ
'DYLV¶WHOHJUDPVDIHHOLQJRIGLVPD\DWWKHODFNRISURJUHVVKHLVPDNLQJQRWRQO\ZLWK
<DPDPRWRZKLFK,WKLQNKHDQWLFLSDWHGEXWZLWK0DWVXGDLUDZLWKZKRPKHZDV
IRUPHUO\RQWKHEHVWRIWHUPVDQGZKRLVQRZDVXQDSSURDFKDEOHDVWKHRWKHUV´ 2Q
2FWREHU'DYLVUHSRUWHGWR6HFUHWDU\+XOOWKDW0DWVXGDLUDKDGFRQILUPHGWKDWWKH
-DSDQHVHGHILQLWHO\LQWHQGHGWRDEURJDWHWKH:DVKLQJWRQ7UHDW\E\WKHHQGRIWKH\HDU
DQGWKDWWKH-DSDQHVHZHUHQRWLQWHUHVWHGLQGLVFXVVLQJVSHFLILFWHFKQLFDOGHWDLOVDWWKLV
SRLQW $Q\KRSHWKDWWKH³FRPPRQXSSHUOLPLW´ZDVDQDJJUHVVLYHRSHQLQJELGKDG
TXLFNO\YDQLVKHGLQWKHILUVWZHHNRIWKHSUHOLPLQDU\WDONV
7KH%ULWLVKDQG$PHULFDQVZHUHVFKHGXOHGIRUWDONVRQ2FWREHU:LWKWKH
-DSDQHVHRSHQLQJZLWKWKHLUQRQQHJRWLDEOHERWWRPOLQHWKHRQO\KRSHIRUVDOYDJLQJWKH
FRQIHUHQFHOD\LQWKHVHWDONV7KHWZRGHOHJDWLRQVKDGSDUWHGRQOHVVWKDQIDYRUDEOHWHUPV
RYHUWKHVXPPHUVRWKHUHZDVFRQVLGHUDEOHSUHVVXUHWREHJLQRQIULHQGO\WHUPV$MRLQW
PHPRUDQGXPE\WKH)RUHLJQ2IILFHDQGWKH$GPLUDOW\QRWHGWKDWLI³WKH$PHULFDQ
DWWLWXGHUHPDLQVDVXQKHOSIXODQGDVGLYRUFHGIURPUHDOLWLHVDVZDVWKHLUDWWLWXGHGXULQJ
ODVWVXPPHU´WKHQWKHSRVLWLRQRIWKH8QLWHG.LQJGRPDWWKHFRQIHUHQFHZDVDQ
LPSRVVLEOHRQH ,URQLFDOO\WKHVWXEERUQQHVVRIWKH-DSDQHVHGHOHJDWLRQSURPSWHGWKH
$PHULFDQVWRVHHNWKHJRRGJUDFHVRIWKH%ULWLVK'DYLVDQG+XOODJUHHGWKDW³WKHXQLW\RI
YLHZEHWZHHQWKH%ULWLVKDQGRXUVHOYHVZLWKUHODWLRQWRWKH-DSDQHVHTXHVWLRQVKRXOGQRW
)5863DSHUV5HODWLQJWR)RUHLJQ5HODWLRQVRIWKH8QLWHG6WDWHV-DSDQ,3KLOOLSVWR
'DYLV2FW
+RRNHU0RIIDW3DSHUV
)586,'DYLVWR+XOO2FW
'%)3QG6HULHV9RO;,,,8QGDWHGMRLQWPHPRE\WKH)RUHLJQ2IILFHDQGWKH$GPLUDOW\
EHSUHMXGLFHGE\WKHLQMHFWLRQDWWKLVWLPHRIDGLVFXVVLRQZLWKWKH%ULWLVKRQWHFKQLFDO
TXHVWLRQVRQZKLFKWKHUHDUHGLIIHUHQFHV´ )RUWKHWLPHEHLQJDWOHDVWWKHFRQWHQWLRXV
FUXLVHULVVXHZRXOGEHPRUHRUOHVVWDEOHGLQIDYRURIGHDOLQJZLWKWKHORRPLQJ-DSDQHVH
DEURJDWLRQ
3ULPH0LQLVWHU0DF'RQDOGRSHQHGWKHQHJRWLDWLRQVRQWKHWKSUHHPSWLQJWKH
$PHULFDQSRVLWLRQE\VWDWLQJWKDWQRRQHPRUHWKDQKHGHVLUHGQDYDOUHGXFWLRQVEXWWKDW
WKHFXUUHQWZRUOGVLWXDWLRQUHQGHUHGWKLVLPSRVVLEOH0DF'RQDOGZHQWRQWRUHPDUNWKDWLW
ZRXOGEH³DGLVDVWHUIRUWKH8QLWHG6WDWHV«LI%ULWLVKVHFXULW\ZHUHMHRSDUGL]HG´'DYLV
HPSKDWLFDOO\DJUHHGDQGVDLGWKDWWKH8QLWHG6WDWHVKDGQRLQWHUHVWLQZHDNHQLQJWKH
VHFXULW\RI*UHDW%ULWDLQLQDQ\ZD\ %RWK'DYLVDQG6WDQGOH\VDLGWKDWWKH\
V\PSDWKL]HGZLWK%ULWDLQ¶VSUHRFFXSDWLRQUHJDUGLQJFUXLVHUUHSODFHPHQWJLYHQWKDWVR
PDQ\SRZHUVLQFOXGLQJWKH8QLWHG6WDWHVZHUHEXLOGLQJWKHKHDYLHUW\SHRIWKLVVKLSIRU
ZKLFK%ULWDLQKDGQRXVHEXWZKLFKVKHZRXOGEHREOLJHGWRPDWFK :KLOH'DYLV
UHLWHUDWHGWKH$PHULFDQOLQHDERXWDSHUFHQWUHGXFWLRQKHDOVRKHDGHGRII-RKQ
6LPRQ¶VUHTXHVWIRUSDUWLFXODUVH[SODLQLQJWKDW³WHFKQLFDOGLVFXVVLRQDWWKLVWLPHZRXOG
EHXQUHDOLVWLFLQWKHIDFHRIWKHIDUJUHDWHULVVXHZKLFKKDGDULVHQDVDUHVXOWRI-DSDQ¶V
GHPDQGV´7KH%ULWLVKDJUHHGZKROHKHDUWHGO\DQGWKHFRQYHUVDWLRQDQGLWVWRQHVKLIWHG
SUHFLSLWRXVO\
6LPRQUHPDUNHGWKDWWKH%ULWLVKKDGDUULYHGDWWKHVDPHFRQFOXVLRQDVWKH8QLWHG
6WDWHVUHJDUGLQJ-DSDQHVHLQWHQWLRQVWKDWLWVGHVLUHWRDEURJDWHZDVQREOXIIDQGWKDWLWV
FRQVHTXHQFHVZRXOGEHDPHQDFHWRERWK$PHULFDDQG%ULWDLQ0DF'RQDOGGHFODUHGWKDW
)586,'DYLVWR+XOO2FW
/2&0DQXVFULSW'LYLVLRQ'DYLV3DSHUV%R[0HPRRIPHHWLQJEHWZHHQWKH%ULWLVKDQG$PHULFDQ
GHOHJDWLRQV2FW
,ELG
LIWKH-DSDQHVHQHJOHFWHGWRVLJQDQ\WUHDW\DWWKHXSFRPLQJFRQIHUHQFHWKHQ%ULWDLQ
ZRXOGHQJDJHLQDEXLOGLQJUDFHZLWKWKHPDQGWKDWLWZRXOGEHD³JUDYHHUURUÍRUWKH
-DSDQHVHWRSUHVXPHWKDWWKH%ULWLVKZRXOGQRWDEDQGRQWKHLUVRFLDOUHOLHISURJUDPVLQ
VHUYLFHRIVXFKFRQVWUXFWLRQ 7KHRQO\DOWHUQDWLYHWRDUXLQRXVQDYDOUDFHWKH3ULPH
0LQLVWHUVDLGZRXOGEHDVHFXULW\SDFWEHWZHHQWKH8QLWHG6WDWHVDQG%ULWDLQLQWKH
3DFLILF'DYLVUHSOLHGWKDWDQDOOLDQFHZDVRXWRIWKHTXHVWLRQJLYHQWKHORQJVWDQGLQJ
$PHULFDQSROLF\RIDYRLGLQJIRUHLJQHQWDQJOHPHQWV0DF'RQDOGXQGHUVWRRGWKLVWREHWKH
FDVHEXWVXJJHVWHGWKDW%ULWDLQDQG$PHULFDFRXOGHQWHULQWRDELODWHUDOWUHDW\WKDWZRXOG
HQVXUHQRUDFHEHWZHHQWKHPDQGZRXOGVXJJHVWWRWKH-DSDQHVHDQ$QJOR$PHULFDQ
IURQWLQWKH3DFLILF%RWKQDWLRQVZHUHIUHHGHPRFUDFLHVERWKQDWLRQVKDGDFFHSWHGWKH
SULQFLSOHRISDULW\7KH3ULPH0LQLVWHUVWDWHGFOHDUO\KRZHYHU³DVEHWZHHQIULHQGV´WKDW
³WKHDFWXDOILJXUHVPXVWUHVWRQ*UHDW%ULWDLQ¶VIDUIOXQJQHHGVDQGUHVSRQVLELOLWLHVDQG
QRWRQDUELWUDU\ILJXUHVLPSRVHGE\WKH8QLWHG6WDWHV´'DYLVDJUHHGV\PSDWKL]LQJZLWK
%ULWLVKVHFXULW\QHHGVDQGQHJOHFWLQJWRUHVWDWH5RRVHYHOW¶VSHUFHQWOLQH
7KHGHOHJDWLRQVGLVFXVVHGKRZWKH\RXJKWWRGHDOZLWKWKHXSFRPLQJFRQIHUHQFH
LQYLHZRIWKHQHDUFHUWDLQ-DSDQHVHDEURJDWLRQ'DYLVIHOWLWZDVOLNHO\WKDWWKH-DSDQHVH
ZHUH³SODQQLQJWRVWDJHDUXQRXWFRPELQHGZLWKDQDWWHPSWWRVKLIWWKHEODPHWRWKH
RWKHUWZRSRZHUV´ 7KH%ULWLVKDJUHHGVWHSVQHHGHGWREHWDNHQWRHQVXUHWKDWWKH
-DSDQHVHFRXOGQRWSURGXFHIDLOXUHDWWKHFRQIHUHQFHRQWKHLUWHUPVEXWXUJHGWKH
$PHULFDQVQRWWRDEDQGRQWKHFRQIHUHQFHMXVW\HW,IWKH-DSDQHVHGLGHQGXSZDONLQJRXW
WKHQWKH86DQG8.FRXOGDUULYHDWVRPHDJUHHPHQWEXWHYHU\HIIRUWWRSUHVHUYHWKH
,ELG
,ELG
WULSDUWLWHDUUDQJHPHQWPXVWEHH[KDXVWHG 7KHGHOHJDWHVDOVRGLVFXVVHGWKHWHFKQLFDO
DVSHFWVRIWKH-DSDQHVHSURSRVDOZLWKWKH%ULWLVKDVNLQJ'DYLVLIWKH-DSDQHVHKDG\HW
EURXJKWXSWKHLUGHILQLWLRQRI³GHIHQVLYHDQGRIIHQVLYHZHDSRQV´LQWKHLUSUHOLPLQDU\
FRQYHUVDWLRQV'DYLVUHSOLHGLQWKHDIILUPDWLYHDQGDVNHGZKHWKHUWKH%ULWLVKKDGEHHQ
DEOHWRDJUHHRQWKH-DSDQHVHFODVVLILFDWLRQ7KH%ULWLVKGHOHJDWLRQPHUHO\ODXJKHGDQG
VDLGWKDWWKH\KDGQRWDQGWKH\DVVXPHGWKH$PHULFDQGHOHJDWLRQZDVKDYLQJWKHVDPH
GLIILFXOW\ 7KHDWPRVSKHUHDQGWRQHRIWKHPHHWLQJZDVXQGHQLDEO\FRUGLDODQGDUHPDUNDEOH
VKLIWIURPWKHKRVWLOHH[FKDQJHVRIWKHVXPPHU,QGHHGRYHUWKHFRXUVHRIDIHZGD\VWKH
GLUHFWLYHRIWKH$PHULFDQGHOHJDWLRQLQ/RQGRQKDGVKLIWHGGUDPDWLFDOO\,WZDVFOHDUWKDW
WKHVHFRQG/RQGRQ1DYDO&RQIHUHQFHZRXOGEHDUQRVLPLODULW\WRWKHILUVWQRUDQ\RILWV
SUHGHFHVVRUV7KHSULPDU\REMHFWLYHEHFDPHGDPDJHFRQWUROUDWKHUWKDQUHGXFWLRQRU
HYHQOLPLWDWLRQ,QWKLVUHJDUGWKH8QLWHG.LQJGRPZDVFOHDUO\DIULHQG²ERWKQDWLRQV
VWRRGWRORVHPXFKIURPVXFKDIXQGDPHQWDOGLVWXUEDQFHLQWKHUDWLRVDV-DSDQGHPDQGHG
7KHFUXLVHULVVXHZKLOHVWLOOSUHVHQWEHJDQWRVHHPUDWKHULQFRQVHTXHQWLDOGXULQJWKH
HDUO\SKDVHRIWKHSUHOLPLQDU\GLVFXVVLRQV7KHWKUHDWSUHVHQWHGE\WKH-DSDQHVHWRWKH
:DVKLQJWRQRUGHUEHFDPHDSSDUHQWWRERWKSDUWLHVDQGXQLWHGWKHPLQWKHLURSSRVLWLRQWR
LW
7KH$PHULFDQGHOHJDWLRQDJUHHGQRWWRLPPHGLDWHO\EUHDNRIIWKHSUHOLPLQDU\
WDONVDQGRYHUWKHIROORZLQJZHHNFRQWLQXHGWRFRQGXFWVHSDUDWHELODWHUDOWDONVZLWKWKH
-DSDQHVH2Q2FWREHU6WDQGOH\SUHVVHG<DPDPRWRWRMXVWLI\WKH-DSDQHVHVWDWHPHQW
WKDWWHFKQRORJLFDOGHYHORSPHQWKDGUHQGHUHGWKH:DVKLQJWRQUDWLRVDFFHSWHGE\DOO
,ELG
,ELG
SDUWLHVLQVXGGHQO\LQDGHTXDWHLQ7KH-DSDQHVHKDGODLGGRZQIDUPRUH
YHVVHOVVLQFHWKDQWKH8QLWHG6WDWHV6WDQGOH\DUJXHGDQGWKHUHIRUHDQ\TXDOLWDWLYH
HGJHUHVXOWLQJIURPWHFKQRORJLFDOLPSURYHPHQWVRXJKWWRIDYRU-DSDQ+HFRQWLQXHGWR
VD\WKDWZKLOHSDULW\ZLWK-DSDQZRXOGRIFRXUVHQRWWKUHDWHQWKH:HVWFRDVWRIWKH8QLWHG
6WDWHVLWZRXOGFOHDUO\UHQGHU$ODVND+DZDLLDQGWKH3KLOLSSLQHVFULWLFDOO\LQVHFXUH
*LYHQVXFKLQVHFXULW\WKHUHZRXOGLQHYLWDEO\EHDQDYDODUPVUDFH 0DWVXGDLUD
FRXQWHUHGWKDWWKH-DSDQHVHSURSRVDOZRXOGDIIL[DOOSRZHUVWRDFRPPRQOLPLWWKHUHE\
SUHFOXGLQJDQDUPVUDFH'DYLVUHSOLHGWKDW³LWZRXOGQRWEHSRVVLEOHWRGHVWUR\WKH
IRXQGDWLRQRIQDYDOOLPLWDWLRQDQGH[SHFWWKHKRXVHEXLOWWKHUHRQWRVWDQG´ )XUWKHU
'DYLVDUJXHGWKDWQDYDOSRZHUZDVQRWWKHRQO\PHDVXUHRIPLOLWDU\PLJKWWKH8QLWHG
6WDWHVKDGH[SUHVVHGLWVZLOOLQJQHVVWRDFFHSWDJUHDWO\LQIHULRUDUP\WRWKDWRIPDQ\
QDWLRQV-DSDQLQFOXGHGDQGGLGQRWDVDUHVXOWIHHOLWKDGVDFULILFHGDQ\SUHVWLJH 0DWVXGDLUDVLPSO\VDLGWKDWWKLVZDVDVHSDUDWHTXHVWLRQDQGDEUXSWO\HQGHGWKH
PHHWLQJ 7KH%ULWLVKKDGQRJUHDWHUVXFFHVVLQGLVVXDGLQJWKH-DSDQHVHIURPWKHLUGHFLGHG
FRXUVHEXWWKH\FRQWLQXHGWRGLVSOD\DZLOOLQJQHVVWRFRRSHUDWHZLWKWKH$PHULFDQV,Q
ZKDWZDVWREHFRPHDUHJXODURFFXUUHQFHRYHUWKHFRXUVHRIWKHFRQIHUHQFHDQGLWV
SUHOLPLQDULHVWKHGHOHJDWLRQVVKDUHGWKHLPSRUWRIWKHLUELODWHUDOWDONVZLWKWKH-DSDQHVH
-RKQ6LPRQUHSRUWHGWR'DYLVWKDW0DWVXGDLUDZDVSHUVRQDOO\VDWLVILHGWKDW³WKH8QLWHG
6WDWHVKDGQRPRUHGHVLUHRULQWHQWLRQRIDWWDFNLQJ-DSDQWKDQKDG*UHDW%ULWDLQÉXWWKDW
³QHYHUWKHOHVVWKLVZDVWKHYLHZRIWKH-DSDQHVH1DY\DQGSHRSOHDQGZRXOGKDYHWREH
/2&0DQXVFULSW'LYLVLRQ'DYLV3DSHUV%R[0HPRRIPHHWLQJEHWZHHQWKH$PHULFDQDQG
-DSDQHVHGHOHJDWLRQV2FW
,ELG
,ELG
,ELG
UHFNRQHGZLWK´ $V6LPRQDGPLWWHGJLYHQWKDWWKLVFDPHIURPWKHPRXWKRID
VXSSRVHGPRGHUDWHWKH%ULWLVKWKHVLVWKDWWKHFRPPRQXSSHUOLPLWDURVHIURPD
PRPHQWDU\XSZHOOLQJRIH[WUHPLVPDSSHDUHGWREHLQFRUUHFW 7KHH[WHQWRIWKH
JURZLQJFORVHQHVVEHWZHHQWKHGHOHJDWLRQVVWLOOKDGLWVOLPLWDWLRQVKRZHYHU:KHQ'DYLV
VXJJHVWHGWKDW%ULWDLQDQG$PHULFDLPPHGLDWHO\DVVXPHDQRSHQO\XQLWHGIURQWDJDLQVW
-DSDQ6LPRQVDLGWKDWWKLVZRXOGEDFNWKH-DSDQHVHLQWRDFRUQHUDQGPDNHQHJRWLDWLRQV
LPSRVVLEOH:KLOHLWZDVWKH³FDUGLQDOSROLF\´RIWKH8.WR³FRRSHUDWHLQWKHFORVHVW
SRVVLEOHZD\ZLWKWKH8QLWHG6WDWHV´LWZDVFOHDUWKH%ULWLVKZHUHQRW\HWSUHSDUHGWR
FDVWWKHLUORVWHQWLUHO\ZLWKWKH$PHULFDQV 1RQHWKHOHVV'DYLVZDVHQWKXVLDVWLFDERXWWKHSRVVLELOLW\RIDXQLWHGIURQWDQG
FDEOHGKLVVXSSRUWRIJRLQJIRUZDUGZLWKWKHFRQIHUHQFHEDFNWR:DVKLQJWRQ'DYLV
UHSRUWHGWR5RRVHYHOWWKDW-DSDQHVHLQWUDQVLJHQFHKDGVZXQJWKHIDYRURI%ULWLVK
SROLF\PDNHUVDQGWKH%ULWLVKSXEOLFDWODUJHEHKLQGWKH8QLWHG6WDWHV 7KHUHZHUH
ZRUULVRPHUHSRUWVWKDWWKH-DSDQHVHKDGDSSURDFKHGWKH%ULWLVKIRUDVHSDUDWH
DUUDQJHPHQWDORQJWKHOLQHVRIFDUYLQJRXWGHILQLWHVSKHUHVLQWKH)DU(DVWWKHUHE\JLYLQJ
WKH-DSDQHVHDIUHHKDQGLQ&KLQD 7KLVKRZHYHUUHPDLQHGDQRSLQLRQRQO\DPRQJ³D
PLQRULW\DQGH[WUHPH7RU\JURXS´DQGWKHPDMRULW\RIWKH&DELQHWEHOLHYHGWKDW
³FRRSHUDWLRQZLWKWKH8QLWHG6WDWHVPXVWEHDEDVLFSROLF\DQGQHJRWLDWLRQVZLWK-DSDQ
PXVWRQO\EHFDUULHGWRDSRLQWZKHUHWKH\GRQRWUXQFRQWUDU\WRFRPSOHWHDFFRUGZLWK
WKH8QLWHG6WDWHV´ 5HFRJQL]LQJWKDWKLVSODQIRUDSHUFHQWUHGXFWLRQKDGEHFRPH
/2&0DQXVFULSW'LYLVLRQ'DYLV3DSHUV%R[0HPRRIDPHHWLQJEHWZHHQ'DYLVDQG6LPRQ1RY
,ELG
,ELG
1L[RQ5RRVHYHOW,,'DYLVWR5RRVHYHOW1RY
)586,'DYLVWR+XOO1RY
,ELG
XQWHQDEOH5RRVHYHOWLQVWUXFWHG'DYLVWRVHFXUHDWPLQLPXPD³JHQWOHPDQ¶VDJUHHPHQW´
ZLWKWKH%ULWLVKWRIROORZWKHJHQHUDOWHQHWVRIWKH:DVKLQJWRQDQG/RQGRQ7UHDWLHVDIWHU
WKHLUSUREDEOHH[SLUDWLRQDWWKHHQGRI 7KLVZDVDUHPDUNDEOHFRPHGRZQIRUWKH
3UHVLGHQWWRVXEPLWWRDQGVKRZVDVXEVWDQWLDOVKLIWLQ$PHULFDQSROLF\
7KH$PHULFDQGHOHJDWLRQUHFRQYHQHGZLWKWKH%ULWLVKRQ1RYHPEHU'DYLV
UHOD\HG5RRVHYHOW¶VLQWHQWLRQWRFRQWLQXHFRQYHUVDWLRQVZLWKWKH%ULWLVKEXWVDLGWKDWWKH
8QLWHG6WDWHVPLJKWEHXQZLOOLQJWRFRQWLQXHWKHFRQIHUHQFHRQDWULODWHUDOEDVLV³,WLVQRW
MXVWDQDYDOTXHVWLRQWKDWLVPHUHFDPRXIODJH´'DYLVWROG0DF'RQDOG³:HKDYHVHWXS
DFROOHFWLYHV\VWHPIRUFRRSHUDWLQJLQWKH)DU(DVWWRPDLQWDLQSHDFHDQGQRZZKDW-DSDQ
LVWU\LQJWRVD\LVWKDWVKHZRQ¶WKDYHDQ\WKLQJPRUHWRGRZLWKWKDWFROOHFWLYHV\VWHP
:HVLPSO\FDQQRWDJUHHZLWKWKDW´ 7KH%ULWLVKDJUHHGEXW6LPRQSURSRVHGZKDW
ZRXOGFRPHWREHFDOOHGWKH%ULWLVK³PLGGOHFRXUVH´FRPSURPLVH(VVHQWLDOO\6LPRQ
SURSRVHGWKDWWKH86DQG%ULWDLQWU\WRREWDLQIURP-DSDQDQDVVXUDQFHWKDWLWVSRVW
:DVKLQJWRQEXLOGLQJSURJUDP³ZRXOGEHDVQRWWRLQYROYHDIXQGDPHQWDOGHSDUWXUHIURP
WKHH[LVWLQJUDWLRV´ ,QRWKHUZRUGVWKH%ULWLVKVXJJHVWHGWKDWLQOLHXRIDQRIILFLDO
V\VWHPRIUDWLRVWKHSRZHUVSULYDWHO\DJUHHWRH[FKDQJHLQIRUPDWLRQRQWKHLUIXWXUHQDYDO
FRQVWUXFWLRQWRHQVXUHWKDWHDFKDGKHUHPRUHRUOHVVWRWKHVWDWXVTXRWRQQDJH7KH
SURSRVDOZDVDSXUHO\IDFHVDYLQJVROXWLRQEDVHGRQWKHFRPPRQ%ULWLVKDVVXPSWLRQWKDW
WKH-DSDQHVHSRVLWLRQGHULYHGIURPDVHQVHRIZRXQGHGQDWLRQDOSUHVWLJHDULVLQJIURPDQ
LQIHULRUUDWLR
1L[RQ5RRVHYHOW,,5RRVHYHOWWR+XOO1RY
/2&0DQXVFULSW'LYLVLRQ'DYLV3DSHUV%R[0LQXWHVRIPHHWLQJEHWZHHQ%ULWLVKDQG$PHULFDQ
GHOHJDWLRQV1RY
,ELG
7KH³PLGGOHFRXUVH´ZRXOGKDYHRQO\XQRIILFLDOTXDQWLWDWLYHOLPLWDWLRQVEXW
ZRXOGLQFOXGHGHILQLWHTXDOLWDWLYHSURYLVLRQV&KDWILHOGH[SODLQHGWKDWLI-DSDQRSWHGWR
LQFUHDVHLWV1DY\EH\RQGLWVFXUUHQWWRQQDJHWKHSUREOHPZDVQRWVRJUHDW³,WLVQRWVR
PXFKDTXHVWLRQRIQXPEHUV,WLVYHU\GLIILFXOWWRXSVHWWKHIHOORZDKHDGRI\RX
QXPHULFDOO\´HVSHFLDOO\LIDVWKHFDVHZDVWKH³IHOORZV´KDGDPXFKJUHDWHU
VKLSEXLOGLQJFDSDFLW\DQ\ZD\7KHUHDOWKUHDWOD\LQDTXDOLWDWLYHUDFHIRUWKHQ-DSDQ
FRXOGFRQVWUXFWDZKROHQHZW\SHRIVKLSWKDWZRXOGLQVWDQWO\UHQGHUZKROHSRUWLRQVRI
WKH$QJOR$PHULFDQIOHHWVREVROHWH 7KHDUJXPHQWIURPWKH%ULWLVKVLGHZDVQRWDQHZ
RQHWKHFUXLVHUGHEDWHDWWKHODVWFRQIHUHQFHZDVSULPDULO\DTXDOLWDWLYHRQHDQGWKH
8.¶VLQLWLDOSURSRVDODWWKH*HQHUDO'LVDUPDPHQWFRQIHUHQFHKDGIRFXVHGODUJHO\RQWKH
VSHFLILFDWLRQVRILQGLYLGXDOYHVVHOV'HVSLWHWKHIDFWWKDWWKH³PLGGOHFRXUVH´ZDVPRUHRU
OHVVLQOLQHZLWK5RRVHYHOW¶VGLUHFWLYH'DYLVUHIXVHGWRGLVFXVVLWDWDQ\OHQJWK³:HDUH
LQDULGLFXORXVSRVLWLRQ´'DYLVVDLG7KH-DSDQHVHDQQRXQFHGWKHLULQWHQWWRDEURJDWHWKH
:DVKLQJWRQ7UHDW\\HWWKH\SURSRVHGQRFRPSUHKHQVLYHDOWHUQDWLYHEH\RQGWKHYDJXHO\
GHVFULEHGDQGPXWXDOO\XQDFFHSWDEOH³FRPPRQXSSHUOLPLW´7KHPLGGOHFRXUVHZDV³WRR
K\SRWKHWLFDOQRZ:HGLGQRWFRPHKHUHWRQHJRWLDWHDQHQWLUHO\QHZDUUDQJHPHQW´ :LWKRXWDFOHDUHUGLUHFWLYHIURP:DVKLQJWRQ'DYLVFRXOGQRWFRPPLWWKH8QLWHG6WDWHV
WRVXFKDUDGLFDOUHLQWHUSUHWDWLRQRIWKHWUHDW\V\VWHPGHVSLWHDJHQHUDOSOHGJHWRFORVHU
$QJOR$PHULFDQUHODWLRQV
,QGHHGWKHUHVHHPHGWREHGLVDJUHHPHQWEHWZHHQWKH3UHVLGHQWDQGWKH6WDWH
'HSDUWPHQWRQKRZWRSURFHHG5HSO\LQJWR'DYLV¶FDEOHUHJDUGLQJWKH1RYHPEHU
GLVFXVVLRQV+XOOVLPSO\LQVWUXFWHGWKHGHOHJDWLRQWRFRQWLQXHWKHWDONVDQGWKHUHE\SODFH
,ELG
,ELG
WKHUHVSRQVLELOLW\RIVXVSHQGLQJQHJRWLDWLRQVRQHLWKHUWKH%ULWLVKRUWKH-DSDQHVH 'DYLVUHTXHVWHGIXUWKHULQVWUXFWLRQVVSHFLILFDOO\ZKDWWKH$PHULFDQUHVSRQVHVKRXOGEH
WRWKH%ULWLVK³PLGGOHFRXUVH´ +XOO¶VUHSO\DSSDUHQWO\FRQWUDGLFWHG5RRVHYHOW¶VGHVLUH
WRVHHND³JHQWOHPDQ¶VDJUHHPHQW´ZKLFKPRUHRUOHVVDOLJQHGZLWKWKH³PLGGOHFRXUVH´
SURSRVDO³:HDUHFRQYLQFHGWKDWWKHEHVWFKDQFHRIXOWLPDWHO\QHJRWLDWLQJDVXFFHVVIXO
DJUHHPHQWZRXOGOLHLQOHWWLQJWKH-DSDQHVHUHWXUQKRPHHPSW\KDQGHG´+XOOZURWH
VD\LQJWKDWDQ\DJUHHPHQWZKDWVRHYHUZRXOGEHVHHQE\WKH-DSDQHVHDVDFRQFHVVLRQ$W
DOOHYHQWVWKH6HFUHWDU\ZURWHDQ\DJUHHPHQWWKDWGLGQRWPDLQWDLQWKHUDWLRVLQDQ
RIILFLDOVWDWHPHQW³ZRXOGVHHPDQHYDVLRQRIWKHHVVHQFHRIQDYDOOLPLWDWLRQ´ 2Q
1RYHPEHU+XOOHYHQZHQWVRIDUDVWRLQVWUXFW'DYLVWR³WDONWKH%ULWLVKRXWRIWKHLU
LGHDRIIXUWKHUH[SORULQJDPLGGOHFRXUVHÍRUIHDUWKDWLWZRXOGPDNHWKH$QJOR
$PHULFDQIURQWDSSHDUZHDNDQGIHDUIXORI-DSDQHVHVHDSRZHU ,IWKHUHZDVVRPHFRQIXVLRQIURPSROLF\PDNHUVLQ:DVKLQJWRQLWPD\EH
IRUJLYHQ7KHVXGGHQDQGFRPSOHWHFROODSVHRIWKH$PHULFDQSODWIRUPIRUWKHFRQIHUHQFH
LQFRPELQDWLRQZLWKWKHGHOD\LQFRPPXQLFDWLRQVEHWZHHQWKHWZRFDSLWDOVOHGWRVRPH
FRQWUDGLFWRU\LQVWUXFWLRQV*LYHQWKHDYDLODEOHHYLGHQFHLWVHHPVOLNHO\WKDW5RRVHYHOW
ZRXOGKDYHDFFHSWHGQHJRWLDWLRQVDORQJWKHOLQHVRIWKH%ULWLVKPLGGOHFRXUVHLQWKHIDOO
RIJLYHQKLVVXSSRUWRID³JHQWOHPDQ¶VDJUHHPHQW´,QIDFWWKLVPLGGOHFRXUVHZDV
WKHVRUWRISROLF\WKDW5RRVHYHOWWHQGHGWRIDYRUDVLWZRXOGJLYHWKH3UHVLGHQWVRPH
IOH[LELOLW\ZLWKRXWSURGXFLQJDQ\NLQGRISROLWLFDOO\FRQWHQWLRXVGRFXPHQWWKDWZRXOG
KDYHWREHVXEPLWWHGWRWKH6HQDWH+RZHYHUWKLVH[FKDQJHRFFXUUHGEHWZHHQ'DYLVDQG
)586,+XOOWR'DYLV1RY
)586,'DYLVWR+XOO1RY'DYLVSHUVRQDOO\VXJJHVWVWKDW³WKHZLVHVWFRXUVH
ZRXOGEHIRUXVWRJRDORQJZLWKWKH%ULWLVK«´
)586,+XOOWR'DYLV1RY
)586,+XOOWR'DYLV1RY
5RRVHYHOWGLUHFWO\ZLWKRXWFRQIHUULQJZLWK6WDWHILUVW5RRVHYHOWZDVQRJUHDWDGPLUHURI
WKH6WDWH'HSDUWPHQWZKLFKKHIHOWZDVSRSXODWHGE\³ER\VLQVWULSHGSDQWV´ZKRWHQGHG
DOVRWREHLVRODWLRQLVWV$V:DUUHQ.LPEDOOKDVZULWWHQ5RRVHYHOWSUHIHUUHGWRGHDOZLWK
IRUHLJQSROLF\WKURXJKSHUVRQDOFRUUHVSRQGHQFHZLWK³QRQSURIHVVLRQDOGLSORPDWV´ZKR
³ZHUHWROGWRE\SDVVWKH6WDWH'HSDUWPHQWDQGJRGLUHFWO\WRWKHSUHVLGHQWZKHQHYHUWKH\
ZLVKHG´ 7KHUHODWLRQVKLSEHWZHHQ&RUGHOO+XOODQGWKH3UHVLGHQWLVZHOOGRFXPHQWHG
DVEHLQJFRRODQGDWWLPHVRXWULJKWKRVWLOH ,WDSSHDUVOLNHO\WKDW+XOODVVHUWHGZKDWKH
EHOLHYHGZDVWKH6WDWH'HSDUWPHQW¶VSUHURJDWLYHRYHUIRUHLJQSROLF\DQGVWHHUHGWKH
GHOHJDWLRQDZD\IURPWKHPLGGOHFRXUVH$PHULFDQIRUHLJQSROLF\LQWKLVSHULRGPD\
KDYHEHHQPRUHDFWLYLVWWKDQKDVSUHYLRXVO\EHHQUHFRJQL]HGEXWLWZDVVWLOOERXQGHGE\
WKHFRQVLGHUDEOHDYHUVLRQWRIRUHLJQHQWDQJOHPHQWVWKDW+XOOUHSUHVHQWHG
$VDUHVXOWRI$PHULFDQFDXWLRQ-DSDQHVHVWXEERUQQHVVDQG%ULWLVKGHVSHUDWLRQ
WKHSUHOLPLQDULHVFRQWLQXHGWROLPSWKURXJK1RYHPEHU0DF'RQDOGSHUVLVWHGLQKLV
DWWHPSWVWRJDLQDVROLGFRPPLWPHQWIURPWKH$PHULFDQVEXW'DYLVFRXOGRQO\RIIHU
JHQHUDOVXSSRUWZKLOHSROLF\PDNHUVLQ:DVKLQJWRQUHHYDOXDWHGWKHVLWXDWLRQDQGDZDLWHG
ZRUGRI-DSDQHVHDEURJDWLRQ7KH3ULPH0LQLVWHUWULHGWRDSSHDOWR$PHULFDQVHFXULW\
LQWHUHVWVVD\LQJWKDWWKH51ZRXOGEH³LQWKHIURQWILULQJOLQH´LQERWKWKH3DFLILFDQGWKH
$WODQWLFDQGLQWKLVFDSDFLW\WKH\JXDUGHGERWK$PHULFDQFRDVWV$VDUHVXOWWKH%ULWLVK
ZRXOGH[SHFWWKH$PHULFDQVWREHPRUHJHQHURXVDVUHJDUGVWRQQDJHWKDQWKH\KDGEHHQ
:DUUHQ.LPEDOO)RUJHGLQ:DU1HZ<RUN:LOOLDP0RUURZDQG&RPSDQ\,QF
+XOOZDVDQHDUO\VXSSRUWHURI5RRVHYHOWDQGWKH3UHVLGHQWDSSRLQWHGKLPDV6HFUHWDU\RI6WDWHEHFDXVH
RIKLVSDVVLRQDWHLQWHUQDWLRQDOLVP'DOOHN5RRVHYHOW+RZHYHUWKHUHODWLRQVKLSEHWZHHQWKHWZR
PHQFRROHGRYHUWKHFRXUVHRI5RRVHYHOW¶V3UHVLGHQF\DQGE\5RRVHYHOW¶VGHDOLQJVZLWKWKH6WDWH
'HSDUWPHQWRFFXUUHGRYHUZKHOPLQJO\WKURXJK8QGHUVHFUHWDU\RI6WDWH6XPQHU:HOOHVPXFKWR+XOO¶VLUH
6HH$ODQ3'REVRQ86:DUWLPH$LGWR%ULWDLQ1HZ<RUN6W0DUWLQ¶V3UHVV
LQWKHSDVWGXHWRWKHGDQJHURXVVLWXDWLRQLQ$VLD'DYLVUHSOLHGYDJXHO\WKDWWKH8QLWHG
6WDWHVZDVLQ³DYHU\UHDVRQDEOHIUDPHRIPLQG´ 7KH-DSDQHVHPHDQZKLOHPDGHDJJUHVVLYHRYHUWXUHVIRU%ULWLVKIDYRU6LPRQ
UHSRUWHGWR'DYLVRQ1RYHPEHUWKDWWKH-DSDQHVHKDGDVNHGWKH%ULWLVKWRMRLQLQWKHLU
GHQXQFLDWLRQRIWKH:DVKLQJWRQ7UHDW\DVWKLVPLJKWSODFDWHWKH-DSDQHVHQDYDOLVWVDQG
OD\PRUHIHUWLOHJURXQGIRUWKHFRPLQJFRQIHUHQFH 2Q1RYHPEHUDSUHVVUHSRUW
VXUIDFHGLQGLFDWLQJWKDWWKH-DSDQHVHKDGRIIHUHGWKH%ULWLVKDFRPSURPLVHZKHUHE\WKH
UDWLRVZRXOGEHDOWHUHGIURPWRJLYLQJWKH-DSDQHVHSDULW\ZLWKWKH$PHULFDQV
DQGWKH%ULWLVKDUHWXUQWRQDYDOGRPLQDQFH %RWKRIIHUVZHUHREYLRXVDWWHPSWVWRVRZ
GLVFRUGEHWZHHQWKH%ULWLVKDQG$PHULFDQGHOHJDWLRQVDVWKH-DSDQHVHSRVLWLRQDOLHQDWHG
ERWKSDUWLHV$V0RIIDWUHPDUNHGZKLOHWKH$PHULFDQVZHUHKHVLWDWLQJWRFRPPLW
³-DSDQHVHGLSORPDF\KDVQRWEHHQDGURLWDQGWKHUDWKHUFOXPV\HIIRUWVPDGHWRGULYHD
ZHGJHEHWZHHQWKH%ULWLVKDQGRXUVHOYHVKDYHZLGHO\RYHUVKRWWKHPDUN´ :KLOHLWZDV
EHFRPLQJFOHDUWKDWWKH8QLWHG6WDWHVZRXOGQHHGWRGHYHORSFORVHUWLHVZLWK%ULWDLQLQ
RUGHUWRGHDOZLWKWKH)DU(DVWHUQVLWXDWLRQLWZDVDOVRFOHDUWKDW$PHULFDKDGWKHWLPHWR
ZRUNRXWDQDUUDQJHPHQWRQLWVWHUPV,Q'DYLV¶HVWLPDWLRQWKHPXFKWDONHGDERXW%ULWLVK
³UHVSRQVLELOLWLHV´PHDQWWKDW³*UHDW%ULWDLQQHHGHG$PHULFDQFRRSHUDWLRQPRUHWKDQWKH
8QLWHG6WDWHVQHHGHGWKDWRI*UHDW%ULWDLQ´ 3UHVVXUHPRXQWHGIURP:DVKLQJWRQWRFRQFOXGHWKHSUHOLPLQDU\WDONVDQGUH
HYDOXDWHRQFH-DSDQHVHDEURJDWLRQFDPHWKURXJK7KHPRGHUDWH-DSDQHVHIDFWLRQZDVQRW
/2&0DQXVFULSW'LYLVLRQ'DYLV3DSHUV%R[0LQXWHVRIPHHWLQJEHWZHHQ%ULWLVKDQG$PHULFDQ
GHOHJDWLRQV1RY
)586,0HPRRIFRQYHUVDWLRQLQ3ULPH0LQLVWHU¶V2IILFH1RY
1$5*5HFRUGV5HODWLQJWR'LVDUPDPHQW%R[0DWWKHZ(+DQQDWR+XOOUH/RQGRQ1DYDO
'LVFXVVLRQV1RY
+RRNHU0RIIDW3DSHUV
/2&0DQXVFULSW'LYLVLRQ'DYLV3DSHUV%R[0LQXWHVRIPHHWLQJEHWZHHQ%ULWLVKDQG$PHULFDQ
GHOHJDWLRQV1RY
³LQHFOLSVH´DFFRUGLQJWR+XOO7KHPLOLWDULVWHOHPHQWZDVVWURQJHUWKDQHYHUDQGKDGWKH
GLSORPDWLFFRUSVGDQFLQJWRLWVWXQH7KH$PHULFDQVKDGJRQHDORQJZLWKWKH%ULWLVK
VXJJHVWLRQQRWWRVXVSHQGWDONVULJKWDZD\EXWSXEOLFRSLQLRQZDVRQO\JHWWLQJPRUH
FRQIXVHGZLWKQRWDQJLEOHUHVXOW 2Q'HFHPEHU'DYLVLQIRUPHGWKH3ULPH0LQLVWHU
WKDWWKH86JRYHUQPHQWIHOWWKDW³LUUHVSHFWLYHRIDQ\LQWULQVLFPHULWVWKHPLGGOHFRXUVH
PLJKWKDYH«LWZRXOGEHEHVWWRKDYHDFOHDQEUHDNDQGWDNHXSWKHTXHVWLRQDWDODWHU
GDWH´ 7KH-DSDQHVHKDYH³KHOGGHQXQFLDWLRQDVDKDPPHURYHURXUKHDGZLWKRXWHYHQ
VLWWLQJGRZQDQGWDONLQJLWRYHUZLWKERWKRIXVEHIRUHKDQGWKH\KDYHGHFLGHGDUELWUDULO\
WRGHVWUR\WKHSHDFHVWUXFWXUHDQGFROOHFWLYHV\VWHPVHWXSLQWKH)DU(DVW´$VIDUDVWKH
:DVKLQJWRQSROLF\PDNHUVZHUHFRQFHUQHGWRQHJRWLDWHXQGHUVXFKFLUFXPVWDQFHVZRXOG
EHWRQHJRWLDWHRQ-DSDQ¶VWHUPV 7KHWDONVFRQFOXGHGRQ'HFHPEHUOHDYLQJWKHIXWXUHRIWKHFRQIHUHQFHYHU\
PXFKLQGRXEW0DQ\RIILFLDOVLQWKH6WDWH'HSDUWPHQWEHOLHYHGWKDWWKH/RQGRQWDONV
PDGHKROGLQJDQRWKHUFRQIHUHQFHXVHOHVVDQGHYHQKDUPIXOWR$PHULFDQLQWHUHVWV³7R
KROGDQXQVXFFHVVIXOFRQIHUHQFHGRHVPRUHGDPDJHWRLQWHUQDWLRQDOJRRGZLOOWKDQWR
IRUHJRDFRQIHUHQFH´6HFUHWDU\+XOOZURWHWR'DYLVRQ'HFHPEHU 0RIIDWDQG
+RUQEHFNKHDGVRI:HVWHUQDQG(DVWHUQ'LYLVLRQVUHVSHFWLYHO\DUULYHGDWWKHVDPH
FRQFOXVLRQ%RWKPHQ³HDUQHVWO\DGYRFDWHG%ULWLVK$PHULFDQFRRSHUDWLRQÉXWIHOWWKDWD
IDLOHGFRQIHUHQFHZRXOGSXWVWUDLQRQWKDWUHODWLRQVKLSRYHUUHODWLYHO\LQVLJQLILFDQW
WHFKQLFDOLVVXHVZKLOHDFFRPSOLVKLQJQRWKLQJYLVjYLV-DSDQ 7KH$PHULFDQ
)5863DSHUV5HODWLQJWR)RUHLJQ5HODWLRQVRIWKH8QLWHG6WDWHV-DSDQ,+XOOWR
'DYLV1RY
)586,0HPRRIFRQYHUVDWLRQEHWZHHQ$PHULFDQDQG%ULWLVK'HOHJDWLRQVDWWKH+RXVHRI
&RPPRQV'HF
,ELG
)586,+XOOWR'DYLV'HF
+RRNHU0RIIDW3DSHUV
$PEDVVDGRULQ-DSDQ-RVHSK&*UHZGLGQRWFRPPHQWRQHZD\RUWKHRWKHURQWKH
DGYLVDELOLW\RIDFRQIHUHQFHEXWKLVUHSRUWVFHUWDLQO\DGGHGIXHOWRWKHDUJXPHQWVRIVHQLRU
6WDWH'HSDUWPHQWVNHSWLFV+HUHSRUWHGWKDW-DSDQHVHSROLF\PDNHUVZHUHDVGHWHUPLQHGDV
HYHUWRDEDQGRQWKHUDWLRV\VWHPDQGWKDWVHQVLWLYHWRWKHQHJDWLYHZRUOGSXEOLFRSLQLRQ
WKH\UHFHLYHGGXULQJWKH/RQGRQWDONVWKH\ZHUH³VHHNLQJWRWKURZWKHEODPHHOVHZKHUH
IRUWKHEUHDNGRZQLQWKHSUHOLPLQDU\FRQYHUVDWLRQV´ 7KHLPSOLFDWLRQRIWKLVUHSRUW
ZDVFOHDUDFRQIHUHQFHLQZRXOGKDYHDOPRVWQRFKDQFHRIVXFFHVVZKLOHLW
SUHVHQWHGDQRSSRUWXQLW\IRUWKH-DSDQHVHWROD\WKHIDLOXUHDWWKHIHHWRIWKH86
1RQHWKHOHVVWKHSUHOLPLQDULHVKDGFHUWDLQO\FRQFOXGHGRQIULHQGOLHUWHUPVZLWK
WKH%ULWLVKWKDQKDGEHHQWKHFDVHGXULQJWKHELODWHUDOWDONVRYHUWKHVXPPHU0RIIDW
UHPDUNHGWKDWZKLOHUHODWLRQVZLWKWKH-DSDQHVHKDGGHWHULRUDWHGDODUPLQJO\RYHUWKH
FRXUVHRIWKH/RQGRQWDONVWKLVZDVVRPHZKDWFRPSHQVDWHGE\WKHIDFWWKDW³RXU
ZRUNLQJDUUDQJHPHQWZLWK(QJODQGLVVWURQJHUWKDQLWKDVEHHQIRUVRPHPRQWKVSDVW´ 7KH86SUHVVDOVRJHQHUDOO\QRWHGWKDW$QJOR$PHULFDQUHODWLRQVVHHPWRKDYHFR]LHGLQ
WKHZDNHRIWKHWDONV$WDSUHVVFRQIHUHQFHKHOGRQ'HFHPEHURQHUHSRUWHUDVNHG
³KRZDUHZHJHWWLQJDORQJZLWK*UHDW%ULWDLQ«WKHUHKDVEHHQVRPHGLVFXVVLRQWKDWRXU
UHODWLRQVDUHLPSURYHGDVDUHVXOWRIWKHVWUDLQLQHYHU\GLUHFWLRQ´7KH3UHVLGHQWHYHU
FDXWLRXVDERXWWKHDSSHDUDQFHRIIRUHLJQHQWDQJOHPHQWVGRZQSOD\HGEXWFRQILUPHGWKH
LPSUHVVLRQVD\LQJVLPSO\WKDWUHODWLRQVZLWKWKH%ULWLVK³DUHDOZD\VZKDWWKH\KDYH
EHHQIULHQGO\´ 'DYLVSULYDWHO\FRQILUPHGWKHSUHVV¶SHUFHSWLRQUHSRUWLQJWKDWWKH
UHODWLRQVKLSEHWZHHQWKHGHOHJDWLRQVKDGLPSURYHGFRQVLGHUDEO\VLQFHWKHVXPPHUDQG
)586
+RRNHU0RIIDW3DSHUV
1L[RQ5RRVHYHOW,,3UHVV&RQIHUHQFH'HF
WKDWWKH%ULWLVKJRYHUQPHQWKDGHQWLUHO\FDVWDVLGHQRWLRQVRIDVHSDUDWHDJUHHPHQWZLWK
WKH-DSDQHVH 2QWKHRWKHUKDQG'DYLVUHSRUWHGWKDWWKH%ULWLVKZHUHSRVVHVVHGRIDQ
³LQRUGLQDWHIHDUWKDWLIWKHWDFWLFVZHSURSRVHVRHVWUDQJH-DSDQDVWROHDGWRXOWLPDWH
WURXEOHZHPD\QRWEHZLWKWKHPZKHQWKHWURXEOHFRPHV´ 'DYLVDOVRVSRNHRID
JURZLQJIHDUDPRQJ%ULWLVKSROLF\PDNHUVRIDSRVVLEOH*HUPDQ-DSDQHVHHQWHQWH $VD
ODWHU*HQHUDO%RDUGUHSRUWRQWKH51ZRXOGVXUPLVHWKHJUHDWHVWVWUHQJWKRI%ULWLVKVHD
SRZHUZDVDOVRLWVJUHDWHVWZHDNQHVV%ULWDLQ¶VFODLPWRQDYDOSUHHPLQHQFHOD\LQLWV
³SRVVHVVLRQRIURXQGWKHZRUOGEDVHV´\HWWKHVHYHU\SRVVHVVLRQVSXWWKH51³LQFORVH
SUR[LPLW\WRSRVVLEOHHQHPLHV´ ,QRWKHUZRUGV'DYLV¶VWDWHPHQWWRWKH3ULPH0LQLVWHU
WKDW%ULWDLQQHHGHG$PHULFDPRUHWKDQWKHRWKHUZD\DURXQGDSSHDUHGWREHDFFXUDWH
:LWKWKHGRRUDSSDUHQWO\FORVHGRQDQ$QJOR-DSDQHVHDUUDQJHPHQW%ULWDLQKDGQRZKHUH
HOVHWRWXUQWREXW$PHULFD$QGJLYHQWKHIDUJUHDWHULPPHGLDF\RIGDQJHUIRUWKH51DV
ZHOODVWKHWKUHDWDULVLQJRQLWVGRRUVWHS%ULWDLQQHHGHGDIULHQGPXFKPRUHWKDQGLVWDQW
$PHULFDGLG
7KHLVVXHRILPPHGLDF\H[SODLQVPDQ\RIWKH$QJOR$PHULFDQPLVXQGHUVWDQGLQJV
WKDWRFFXUUHGRYHUWKHFRXUVHRIWKHSUHOLPLQDU\WDONV,QWKHVXPPHURIWKHVSKHUH
RI$PHULFDQLQWHUHVWZDVDVVHFXUHDVLWKDGHYHUEHHQE\GLQWRIJHRJUDSK\7KHUHIRUH
SROLF\PDNHUVYLHZHGWKHSURVSHFWLYHFRQIHUHQFHDVDQRSSRUWXQLW\WRUHGXFHWKHEXUGHQ
RIDUPVRQDQDOUHDG\EDWWHUHGHFRQRP\DQGWREX\WLPHIRUWKH861WRUHDFKWUHDW\
VWUHQJWK7KH%ULWLVKKRZHYHUIDFHGULVLQJWKUHDWVIURPHYHU\VSKHUHWKH\RFFXSLHGDQG
1L[RQ5RRVHYHOW,,'DYLVWR5RRVHYHOW'HF
,ELG
,ELG
1$5*%R[*HQHUDO%RDUG6HULDO1RHQFORVXUH³$%DVLVIRU'LVFXVVLRQRI
/LPLWDWLRQRI$UPDPHQWV±´-XO\
WKHUHIRUHWKH\YLHZHGWKHFRQIHUHQFHDVDQRSSRUWXQLW\WRHQKDQFHWKHLUVHFXULW\:KHQ
IDFHGZLWKWKHLQHYLWDELOLW\RI-DSDQHVHDEURJDWLRQLQWKHIDOOSUHOLPLQDULHVWKH$PHULFDQ
GHOHJDWLRQZDVVXGGHQO\SUHVHQWHGZLWKWKHVDPHVHQVHRILPPHGLDF\WKDWKDGLQIRUPHG
WKH%ULWLVKFUXLVHUGHPDQGVRYHUWKHVXPPHU,WZDVFOHDUWKH-DSDQHVHSURSRVDOZDVQR
EDUJDLQLQJSOD\²WKH\ZRXOGEHVDWLVILHGZLWKTXDQWLWDWLYHSDULW\DQGQRWKLQJOHVV8QGHU
WKHVHFLUFXPVWDQFHVWKH$PHULFDQGHOHJDWLRQZDVTXLFNWRFKDQJHLWVWXQH²WKH
SHUFHQWUHGXFWLRQZDVDOPRVWLPPHGLDWHO\RXWWKHZLQGRZDQGWKH\EHFDPHPXFKPRUH
DPHQDEOHWR%ULWDLQ¶VVHFXULW\FODLPV
$WWKHVDPHWLPHKRZHYHUWKH$PHULFDQVZRXOGQRWEHUXVKHGE\%ULWDLQLQWR
WKHLU³PLGGOHFRXUVH´,QWKHHYHQWRIDZDUZLWK-DSDQ861SODQQHUVZHUHUHODWLYHO\
FHUWDLQWKDWWKH\ZRXOGHYHQWXDOO\WULXPSK:DU3ODQ2UDQJHLQWKHHDUO\VGLGQRW
FRQVLGHUWKHIDFWRURI%ULWLVKFRRSHUDWLRQDWDOO:RUNLQJXQGHUWKHDVVXPSWLRQWKDWWKH
$WODQWLFZRXOGUHPDLQVHFXUHWKH8QLWHG6WDWHVFRXOGUHO\RQLWVODUJHU1DY\DQG
VXSHULRUVKLSEXLOGLQJFDSDFLW\WREHDWWKH,-1%ULWDLQRQWKHRWKHUKDQGFRXOGQHYHU
EULQJWKHIXOOIRUFHRILWV1DY\WREHDUDJDLQVW-DSDQZKLOHLWVKRPHODQGOD\LQVXFK
GDQJHURXVZDWHUV,WZDVFOHDUWKDW%ULWDLQZDVDWWHPSWLQJWRELQGWKH8QLWHG6WDWHVWRD
FHUWDLQSROLF\LQWKH3DFLILFLQRUGHUWRVDIHJXDUGLWVRZQ)DU(DVWHUQSRVVHVVLRQV,I
$PHULFDDSSURDFKHGDQ\VXFKDUUDQJHPHQWFDXWLRXVO\WKLVFDQKDUGO\EHDWWULEXWHGWR
LVRODWLRQLVP$PHULFDQSROLF\PDNHUVQHHGHGWLPHWRUHHYDOXDWHWKHVLWXDWLRQDQGWR
GHWHUPLQHH[DFWO\ZKDW-DSDQHVHLQWHQWLRQVZHUH,QDQ\HYHQWDVWLPHZRXOGWHOOWKH
$PHULFDQUHDGLQJRIWKHVLWXDWLRQZDVPRUHDFFXUDWHWKDQWKDWRIWKHLU%ULWLVK
FRXQWHUSDUWVZKRVHKRSHWKDW-DSDQPLJKWEHGLVVXDGHGIURPLWVFRXUVHZDVEDVHGPRUH
RQGHVSHUDWLRQWKDQIDFW,WLVFOHDUWKDWWKH$PHULFDQVZHUHFRPLQJDURXQGWRWKHLGHDRI
FORVHUFRRSHUDWLRQZLWKWKH%ULWLVKLQWKH3DFLILFEXWWKHWHUPVRIVXFKFRRSHUDWLRQZRXOG
QRWEHGLFWDWHGVROHO\E\WKHSDUW\LQJUHDWHUQHHG
7KH-DSDQHVHDQQRXQFHGWKHLUDEURJDWLRQRIWKH:DVKLQJWRQ7UHDW\RQ'HFHPEHU
7KHDQQRXQFHPHQWFRQWDLQHGWKHVDPHWDONRIDFRPPRQXSSHUOLPLWWKDWKDG
EHHQWKH-DSDQHVHOLQHVLQFHDQGHPSKDVL]HGWKDWWKH:DVKLQJWRQ7UHDW\¶V³LQIHULRU
UDWLRVRGHWULPHQWDOWRRXUQDWLRQDOSUHVWLJHLVERXQGWRUHPDLQDVRXUFHRISHUPDQHQW
DQGSURIRXQGGLVFRQWHQWWRRXUSHRSOH´ $UWLFOH;;,,,RIWKH:DVKLQJWRQ7UHDW\
SURYLGHGWKDWWZR\HDUV¶QRWLFHPXVWEHJLYHQEHIRUHWKHWHUPLQDWLRQRIWKH7UHDW\¶V
WHUPV7KH/RQGRQ1DYDO7UHDW\ZDVRIDIL[HGGXUDWLRQRIVL[\HDUVDQGZDVVHWWR
H[SLUH'HFHPEHU7KXVE\-DQXDU\WKHV\VWHPRIQDYDODUPVOLPLWDWLRQ
DQGDOOLWVDWWHQGDQWSROLWLFDOPDFKLQHU\ZRXOGEHGHDG
$VWKHQHZ\HDUGDZQHGZRUOGHYHQWVSURYHGLQDXVSLFLRXVIRUDJUDQG$QJOR
$PHULFDQDOOLDQFH$IWHUDFRQFHUWHGHIIRUWDWVHFXULQJ86SDUWLFLSDWLRQLQWKH:RUOG
&RXUW5RRVHYHOWSXWWKHPDWWHUWRDYRWHEHIRUHWKH6HQDWH7KH&RXUWDSSHDUHGWRKDYHD
PDMRULW\EDFNLQJDPRQJWKHOHJLVODWRUVEXWDYRFDOPLQRULW\FDPSDLJQHGYHQRPRXVO\
DJDLQVWLW0DQ\LQWKHLVRODWLRQLVWFDPSVDZWKH&RXUWDVDEDFNGRRULQWRWKH/HDJXHDQG
DOOWKHHQWDQJOHPHQWVWKDWLWHQWDLOHGDWDWLPHZKHQ(XURSHZDVEHFRPLQJLQFUHDVLQJO\
XQVWDEOH6HQDWRU+RPHU7%RQHRI:DVKLQJWRQVXPPHGXSWKHLVRODWLRQLVWRSLQLRQRQ
WKH³SRLVRQRXV(XURSHDQPHVV´VD\LQJWKDWZKLOH$PHULFDRXJKWWREHNLQGWR³SHRSOH
ZKRKDYHVPDOOSR[VXFKDV0XVVROLQLDQG+LWOHU´WKDWQRQHWKHOHVV$PHULFDRXJKWQRWWR
JRLQVLGHWKHLUKRXVHV 7KH5RRVHYHOWDGPLQLVWUDWLRQWULHGWRJHWWKHLVRODWLRQLVWEORF
RQVLGHE\HQGRUVLQJQRQLQWHUYHQWLRQLVW6HQDWRU9DQGHQEXUJ¶VDPHQGPHQWWKDWZRXOG
)586,0HPRE\+XOO'HF
1L[RQ5RRVHYHOW,,(DVWPDQWR5RRVHYHOW-DQ
FRQVWUDLQ$PHULFD¶VGLUHFWLQYROYHPHQWLQDQ\SROLWLFDODGPLQLVWUDWLRQRIDIRUHLJQ
VWDWH 7KHILQDOYRWHDWWKHHQGRI-DQXDU\ZDV²DVZLWKWKH9HUVDLOOHVYRWHLW
FDSWXUHGDPDMRULW\YRWHEXWOHVVWKDQWKHWZRWKLUGVVXSHUPDMRULW\UHTXLUHGE\6HQDWH
UXOHVIRUWUHDW\UDWLILFDWLRQ7KH:RUOG&RXUWGHEDFOHLQWKHILUVWZHHNVRIVHUYHGDV
DVWDUNUHPLQGHUWRWKH%ULWLVKRIWKHGLIILFXOW\RIVHFXULQJ$PHULFDQFRRSHUDWLRQ7KH
$PHULFDQSROLWLFDOV\VWHPZDVJHDUHGWRSURGXFHFDXWLRXVSROLF\RXWSXWV$WDWLPHZKHQ
&RQJUHVVKDUERUHGDVXEVWDQWLDOPLQRULW\ZKRVHSROLWLFDOSKLORVRSK\ZDVEDVHGDURXQG
H[WUHPHFDXWLRQLQWKHLQWHUQDWLRQDOUHDOPDELQGLQJ$QJOR$PHULFDQDUUDQJHPHQWLQWKH
3DFLILFDSSHDUHGXQOLNHO\
6RPHVPDOOJOLPPHURIKRSHIRUDQ$QJOR$PHULFDQSDFWFRXOGEHVDOYDJHGIURP
WKHIDLOXUH7KH3UHVLGHQW¶VHDUQHVWSHUVRQDOHIIRUWVDWSXVKLQJWKH:RUOG&RXUWDSSHDUHG
WRFRQILUP5RRVHYHOW¶VLQWHUQDWLRQDOLVWLQFOLQDWLRQV5RRVHYHOWZDVJUHDWO\LUULWDWHGE\WKH
REVWUXFWLRQLVWVLQWKH6HQDWHUHPDUNLQJSULYDWHO\DERXWWKH6HQDWRUVZKRYRWHG
DJDLQVWWKH&RXUW³,DPLQFOLQHGWRWKLQNWKDWLIWKH\HYHUJHWWR+HDYHQWKH\ZLOOEH
GRLQJDORWRIDSRORJL]LQJ²WKDWLVLI*RGLVDJDLQVWZDU²DQG,WKLQN+HLV´ 'DYLV
ZDVOLNHZLVHGLVPD\HGE\WKHIDLOXUHLQWKH6HQDWHEXWKHZDVTXLFNWRUHDVVXUHWKH
%ULWLVKWKDWLWZRXOGKDYHQREHDULQJRQWKHLUELODWHUDOFRRSHUDWLRQ:ULWLQJWR3KLOLS
.HUUODWHUWKH%ULWLVKDPEDVVDGRUWRWKH8QLWHG6WDWHV'DYLVVDLG
,DVVXPHWKDWWKLVDFWLRQRQWKH&RXUWZLOOPDNHWKHPIHHOLQ(QJODQGWKDW
WKH\FDQQRWFRXQWRQRXUFRRSHUDWLRQ6WUDQJHDVLWPD\VHHP,DP
LQFOLQHGWREHOLHYHWKDWLWZLOOKDYHWKHRSSRVLWHHIIHFW6RPHRIWKH
6HQDWRUVIRULQVWDQFHZKRKDYHRSSRVHGWKH&RXUWDUHLQIDYRURI$QJOR
$PHULFDQFRRSHUDWLRQ7KHUHLVVRPHKRZDIHHOLQJKHUHWKDWZHFDQ
FRRSHUDWHZLWK(QJODQGZLWKRXWEHFRPLQJHQWDQJOHGLQ(XURSHDQGWKDWLQ
1L[RQ5RRVHYHOW,,3UHVV&RQIHUHQFH-DQ
1L[RQ5RRVHYHOW,,5RRVHYHOWWR6HQ5RELQVRQ-DQ
WKDWZD\ZHFDQERWKPRUHHIIHFWLYHO\GHDOZLWKWKHSUREOHPLQWKH)DU
(DVWZKLFKLVRIFRPPRQLQWHUHVWDQGFRQFHUQ
$SSDUHQWO\WKHUHZDVXQLYHUVDODSSURYDOE\WKHSUHVVKHUHRIWKHVWDQG,
WRRNLQ/RQGRQDQGRIWKHZD\WKH8QLWHG6WDWHVDQG(QJODQGVWRRG
WRJHWKHULQUHIXVLQJWRDFFHGHWR-DSDQHVHSURSRVDOV,KDYHDOUHDG\WDONHG
ZLWKVRPHRIWKH6HQDWRUVDQGWKH\KDYHEHHQPRVWODXGDWRU\RIP\
SRVLWLRQ« (YHQLI'DYLVZDVWU\LQJWRSDLQWDURV\SLFWXUHLWZDVFOHDUWKDWWKH8QLWHG6WDWHV
ZDVQRWPRQROLWKLFDOO\LVRODWLRQLVWDWWKLVWLPH7KHUHZHUHPDQ\$PHULFDQSROLF\PDNHUV
ZKRZHUHDWOHDVWZLOOLQJWRWROHUDWHVRPHGHJUHHRILQWHUQDWLRQDOLVPLQFOXGLQJWKH
3UHVLGHQWWKHFKLHIGHOHJDWHDWWKHQDYDOFRQIHUHQFHDQGZHOORYHUKDOIWKH866HQDWH
7KHLVRODWLRQLVWEORFLQWKH6HQDWHZDVVWLOODIRUPLGDEOHREVWDFOHWR$QJOR$PHULFDQ
FRRSHUDWLRQEXWQRWDQLQVXUPRXQWDEOHRQH
8QIRUWXQDWHO\DVHFRQGPRUHSUHVVLQJGHYHORSPHQWODWHULQWKH\HDUDOVRUDLVHG
VRPHTXHVWLRQVUHJDUGLQJ$PHULFD¶VFRPPLWPHQWWRDQ\LQWHUQDWLRQDODFFRUG&RQJUHVV
SDVVHGWKHILUVWLQDVHULHVRIQHXWUDOLW\ODZVLQWKHVXPPHURI3DVVHGLQWKHZDNHRI
WKH1\H&RPPLWWHHLQYHVWLJDWLRQVDQLQIOXHQWLDOVHULHVRIKHDULQJVWKDWKDGGHWHUPLQHG
WKDWILQDQFLHUVDQGLQGXVWULDOLVWVKDGIRUFHGWKH8QLWHG6WDWHVLQWR:RUOG:DU2QHIRU
WKHLURZQSURILWVWKH1HXWUDOLW\$FWSURKLELWHG$PHULFDIURPH[SRUWLQJZDU
PDWHULHOWRDQ\SDUW\LQDQDUPHGFRQIOLFW 7KHOHJLVODWLRQKDGREYLRXVLPSOLFDWLRQVIRU
WKH$QJOR$PHULFDQUHODWLRQVKLS,QWKHODVWZDULPSRUWVIURP$PHULFDKDGEHHQ
DEVROXWHO\YLWDOWR$OOLHGVXUYLYDO7KHLWHUDWLRQRIQHXWUDOLW\PDGHQRGLVWLQFWLRQ
EHWZHHQDJJUHVVRUDQGGHIHQGHUKRZHYHUZKLFKPHDQWWKDWWKH8QLWHG6WDWHVZRXOGEH
SURKLELWHGIURPDLGLQJ%ULWDLQLQDQ\IXWXUHZDU7KH1HXWUDOLW\$FWZDV\HWIXUWKHU
/2&0DQXVFULSW'LYLVLRQ'DYLV3DSHUV%R['DYLVWR/RWKLDQ-DQ
'DOOHN5RRVHYHOW
HYLGHQFHRI$PHULFD¶VH[WUDRUGLQDU\FDXWLRQRQWKHZRUOGVWDJHDQGLWVVWULQJHQWHIIRUWV
WRUHPRYHDQ\SRVVLEOHHQWDQJOHPHQWWKDWFRXOGOHDGLWLQWRDIRUHLJQZDU
$V%HDU)%UDXPRHOOHUKDVZULWWHQLQVSLWHRIDKLVWRULRJUDSKLFDOFRQVHQVXVWKDW
WKH1HXWUDOLW\$FWVUHSUHVHQWHGWKHDSH[RI$PHULFDQLQWHUZDULVRODWLRQLVP
³FRQWHPSRUDU\FRPPHQWDWRUVKRZHYHUQRWHGWKDWWKHSXUSRVHRIWKH1HXWUDOLW\$FWZDV
QRWQHDUO\DVFOHDUFXWDVVXEVHTXHQWDQDO\VHVKDYHDVVXPHG6RPHPHPEHUVRIWKH
SXEOLFDQG&RQJUHVVVRXJKWQRQLQYROYHPHQWLQIRUHLJQDIIDLUVRWKHUVVRXJKWWRXVH
HFRQRPLFHPEDUJRDVDZHDSRQDJDLQVWDJJUHVVLRQ´ZKLOHVWLOORWKHUJURXSV³VRXJKWWR
ZHDNHQWKH3UHVLGHQWDQGWKHUHE\DYRLGZDUZKLOHDQRWKHUVRXJKWWRVWUHQJWKHQWKH
3UHVLGHQW¶VDELOLW\WRVDQFWLRQDJJUHVVRUV´ 7KH1HXWUDOLW\ODZVZHUHDFWXDOO\DQ
XQHDV\FRPSURPLVHEHWZHHQLQWHUQDWLRQDOLVWVDQGLVRODWLRQLVWVWKHIRUPHUSDUW\EHOLHYLQJ
WKDWWKH$FWFRXOGEHLQYRNHGDVDQHFRQRPLFZHDSRQDQGXVHGWRDUELWUDWHLQWHUQDWLRQDO
GLVSXWHV7KHOLPLWDWLRQVRIWKHOHJLVODWLRQZHUHFHUWDLQO\UHFRJQL]HGE\DGLVJUXQWOHG
5RRVHYHOWZKRGHFLGHGQRWWRVWDNHDQ\SROLWLFDOFDSLWDOLQUHVLVWLQJLW,QDSXEOLF
DGGUHVVGHOLYHUHGRQ$XJXVW5RRVHYHOWVDLG³KLVWRU\LVILOOHGZLWKXQIRUHVHHDEOH
VLWXDWLRQVWKDWFDOOIRUIOH[LELOLW\RIDFWLRQ,WLVFRQFHLYDEOHWKDWVLWXDWLRQVPD\DULVHLQ
ZKLFKWKHZKROO\LQIOH[LEOHSURYLVLRQVRI6HFWLRQ,RIWKLVDFWPLJKWKDYHH[DFWO\WKH
RSSRVLWHHIIHFWIURPWKDWZKLFKZDVLQWHQGHG,QRWKHUZRUGVWKHLQIOH[LEOHSURYLVLRQV
PLJKWGUDJXVLQWRZDULQVWHDGRINHHSLQJXVRXW´ 'DYLVFRQFXUUHGDQGUHFNRQHGWKH
OHJLVODWLRQZDVVLPSO\&RQJUHVVPHGGOLQJZLWKWKH3UHVLGHQWLDOSUHURJDWLYH:KLOH
JHQHUDOO\VXSSRUWLYHRI1HXWUDOLW\'DYLVEHOLHYHGLWZDVRQO\SURSHUWKDW³WKH3UHVLGHQW
VKRXOGKDYHWKHDXWKRULW\WRGHFLGHZKHWKHUDQHPEDUJRRQDUPVVKRXOGEHDSSOLHGWRDQ\
%UDXPRHOOHU³0\WKRI,VRODWLRQLVP´
5RVHQPDQ3XEOLF3DSHUV,93UHVLGHQWLDOVWDWHPHQWRIDSSURYDORI1HXWUDOLW\OHJLVODWLRQ$XJ
RQHEHOOLJHUHQWUDWKHUWKDQQHFHVVDULO\WRDOO´ ,IIRUH[DPSOHDJHQHUDOZDUZHUHWR
EUHDNRXWEHWZHHQ-DSDQDQG&KLQDDVDSSHDUHGOLNHO\WKHQWKH8QLWHG6WDWHVZRXOGEH
REOLJHGWRZLWKKROGDQ\DLGWR&KLQDGHVSLWHWKHQXPHURXV-DSDQHVHYLRODWLRQVWKDWZRXOG
KDYHFDXVHGLW 7KHVHPLVJLYLQJVZHUHFROGFRPIRUWWRREVHUYHUVDFURVVWKH$WODQWLF
$VZRUOGFRQGLWLRQVGHWHULRUDWHGLQ$PHULFDDSSHDUHGWREHSUHSDULQJWRHQWUHQFK
WKHPVHOYHVZLWKLQ³IRUWUHVV$PHULFD´
2PLQRXVZDUQLQJVIURPDEURDGEHJDQWRSHUPHDWHWKHRIILFHVRI:DVKLQJWRQ
SROLF\PDNHUVWKURXJKRXW%UHFNHQULGJH/RQJWKH$PEDVVDGRUWR,WDO\UHSRUWHGLQ
)HEUXDU\WKDWZDUSUHSDUDWLRQVZHUHLQWHQVLI\LQJDFURVV(XURSHDQGWKDW³WKHUHLVQR
GRXEWLQP\PLQGWKDW(XURSHLVKHDGHGVWUDLJKWIRUZDU´ $PEDVVDGRU*UHZZDUQHG
WKDWWKH-DSDQHVHZHUHDEVROXWHO\FRPPLWWHGWRDWWDLQLQJILUVWFODVVSRZHUVWDWXVZLWK
³XQFRQWHVWHGGRPLQDQFHRYHUµ(DVW$VLD¶´(PEROGHQHGE\WKHLUVXFFHVVIXOGHILDQFHRI
ZRUOGRSLQLRQDW6KDQJKDLDQGLQ0DQFKXULDWKH-DSDQHVHZHUHDOPRVWFHUWDLQWRWRUSHGR
DQ\FRQIHUHQFHKHOGLQWKHQHDUIXWXUHLQVHUYLFHRIWKDWDLP :LOOLDP'RGG
DPEDVVDGRUWR*HUPDQ\UHSRUWHGWURXEOLQJUXPRUVRIDWULSDUWLWH*HUPDQ,WDOLDQ
-DSDQHVHFRRSHUDWLRQ³,I,WDO\*HUPDQ\DQG-DSDQDWVRPHFULWLFDOPRPHQWPRYHDWWKH
VDPHWLPHLQWKHLUVSKHUHV,FDQQRWVHHDQ\ZD\WRVWRSWKHGLFWDWRUVKLSV´'RGGZURWHWR
5RRVHYHOWSHUVRQDOO\DGGLQJ³RQHRIWKH0LQLVWHUVKHUHVDLGWRPHWRGD\³,QWKDWFDVH,
ZRXOGFRPPLWVXLFLGH\RXUFRXQWU\DORQHFDQVDYHFLYLOL]DWLRQ´ ,Q0DUFK5RRVHYHOW
JORRPLO\FRQFOXGHGZLWK$PEDVVDGRU/RQJWKDW³WKHVHDUHWKHPRVWKDLUWULJJHUWLPHVWKH
/2&0DQXVFULSW'LYLVLRQ'DYLV3DSHUV%R['DYLVWR+XOO³0HPRUHJDUGLQJQHXWUDOLW\´-DQ
,ELG
1L[RQ5RRVHYHOW,,/RQJWR5RRVHYHOW)HE
)586,*UHZWR+XOO0D\
1L[RQ5RRVHYHOW,,,'RGGWR5RRVHYHOW2FW
ZRUOGKDVJRQHWKURXJKLQ\RXUOLIHWLPHRUPLQH,GRQRWHYHQH[FOXGH-XQHDQG-XO\
EHFDXVHDWWKDWWLPHWKHUHZDVHFRQRPLFDQGVRFLDOVWDELOLW\ZLWKRQO\WKHORRPRID
ZDUE\*RYHUQPHQWVLQDFFRUGDQFHZLWKSUHFRQFHLYHGLGHDVDQGSURJQRVWLFDWLRQV7RGD\
WKHUHLVQRWRQHHOHPHQWDORQHEXWWKUHHRUPRUH´ 7KHUDSLGO\ZRUVHQLQJLQWHUQDWLRQDO
VLWXDWLRQZRXOGFHUWDLQO\LQIOXHQFH$PHULFDQGHFLVLRQPDNLQJUHJDUGLQJWKHDGYLVDELOLW\
RIDQDYDOFRQIHUHQFHLQDQGWKHDWWLWXGHWKDW$PHULFDZRXOGDVVXPHDWVDLG
FRQIHUHQFH
$QRWKHUFRQVLGHUDWLRQIRUWKH$PHULFDQVDVWKH\GHFLGHGZKHWKHURUQRWDQDYDO
FRQIHUHQFHZDVZRUWKWKHHIIRUWZDVWKH$QJOR*HUPDQ1DYDO$JUHHPHQW2IWHQVHHQLQ
WKHKLVWRULRJUDSK\DVWKHEHJLQQLQJRIWKH%ULWLVKSROLF\RIDSSHDVHPHQWWRZDUGV1D]L
*HUPDQ\DQGD³ODQGPDUNRQWKHURDGWRZDU´LQWKH8.XQLODWHUDOO\UHZURWHWKH
QDYDOSURYLVLRQVRI9HUVDLOOHVDQGHQGRUVHGDPXFKODUJHU*HUPDQ1DY\WKDQWKHWUHDW\
DOORZHG 7KH:RUOG'LVDUPDPHQW&RQIHUHQFHLQ*HQHYDKDGIDLOHGHQWLUHO\E\
ZLWK+LWOHUZLWKGUDZLQJ*HUPDQ\IURPERWKWKH&RQIHUHQFHDQGWKH/HDJXHLQ2FWREHU
7KHUHDIWHU+LWOHUDFFHOHUDWHGWKH*HUPDQUHDUPDPHQWSURJUDPWKDWKDGEHHQ
TXLHWO\RQJRLQJVLQFHWKHV+LWOHU¶VQDYDOUHDUPDPHQWLQFOXGHGWKHVRFDOOHG
³SRFNHWEDWWOHVKLSV´ZKLFKVLPXOWDQHRXVO\SUHVHQWHGDW\SHRIVKLSWKDWPLJKWUHQGHU
%ULWDLQ¶VFUXLVHUIOHHWREVROHWHZKLOHDOVRVSXUULQJUHDFWLYHQDYDOEXLOGLQJLQ)UDQFHDQG
,WDO\WKUHDWHQLQJWRXSKHDYHWKH(XURSHDQQDYDOEDODQFH %ULWLVKQDYDOSROLF\KDGEHHQ
VXIILFLHQWO\VHUYHGE\D³RQHSRZHUVWDQGDUG´ZLWKWKH8QLWHG6WDWHVDGUDPDWLFFOLPE
GRZQIURPLWV³WZRSRZHUVWDQGDUG´LQWKHGHFDGHVOHDGLQJXSZLWK::,ZKLFKKDG
1L[RQ5RRVHYHOW,,5RRVHYHOWWR/RQJ0DUFK
&KDUOHV%ORFK³*UHDW%ULWDLQ*HUPDQ5HDUPDPHQWDQGWKH1DYDO$JUHHPHQWRI´LQ(XURSHDQ
'LSORPDF\%HWZHHQ7ZR:DUVHG+DQV:*DW]NH&KLFDJR4XDGUDQJOH%RRNV
&ODLUH06FDPPHOO³7KH5R\DO1DY\DQGWKH6WUDWHJLF2ULJLQVRIWKH$QJOR*HUPDQ1DYDO
$JUHHPHQWRI´LQ-RXUQDORI6WUDWHJLF6WXGLHV
PDQGDWHGD1DY\DVODUJHDVWKHQH[WWZRODUJHVWFRPELQHG 7KHQDYDOUDFHWKDW
*HUPDQEXLOGLQJWKUHDWHQHGZRXOGFHUWDLQO\IRUFHDUHWXUQWRWKH³WZRSRZHUVWDQGDUG´
H[FOXGLQJWKH8QLWHG6WDWHVDQGIRUFHJUHDWHU%ULWLVKEXLOGLQJ²EXLOGLQJZKLFKWKHLU
UDYDJHGILQDQFHVFRXOGLOODIIRUG,QDELGWROLPLWWKH*HUPDQQDYDOH[SDQVLRQWKH
0DF'RQDOGJRYHUQPHQWH[WHQGHGWKHLQYLWDWLRQIRUELODWHUDOWDONVZLWK+LWOHU7KH
)RUHLJQ2IILFHDQGWKH$GPLUDOW\DJUHHGWKDWZLWK*HUPDQ\IODJUDQWO\GHI\LQJWKH
9HUVDLOOHV7UHDW\VRPHIRUPRIOLPLWDWLRQZRXOGEHEHWWHUWKDQXQUHVWULFWHGEXLOGLQJ
7KH%ULWLVKZHUHVXUSULVHGDQGWURXEOHGE\+LWOHU¶VDJJUHVVLYHQHJRWLDWLRQV
KRZHYHU+LWOHUGHPDQGHGD1DY\SHUFHQWWKHVWUHQJWKRIWKH51DQGVXEVWDQWLDOO\
PRUHLQVXEPDULQHWRQQDJH0RUHWKDQWKHQXPEHULWVHOIKRZHYHUWKH%ULWLVKZHUH
GLVPD\HGE\*HUPDQWDFWLFV$WKHUWRQUHSRUWHGLQ0D\WKDWZKLOHWKH0DF'RQDOG
*RYHUQPHQWZDVSUHYLRXVO\DZDUHRI+LWOHU¶VSHUFHQWDPELWLRQ³WKH%ULWLVK
*RYHUQPHQWUHVHQWZKDWKDVEHHQWHUPHGLQDSULYDWHFRQYHUVDWLRQWKHµQDVW\ZD\¶WDNHQ
E\*HUPDQ\WRPDNHWKLVDQQRXQFHPHQWMXVWEHIRUHWKH$QJOR*HUPDQQDYDO
FRQYHUVDWLRQVZHUHVFKHGXOHGWRWDNHSODFHLQ/RQGRQ´ $VZLWKWKH-DSDQHVHGHPDQG
IRUDFRPPRQXSSHUOLPLWWKH)RUHLJQ2IILFHEHOLHYHGWKDWWKHLQLWLDOGHPDQGZDVEOXVWHU
DQGWKDWWKH\FRXOGWDONWKH*HUPDQVGRZQ %ULWLVKGLSORPDWVSURYHGXQDEOHWRJHW
+LWOHUWREXGJHKRZHYHUDQGWKH$GPLUDOW\XOWLPDWHO\DFFHSWHGD*HUPDQ1DY\
SHUFHQWWKHVL]HRIWKH51DVDFFHSWDEOHZLWKLQ%ULWDLQ¶VVHFXULW\IUDPHZRUNDQGWZR
SRZHUVWDQGDUG,QUHFHQW\HDUVKLVWRULDQVKDYHEHJXQWRUHH[DPLQHWKH$*1$DVWKH
EHVWWKH%ULWLVKFRXOGKDYHGRQHJLYHQWKHFLUFXPVWDQFHV²IDFHGZLWKDJURZLQJVHFXULW\
&KULVWRSKHU0%HOO7KH5R\DO1DY\6HDSRZHUDQG6WUDWHJ\%HWZHHQWKH:DUV6WDQIRUG6WDQIRUG
8QLYHUVLW\3UHVV
1$5*5HFRUGV5HODWLQJWR'LVDUPDPHQW%R[$WKHUWRQWR+XOO³'HEDWHRQ)RUHLJQ$IIDLUVDQG
'HIHQVHLQWKH+RXVHRI&RPPRQV´0D\
6FDPPHOO³$QJOR*HUPDQ1DYDO$JUHHPHQW´
SUREOHPLQWKH)DU(DVWNHHSLQJWKHVWLOOHPEU\RQLF*HUPDQ\1DY\WRZLWKLQD
PD[LPXPOLPLWRIDURXQGDWKLUGWKHWRQQDJHRIWKH51ZDVEHWWHUWKDQQRWKLQJ$V&ODUH
06FDPPHOOKDVZULWWHQ³2QO\E\OLPLWLQJWKHSRWHQWLDOQDYDOWKUHDWRI%ULWDLQ¶V
XOWLPDWHHQHP\FRXOGWKH$GPLUDOW\FRQFHQWUDWHLWVHIIRUWVRQFHPRUHRQWKHDFWXDODQG
LPPHGLDWHWKUHDWRI-DSDQLQWKH)DU(DVW´ :KHWKHURUQRWWKH$*1$ZDVDZLVHVWUDWHJLFPRYHIRU%ULWDLQPXVWUHPDLQD
GLVFXVVLRQIRUDGLIIHUHQWSODFH7KHXQIRUWXQDWHVLGHHIIHFWRIWKHGHDOZDVWKHQHJDWLYH
SHUFHSWLRQWKDWLWFXOWLYDWHGDPRQJ%ULWDLQ¶VSURVSHFWLYHDOOLHVLQDQ\IXWXUHFRQIOLFW
)UDQFHLQSDUWLFXODUZDVRXWUDJHGE\%ULWDLQ¶VXQLODWHUDODFWLRQDQGGLVUHJDUGIRUWKH
9HUVDLOOHV7UHDW\)HHOLQJEHWUD\HGE\%ULWDLQ¶VPRYHWRHQGRUVHDODUJHU1DY\LQWKH
KDQGVRIWKHLUPRUWDOHQHP\)UDQFHZRXOGFDXVHDJUHDWGHDORIWURXEOHDWWKHXSFRPLQJ
FRQIHUHQFH
7KH$PHULFDQVZHUHDOVRERWKHUHGE\%ULWLVKDFWLRQRQWKH*HUPDQIURQW
5RRVHYHOWZDVVNHSWLFDORIWKHZLVGRPRIWKHDJUHHPHQWEHOLHYLQJWKDW³WKH%ULWLVKKDYH
LQWKH*HUPDQ1DYDODJUHHPHQWOHWWKHPVHOYHVLQIRUUHDOUHVHQWPHQWRQWKH&RQWLQHQW
DQGDOVRIRUPXFKWURXEOHWRWKHPVHOYHVLQWKHGD\VWRFRPH´ +HDOVRFULWLFL]HGWKH
WUHDW\¶VVXEPDULQHSURYLVLRQVZKLFKDOORZHGWKH*HUPDQVSHUFHQWRIWKH51
VXEPDULQHWRQQDJHZLWKWKHWKHRUHWLFDOULJKWWRSDULW\LIWKH*HUPDQJRYHUQPHQWGHHPHG
WKLVQHFHVVDU\*LYHQWKHVXEPDULQH¶VLPPHQVHSRWHQWLDOIRUWKUHDWHQLQJ$PHULFD¶V
FDUGLQDOSROLF\RI³IUHHGRPRIWKHVHDV´WKLVSURYLVLRQZDVSDUWLFXODUO\LUNVRPHWRWKH
8QLWHG6WDWHV5RRVHYHOWVHHPHGH[DVSHUDWHGE\WKHZKROH%ULWLVKDWWLWXGHRQWKHPDWWHU
VD\LQJWKH%ULWLVK³DUHDIXQQ\SHRSOHDQGWKRXJKDOZD\VSROLWHFDQEHFRXQWHGRQZKHQ
6FDPPHOO³$QJOR*HUPDQ1DYDO$JUHHPHQW´
1L[RQ5RRVHYHOW,,5RRVHYHOWWR%LQJKDP-XO\
WKLQJVDUHJRLQJZHOOZLWKWKHPWRVKRZDQDWLRQDOVHOILVKQHVVWRZDUGVRWKHUQDWLRQV
ZKLFKPDNHVPXWXDOKHOSIXOQHVVYHU\GLIILFXOWWRDFFRPSOLVK7KHLUDYHUDJHFRQFHSWLRQ
RIPXWXDOLW\GLIIHUVIURPPLQH´ 6HFUHWDU\+XOOZDVVLPLODUO\LOOGLVSRVHGWRWKH$*1$DQGWKHODFNRI
LQIRUPDWLRQJLYHQRQDPDWWHUWKDWZRXOGXOWLPDWHO\DIIHFW$PHULFDQVHFXULW\:KLOHWKH
8QLWHG6WDWHVKDGFRQFHGHGWRFRQWHPSODWH%ULWDLQ¶V³PLGGOHFRXUVH´LQWKHLQWHULP
EHWZHHQWKHSUHOLPLQDULHVDQGWKHFRQIHUHQFH+XOOZURWHWR$WKHUWRQ
WKH%ULWLVK*RYHUQPHQWLVQRZXSRQLWVRZQLQLWLDWLYHDQGZLWKRXWSULRU
GLVFXVVLRQZLWKXVHQGHDYRULQJWRUHDFKµDVXIILFLHQWPHDVXUHRI(XURSHDQ
DJUHHPHQW¶VRWKDWLWFDQSXWIRUZDUGµDVD(XURSHDQYLHZ¶SURSRVDOZKLFK
LWPXVWKDYHNQRZQHPERGLHGVXFKDZLGHGLYHUJHQFHIURPH[LVWLQJWUHDW\
W\SHVDVWRPDNHWKHPXQDFFHSWDEOHWRWKH8QLWHG6WDWHV,QWKHVH
FLUFXPVWDQFHVZKLOHZHZLVKWREHDVFRRSHUDWLYHDVSRVVLEOHDQGVKDUH
WKHGHVLUHRIWKH%ULWLVKWRUHDFKDQDJUHHPHQWRQJHQHUDOQDYDOOLPLWDWLRQ
ZHIHHOWKDWOLWWOHKRSHRIDFKLHYLQJWKHVHDLPVLVRIIHUHGE\DFRQIHUHQFH
VRORQJDVWKHSRVLWLRQVRIWKHWZRPDMRUSDUWLFLSDQWVDUHVWLOOVRIDU
DSDUW ,WLVFOHDUWKDWKRZHYHUPXFK$PHULFD¶VFDXWLRQDU\SROLF\RXWSXWVGLVWUHVVHG
%ULWDLQLQWKHDIWHUPDWKRIWKHSUHOLPLQDULHV%ULWDLQ¶VDFWLRQVLQWKH(XURSHDQ
VSKHUHSURYRNHGDJUHDWGHDORILUULWDWLRQLQ$PHULFD
7KHSROLWLFDOFRQVLGHUDWLRQZDVRQO\RQHKDOIRIWKHHTXDWLRQ7KH861ZDVRI
FRXUVHWKHRWKHUFULWLFDOFRPSRQHQWLQDQ\$QJOR$PHULFDQSDFW,QWKHLPPHGLDWH
DIWHUPDWKRIWKH-DSDQHVHDEURJDWLRQKRZHYHUPDQ\VHQLRURIILFHUVLQWKH1DY\ZHUH
PXFKPRUHFRQFHUQHGZLWKWKHLURZQIOHHWUDWKHUWKDQDQ\QRWLRQRIFRRSHUDWLRQZLWKWKH
51$PLOLWDU\IRUFHPXVWSUHSDUHIRUWKHZRUVWFDVHVFHQDULRDQGWKHZRUVWFDVH
VFHQDULRLQZDVDZDUZLWK-DSDQZLWKQRRXWVLGHKHOS,WZDVDOVRDVFHQDULRIRU
,ELG
)586,+XOOWR$WKHUWRQ$XJXVW
ZKLFKWKH861ZDVZRHIXOO\XQSUHSDUHG$PHULFD¶VQDYDOVKRUWFRPLQJVDSSHDUHG
VWDUNHUJLYHQWKHQHZVIURP-DSDQ,QWKH861ZDVZHOOVKRUWRILWVDOORWPHQWLQ
RYHUDOOWRQQDJHDQGHYHQZRUVHZKHQLWFDPHWRXQGHUDJHYHVVHOV7KH*HQHUDO%RDUG
UHFNRQHGWKDWWKHUDWLRLQXQGHUDJHYHVVHOVZDVDSSUR[LPDWHO\DVOLPPDUJLQHYHQ
ZLWKRXWWKHFRQVLGHUDEOHJHRJUDSKLFDGYDQWDJHWKDW-DSDQSRVVHVVHG 6HFUHWDU\RIWKH
1DY\6ZDQVRQRUGHUHGQHZSRVW:DVKLQJWRQGHVLJQVEHGUDZQXSRIYHVVHOVKLWKHUWR
UHVWULFWHGE\WKHWUHDW\LQFOXGLQJVRFDOOHG³SRFNHWEDWWOHVKLSV´DQGIDVWFUXLVHU
VTXDGURQV &126WDQGOH\DOVRWKHFKLHIWHFKQLFDODGYLVRUIRUWKH$PHULFDQGHOHJDWLRQWRRN
WKHOHDGLQVWXPSLQJIRUPRUHIXQGVIRUWKH1DY\DQGGHOLYHUHGDUHQHZHGFDOOIRUD
VWHDG\DQGUHJXODUL]HGEXLOGLQJSURJUDP6WDQGOH\KDVJRWWHQVRPHWKLQJRIDEDGVKDNH
IURPKLVFRQWHPSRUDULHVDQGKLVWRULDQVDOLNHIRUEHLQJULJLGDQGFRQVHUYDWLYH+LV
SUHGHFHVVRU:LOOLDP93UDWWVXJJHVWHGDVPXFKWR5RRVHYHOWVD\LQJWKDWKHSHUVRQDOO\
HQGRUVHG$GPLUDO$UWKXU+HSEXUQWRUHSODFHKLPEXWWKDW6WDQGOH\ZDVWKHVHUYLFH¶V
FKRLFH²LPSO\LQJWKDWWKHFRQVHUYDWLYHPLQGHGOLQHRIILFHUVVDZ6WDQGOH\DVRQHRIWKHLU
RZQ 7KH3UHVLGHQWDQG6WDQGOH\KDGDFRROZRUNLQJUHODWLRQVKLSWKURXJKRXWKLVWHUP
ZLWK6WDQGOH\UHPDUNLQJSULYDWHO\WKDWKHUHVHQWHG5RRVHYHOW¶V³LQIODWHGRSLQLRQ´RIKLV
H[SHUWLVHLQQDYDOPDWWHUV :LOOLDP0F%ULGHZULWLQJDERXWWKH861¶VDGDSWDWLRQWR
QHZWHFKQRORJLHVFDVWV6WDQGOH\DVDWHFKQRORJLFDOREVWUXFWLRQLVWZKR³ZDVDVWDXQFK
PHPEHURIWKH³*XQ&OXE´DQGFRROWRDYLDWLRQDQGDLUVKLSV´ ,WLVWUXH6WDQGOH\KDG
/2&0DQXVFULSW'LYLVLRQ'DYLV3DSHUV%R[*HQHUDO%RDUG6HULDO1R2FW
1L[RQ5RRVHYHOW,,6ZDQVRQWR5RRVHYHOW1RYDQG5RRVHYHOW¶VUHSO\'HF
0F%ULGH7HFKQRORJLFDO&KDQJH
0F%ULGH7HFKQRORJLFDO&KDQJH
0F%ULGH7HFKQRORJLFDO&KDQJH
EHHQDORXGELJ1DY\DGYRFDWHGXULQJWKH/RQGRQ1DYDO&RQIHUHQFHDQGKDGVWRRGLQWKH
FDPSRIWKH$QJORSKRELFQDWLRQDOLVW+LODU\3-RQHVZKRKDGVWURQJO\REMHFWHGWRWKH
WUHDW\$SSDUHQWO\6WDQGOH\¶VUHSXWDWLRQDVDULJLGELJ1DY\HQWKXVLDVWZDVHYHQ
UHFRJQL]HGLQ-DSDQ$Q21,UHSRUWLVVXHGIURP7RN\RRQ2FWREHUVWDWHGWKDW
³PRVWRIWKHSDSHUVH[SUHVVHGWKHRSLQLRQWKDW$GPLUDO6WDQGOH\¶VSUHVHQFHLQ/RQGRQ
PHDQWWKDWLWZRXOGEHLPSRVVLEOHIRU-DSDQDQG$PHULFDWRUHDFKDQDJUHHPHQWVLQFH
WKH\DUHYHU\VXUHWKDWKHZLOOQRWEHLQFOLQHGWRDFFHSWWKH-DSDQHVHSURSRVDOV´ +LVWRULDQ5REHUW/HYLQHLVSDUWLFXODUO\FULWLFDORIWKH&12FODLPLQJ³KLVYLHZVZHUH
LQIOH[LEOH«6WDQGOH\ZDVXQIRUWXQDWHO\DSRRUFKRLFHDVGHOHJDWHWRVHQVLWLYH
GLVDUPDPHQWQHJRWLDWLRQV«6WDQGOH\ZHQWWR/RQGRQWRVDIHJXDUGWKH1DY\IURP'DYLV
MXVWDVPXFKDVKHZHQWWRVDIHJXDUGLWIURPWKH%ULWLVKDQG-DSDQHVHQHJRWLDWRUV´ 7KLVFULWLFLVPLVPRVWO\XQIDLU6WDQGOH\¶VYLHZVHYROYHGWREHPXFKPRUH
IOH[LEOHXSRQDVVXPLQJRIILFHDV&12DQGHYROYHGHYHQIXUWKHURYHUWKHFRXUVHRIWKH
FRQIHUHQFHDQGLWVSUHOLPLQDULHV&RQWUDU\WR0F%ULGH¶VDVVHUWLRQ6WDQGOH\IUHTXHQWO\
VSRNHRXWIRUWKHQHHGRIFDUULHUVDQGRWKHUDX[LOLDU\YHVVHOV,QDQ2FWREHUUDGLR
DGGUHVV6WDQGOH\GHFODUHGWKDW³DWUHDW\1DY\ZKLFKRIFRXUVHLQFOXGHVDLUFUDIWDQGD
ODUJHPHUFKDQWPDULQHDUHYLWDOWRWKHZHOIDUHRIWKH8QLWHG6WDWHV´ 6WDQGOH\ZDV
SDUWLFXODUO\HPSKDWLFRQWKHQHHGIRUPHUFKDQWPDULQHVXSSRUWFUDIWWRVHUYLFHDQ\86
3DFLILFIOHHWDYLWDOFRPSRQHQWRIVHDSRZHUWKDWKDGEHHQQHJOHFWHGE\SROLWLFLDQVDQG
³%LJ*XQ´QDYDORIILFHUVDOLNH +HFULWLFL]HGWKHIXQGVDWWDFKHGWRWKH9LQVRQ$FWIRU
IDLOLQJWRSURYLGHIRU³PLQRUFRPEDWVKLSVDQGDX[LOLDULHVWHQGHUVHWFZKLFKDUH
/2&0DQXVFULSW'LYLVLRQ'DYLV3DSHUV%R[1DYDO$WWDFKp-DSDQ5HSRUW1R2FW
/HYLQH$PHULFDQ1DYDO5HDUPDPHQW
/2&0DQXVFULSW'LYLVLRQ6WDQGOH\3DSHUV%R[1DY\3UHVV7UDQVFULSW2FW
1L[RQ5RRVHYHOW,,+XOOWR5RRVHYHOW1RY7KH860HUFKDQW0DULQHKDGEHHQEDGO\
QHJOHFWHGLQWKHVDQGLWVWRWDOWRQQDJHKDGGHFOLQHGFRQVLGHUDEO\VLQFH
UHTXLUHGWRURXQGRXWRXUIOHHW´ 7KHFKDUDFWHUL]DWLRQRI6WDQGOH\DVDPHFKDQLFDO
DGKHUHQWWRWKHEDWWOHVKLSLVHQWLUHO\IDOVH
$V&126WDQGOH\ILQDOO\RUGHUHGDQRIILFLDOHQGWRWKH³7KURXJK7LFNHW´
VWUDWHJ\SUHVHQWLQWKHHDUO\LWHUDWLRQVRI:DU3ODQ2UDQJHDVWUDWHJ\WKDWDGYRFDWHGD
VZLIWWUDQV3DFLILFMRXUQH\RIWKH86IOHHWWR0DQLODDQGWKHQFHWR-DSDQIRUDGHFLVLYH
QDYDOHQJDJHPHQW +HZDVLQVWUXPHQWDOLQGHYHORSLQJWKHVRFDOOHG³FDXWLRQDU\´
DSSURDFKZKLFKZRXOGVORZO\WDNHWKH0LFURQHVLDQLVODQGVDVD³KLJKZD\´DFURVVWKH
3DFLILF ,QD)HEUXDU\DGGUHVV6WDQGOH\VWXPSHGIRUIXQGVLQDPHDVXUHGWRQH
³/HWXVDYRLGURFNLQJWKHERDWOHWXVQRWUDWWOHWKHVZRUGOHWXVSXUVXHWKHHYHQWHQRURI
RXUZD\XUJHDGKHUHQFHWRRXUSUHVHQWQDYDOSROLF\DQGUHSODFHPHQWSURJUDPDQGPDNH
HYHU\HIIRUWWRVHHWKDWIXQGVDUHDSSURSULDWHGWRFDUU\WKLVSURJUDPLQWRHIIHFW´ 6WDQGOH\FRQVLVWHQWO\DVNHGIRUDUHJXODUL]HGEXLOGLQJSURJUDPWKURXJKRXWEXWD
JUDGXDORQHWKDWZRXOGDYRLG³URFNLQJWKHLQWHUQDWLRQDOERDW´RUWDNHRQWKHDSSHDUDQFH
RI³VZDVKEXFNOLQJ´ 6WDQGOH\ZDVZHOODZDUHWKHHIIHFWVRILQFUHDVHG$PHULFDQQDYDO
VSHQGLQJZRXOGKDYHRQWKH-DSDQHVHPLOLWDULVWIDFWLRQDQGVRXJKWWRDYRLGVXFK
QHJDWLYHHIIHFWVDVPXFKDVSRVVLEOH+HZDVD³ELJ1DY\´HQWKXVLDVWRQO\LQDVPXFKDV
KHDGYRFDWHGIRUWKH861WREHEXLOWWRLWVIXOO:DVKLQJWRQDOORWPHQWVZKLFKZDVWKH
SROLF\RIHYHQWKHPRVWDUGHQWSURWUHDW\RIILFHUVVXFKDV:LOOLDP93UDWW 6WDQGOH\
GHFULHGWKH³DQWLSUHSDUHGQHVVLQIOXHQFH´ZKLFKZDV³DEOHWRWKZDUWDOOHIIRUWVWREXLOG
WKH1DY\WRWUHDW\VWUHQJWK´ +RZHYHUKHFRQVLVWHQWO\VKRZHGKLPVHOIWREHLQIDYRU
1$5*%R[5HFRUGVRIWKH&122IILFH6WDQGOH\WR6ZDQVRQ0DUFK
0LOOHU:DU3ODQ2UDQJH
0LOOHU:DU3ODQ2UDQJH
/2&0DQXVFULSW'LYLVLRQ6WDQGOH\3DSHUV%R[1DY\3UHVV7UDQVFULSW)HEUXDU\
/2&0DQXVFULSW'LYLVLRQ6WDQGOH\3DSHUV%R[1DY\3UHVV7UDQVFULSW0DUFK
1$5*%R[5HFRUGVRIWKH&122IILFH3UDWWWR6ZDQVRQ0DUFK
/2&0DQXVFULSW'LYLVLRQ6WDQGOH\3DSHUV%R[1DY\3UHVV7UDQVFULSW6HSWHPEHU
RIPDLQWDLQLQJWKHXSSHUOLPLWRIQDYDOH[SDQVLRQ7KH$GPLUDOZDVDQH[FHOOHQWVWHZDUG
RIWKH861LQWKHWURXEOHG\HDUVRIWKHPLGVDQGZRXOGSURYHKLVZRUWKDWWKH
FRQIHUHQFHDQGLWVDIWHUPDWK
7KH*HQHUDO%RDUGZLWKRXWFOHDUGLUHFWLRQIURPLWVFLYLOLDQSROLF\PDNHUVDVWR
ZKHWKHUDFRQIHUHQFHZRXOGHYHQEHKHOGEHJDQWRGUDZXSUHFRPPHQGDWLRQVRQWKH
DVVXPSWLRQWKDWLWZRXOGJRIRUZDUG$VZRXOGEHH[SHFWHGWKH*HQHUDO%RDUGURXQGO\
GLVPLVVHGWKH-DSDQHVHGHPDQGIRUDFRPPRQXSSHUOLPLW+RZHYHUWKH\ZHUHDOVR
FULWLFDORIWKH%ULWLVKPLGGOHFRXUVHZKLFKGLVFDUGHGRIILFLDOTXDQWLWDWLYHOLPLWDWLRQLQWKH
IRUPRIWKHUDWLRV\VWHPLQIDYRURIVWULFWHUTXDOLWDWLYHOLPLWDWLRQ'XHWR%ULWDLQ¶VZLGHO\
GLVSHUVHGDUUD\RIQDYDOEDVHVDQGVXSHULRUPHUFKDQWPDULQHWKH51FRXOGEHVWDIIRUG
VPDOOHUYHVVHOVZLWKDPRUHOLPLWHGUDGLXVRIDFWLRQRIDQ\RIWKHQDYDOSRZHUV:LWKWKH
EHVWVKLSEXLOGLQJIDFLOLWLHVLQWKHZRUOG%ULWDLQFRXOGDOVREHVWDIIRUGWRVZLIWO\FRQVWUXFW
ODUJHQXPEHUVRIVPDOOFUDIWVRORQJDVQRRWKHUQDWLRQEXLOWDW\SHRIYHVVHOWKDWUHQGHUHG
WKHPREVROHWH³7KHDQQRXQFHGLQWHQWLRQRI*UHDW%ULWDLQWRIDYRUTXDOLWDWLYHOLPLWDWLRQ´
UHDGD*HQHUDO%RDUGUHSRUWRQ-XO\³WRWKHGHWULPHQWRITXDQWLWDWLYHOLPLWDWLRQ²LVLQ
DFFRUGZLWKDSROLF\RIVHOILQWHUHVWZKLFKDQDO\VLVZLOOSURYHKDVQRIXQGDPHQWDO
SULQFLSOHRIJHQHUDODSSOLFDWLRQEHKLQGLW´ 7KH%ULWLVKSRVLWLRQZDV³SODXVLEOHEXW
LOORJLFDO´DQGULIHZLWK³VHOIVHUYLQJSROLFLHVDQGPHWKRGV´ 7KH*HQHUDO%RDUG
LQVLVWHGWKDWWKH8QLWHG6WDWHVVWLFNWRDFRQVLVWHQWSROLF\HYHQWRWKHGHWULPHQWRI
UHODWLRQVZLWKWKH%ULWLVK$Q$XJXVWUHSRUWVWDWHGWKDW³*UHDW%ULWDLQDQG-DSDQGHVLUHWR
LQFUHDVHWKHWRQQDJHRIW\SHVZKLFKWKH8QLWHG6WDWHVFRQVLGHUVVKRXOGEHKHOGDWPRVW
WRSUHVHQWOHYHOV:KLOHWKHLQFUHDVHGHVLUHGE\*UHDW%ULWDLQKDVDPRUHORJLFDO
1$5*%R[*HQHUDO%RDUG6HULDO1RHQFORVXUH³$%DVLVIRU'LVFXVVLRQRI
/LPLWDWLRQRI$UPDPHQWV±´-XO\
,ELG
IRXQGDWLRQWKDQWKDWRI-DSDQWKHWZRFDQKDUGO\EHDFFRUGHGGLIIHUHQWWUHDWPHQW´ ,I
WKH8QLWHG6WDWHVHQWHUHGWKHFRQIHUHQFHVHHNLQJPHUHO\WRSUHVHUYHWKHVWDWXVTXRWKDW
ZRXOGSODFHWKHUHVSRQVLELOLW\RIWKHFRQIHUHQFH¶VOLNHO\IDLOXUHVTXDUHO\XSRQWKHRWKHU
SRZHUV
7KH*HQHUDO%RDUGZKLOHEDFNSHGDOOLQJVRPHZKDWIURPWKHLURSHQQHVVWR$QJOR
$PHULFDQFRRSHUDWLRQWKDWWKH\KDGGLVSOD\HGGXULQJWKHVXPPHURIZDV
QRQHWKHOHVVQRWFRPSRVHGRIWKH³%LJ1DY\´GLHKDUGVWKDWWKHKLVWRULRJUDSK\RIWHQ
SUHVXPHV7KH*HQHUDO%RDUGHQGRUVHGDSHUFHQWUHGXFWLRQWRWKHVL]HRIWKHFDSLWDO
IOHHWVRORQJDVWKHTXDOLWDWLYHOLPLWDWLRQVHVWDEOLVKHGDW:DVKLQJWRQUHPDLQHGWKHVDPH
DQGUHFRPPHQGHGWKDWWKLVVKRXOGEHWKHFRQWLQXHGSROLF\RIWKH8QLWHG6WDWHVDWWKH
SURVSHFWLYHFRQIHUHQFH 7KH*HQHUDO%RDUGVXJJHVWHGWKDWDSHUFHQWTXDQWLWDWLYH
UHGXFWLRQFRXOGEHDFFRPSOLVKHGVLPSO\E\VFUDSSLQJDQGQRWUHSODFLQJVRPHRIWKH
FDSLWDOVKLSVWKDWZRXOGEHFRPHRYHUDJHRYHUWKHQH[WGHFDGH %H\RQGDSHUFHQW
UHGXFWLRQLQWKHEDWWOHVKLSIOHHWWKH\DOVRUHFRPPHQGHGH[SORULQJIXUWKHUUHGXFWLRQVLQ
RWKHUFDWHJRULHVLQFOXGLQJDSHUFHQWUHGXFWLRQLQOLJKWFUXLVHUVDSHUFHQWUHGXFWLRQ
LQDLUFUDIWFDUULHUVDQGDSHUFHQWUHGXFWLRQLQGHVWUR\HUVFRQWLQJHQWRQWKHXQOLNHO\
DEROLVKPHQWRIVXEPDULQHV 7KH*%VDZWKHYDOXHLQOLPLWDWLRQDVH[SUHVVHGLQD-XO\
UHSRUW
7KHUHDSSHDUVWREHRQHZD\LQZKLFKWKH8QLWHG6WDWHVFDQH[HUW
LQIOXHQFHWRZDUGVWDELOL]DWLRQLQWHUQDWLRQDOXQGHUVWDQGLQJDQGUHWHQWLRQ
RIWKHSUHVHQWEDVLVDQGVLWXDWLRQDVUHJDUGVQDYDODUPDPHQWVWKDWLV²WR
SUHVHQWWRDOOLQWHUHVWHGQDWLRQVDSURSRVHGJHQHUDOSROLF\DVWRWKH
1$5*%R[*HQHUDO%RDUG6HULDO1R2FW
1$5*%R[*HQHUDO%RDUG6HULDO1RHQFORVXUH³$%DVLVIRU'LVFXVVLRQRI
/LPLWDWLRQRI$UPDPHQWV±´-XO\
1$5*%R[*HQHUDO%RDUG6HULDO1R2FW
,ELG
VLWXDWLRQOHIWE\EXWQRWRQWKHWHUPLQDWLRQRIWKHWUHDWLHVWRLQYLWHWKH
RWKHUQDWLRQVWRFRQFXULQWKLVEDVLFSROLF\DQGWRVWDWHKHUZLOOLQJQHVVWR
FRQIHUDVWRGHWDLOV7KHHVVHQFHRIWKDWSURSRVHGSROLF\VKRXOGGHULYH
IURPWKHWKHVLVRIWKH8QLWHG6WDWHVSUHVHQWHGDW/RQGRQ²WKDWHTXDOLW\RI
VHFXULW\LVIXQGDPHQWDODQGWKDWHTXDOLW\RIDUPDPHQWLVDQDQRPDO\LQ
LQWHUQDWLRQDOZHOIDUHDQGJRRGUHODWLRQV,WVKRXOGVWDWHWKHLQWHQWLRQWR
SUHVHUYHLISRVVLEOHWKHIXQGDPHQWDOIHDWXUHVRILQWHUQDWLRQDO
XQGHUVWDQGLQJDQGVWDELOL]HGVLWXDWLRQHVWDEOLVKHGE\WKHWUHDWLHVXQGHU
ZKLFKDFFRUGKDVEHHQPDLQWDLQHG«WKH8QLWHG6WDWHVPD\VXJJHVW
UHFRJQLWLRQWKDWWKH:DVKLQJWRQ/RQGRQDQGFROODWHUDOWUHDWLHVKDYH
VHUYHGDVDEDVLVIRULQWHUQDWLRQDOVWDELOL]DWLRQDQGDJUHHPHQW« &HUWDLQO\E\WKHPLGVWKHLQWHUZDU861ZDVQRWWKHXOWUDFRQVHUYDWLYH
P\RSLFDOO\QDWLRQDOLVWLFERG\WKDWLWKDVVRPHWLPHVEHHQSRUWUD\HGDV7KHQDYDORIILFHU
FRUSVFRXOGDQGGLGVHHWKHVHFXULW\YDOXHLQDUPVOLPLWDWLRQDQGHYHQDUPVUHGXFWLRQ
:KLOHWKH\UHVLVWHGOLPLWDWLRQVROHO\RQ%ULWDLQ¶VWHUPVWKH\ZHUHQHLWKHUDQWLWUHDW\QRU
$QJORSKRELF
%\$XJXVWLWDSSHDUHGOLNHO\WKHFRQIHUHQFHZRXOGJRIRUZDUGZLWKWKH%ULWLVK
LQGLFDWLQJWKDWWKH\ZRXOGFDOOLWVRPHWLPHLQWKHIDOO7KHUHZDVJHQHUDODJUHHPHQWE\
ERWKWKHFLYLOLDQDQGPLOLWDU\KDOYHVRIWKHGHOHJDWLRQWKDWDQDUUDQJHPHQWZLWK%ULWDLQ
ZDVERWKSRVVLEOHDQGGHVLUDEOH'DYLVDQG6WDQGOH\FRQFXUUHGWKDW³WKHUHDUHQR
LQVXSHUDEOHGLIILFXOWLHVWRRXUDFKLHYLQJDJUHHPHQWZLWK*UHDW%ULWDLQRQWKHTXHVWLRQRI
TXDOLWDWLYHOLPLWDWLRQDQGRILQFUHDVHGFUXLVHUWRQQDJH´ 'DYLVVXJJHVWHGWKDWWKH861
FRXOGUHWDLQJUHDWHURYHUDJHWRQQDJHWRFRPSHQVDWHIRU%ULWLVKGHPDQGVIRUDODUJHU
FUXLVHUIOHHWDQG6WDQGOH\ZDVJHQHUDOO\DPHQDEOH :KLOH6WDQGOH\VDLGWKDWWKH861
ZRXOGQRWFRQFHGHWRDORZHUXQLWWRQQDJHFDSIRUEDWWOHVKLSVIURPWKHFXUUHQW
WRQVKHZDVSUHSDUHGWRDFFHSWDOLPLWRILQFKJXQVUDWKHUWKDQWKHLQFKHVSUHVHQWO\
,ELG
)586,6WDWH'HSDUWPHQW0HPRE\1RHO+)LHOG$XJXVW
,ELG
LQWKH:DVKLQJWRQ7UHDW\ 7KH$GPLUDODOVRVDLGWKDWWKHQHWWOHVRPHTXHVWLRQRILQFK
JXQFUXLVHUV³ZLOOQRWLQDQ\FDVHEHDQXUJHQWTXHVWLRQLQWKHQHDUIXWXUHVLQFHWKLVW\SH
LVRIUHFHQWFRQVWUXFWLRQDQGDVORQJDVWKHWRWDOWRQQDJHLQWKLVVXEFDWHJRU\LVQRW
LQFUHDVHGWKHUHZLOOLQDQ\FDVHEHQRQHZFRQVWUXFWLRQWKHUHLQIRUDQXPEHURI\HDUV´ $WOHDVWDVIDUDVWKHGHOHJDWLRQZDVFRQFHUQHGWKHXSFRPLQJFRQIHUHQFHZRXOGEHIHUWLOH
JURXQGIRUDQ$QJOR$PHULFDQDFFRUG
7KLVLVQRWWRVXJJHVWWKDWWKHGHOHJDWLRQZDVXQUHVHUYHGO\SUR%ULWLVK,QD
6HSWHPEHUPHHWLQJEHWZHHQ6HFUHWDU\+XOODQGWKHQDYDOKDOIRIWKHGHOHJDWLRQDV
SDUWRIDJHQHUDOSROLF\WRFRRUGLQDWH6WDWHDQG1DY\'HSDUWPHQWVPRUHHIIHFWLYHO\WKDQ
DWSDVWFRQIHUHQFHV 6WDQGOH\WKRXJKWWKDWIRUWKHPRPHQWWKH8QLWHG6WDWHVVKRXOG
KROGLWVFDUGVFORVHWRLWVFKHVWLQGHDOLQJZLWKWKH%ULWLVK+HGLGQRWEHOLHYHWKDWWKH
%ULWLVKKDGEHHQ³IUDQNZLWKXVÍRULQVWDQFH6WDQGOH\³GRXEWHGZKHWKHUWKH%ULWLVK
UHDOO\ZDQWHGWROLPLWEDWWOHVKLSVWRWRQV´ :LWKWKH,WDOLDQVSUHVHQWO\EXLOGLQJ
WZRWRQEDWWOHVKLSVDQGWKH-DSDQHVHDOPRVWVXUHWRUHMHFWDQ\WUHDW\ZKDWVRHYHU
WKHWRQOLPLWVHHPHGWR6WDQGOH\WREHDGLVLQJHQXRXVEDUJDLQLQJFKLS6WDQGOH\
EHOLHYHGWKDWWKH%ULWLVKZHUHHQGHDYRULQJWRJHWWKH)UHQFKDQG,WDOLDQVRQVLGHUHJDUGLQJ
TXDOLWDWLYHOLPLWDWLRQVRQEDWWOHVKLSVLQRUGHUWRSUHVHQWDXQLWHG(XURSHDQIURQWRQWKH
PDWWHUDQGIRUFHFRQFHVVLRQVIURPWKHPLQRULW\$PHULFDQSRVLWLRQ +HDGYLVHGWKDWWKH
GHOHJDWLRQVKRXOGSHUKDSVRIIHUWRRIIHUDVOLJKWUHGXFWLRQLQJXQFDOLEHUDQGDWRNHQ
WRQGHFUHDVHLQRUGHUWRVDYHIDFH*LYHQWKDW$PHULFDKDGQRWFRQVWUXFWHGDQHZ
,ELG
,ELG
/2&0DQXVFULSW'LYLVLRQ'DYLV3DSHUV%R[0HPRRIPHHWLQJEHWZHHQ6WDWH'HSDUWPHQWDQG
1DY\'HSDUWPHQW6HSW
,ELG
,ELG
EDWWOHVKLSLQDOPRVWILIWHHQ\HDUVKRZHYHUWKHILUVWSRVWWUHDW\EDWWOHVKLSVODLGGRZQ
ZRXOGEHODUJHO\H[SHULPHQWDODQGFRQFHGLQJWRVXFKDGUDVWLFDOWHUDWLRQWRWKH
:DVKLQJWRQFKDUDFWHULVWLFVPLJKWUHVXOWLQFRVWO\IOHHWRILQVWDQWO\REVROHWHFDSLWDO
VKLSV 7KLVZDVSDUWLFXODUO\ZRUULVRPHIRU861SODQQHUVZKRZHUHVDGGOHGZLWKWKH
ROGSUREOHPRIDODFNRIEDVHVDQGWKHUHIRUHUHTXLUHGODUJHFUXLVLQJUDGLL6WDQGOH\
H[SUHVVHGLUULWDWLRQWKDWWKH%ULWLVKZHUHDOZD\VGHPDQGLQJWKH$PHULFDQVWREHPRUH
XQGHUVWDQGLQJRIWKHLUUHVSRQVLELOLWLHVZKLFKUHTXLUHGDODUJHUFUXLVHUIRUFHZKLOH
LJQRULQJWKDW³WKH8QLWHG6WDWHVKDVDSDUWLFXODUSUREOHPLQWKH3DFLILFZKLFKFDOOVIRU
FKDUDFWHULVWLFVLQ$PHULFDQ)OHHWFRQVWUXFWLRQZKLFKDUHQRWUHTXLUHGE\RWKHU
3RZHUV´ 7KHQDYDOSUREOHPVZKLFKKDGEHGHYLOOHG$QJOR$PHULFDQUHODWLRQV
WKURXJKRXWWKHLQWHUZDUSHULRGKDGEHHQPXWHGVLQFHWKHSUHOLPLQDULHVEXWWKH\ZHUHVWLOO
YHU\PXFKLQWKHGHOHJDWLRQV¶PLQGVDVWKHFRQIHUHQFHORRPHGQHDUHU
'HVSLWHWKHVHPLQRUPLVJLYLQJVWKHSLHFHVFRQWLQXHGWRIDOOLQSODFH7KH1DY\
DQG6WDWH'HSDUWPHQWVIRUPDOO\QRWLILHGWKH%ULWLVKWKDWWKH\ZRXOGDFFHSWPDQ\RIWKHLU
TXDOLWDWLYHGHPDQGVLQFOXGLQJDUHGXFWLRQLQWRQQDJHWRFDUULHUVDQH[WHQVLRQRIWKHDJH
OLPLWRQEDWWOHVKLSVIURPWR\HDUVDQGOLNHO\DQDJUHHPHQWWRDEXLOGLQJKROLGD\RI
LQFKJXQKHDY\FUXLVHUV 7KH861KDGE\ODWHKHDY\FUXLVHUVEXLOWDQG
PRUHEXLOGLQJRUSURYLGHGIRUPHDQLQJWKDWWKH\KDGUHDFKHGWKHLUWUHDW\DOORWPHQWLQ
WKLVFDWHJRU\DQGFRXOGWKHUHIRUHDIIRUGWREHDJUHHDEOHZLWKRXWFRPSURPLVLQJVHFXULW\RU
EHLQJLQFRQVLVWHQWRQSROLF\ ,QD1RYHPEHUPHHWLQJEHWZHHQWKH3UHVLGHQWDQGWKH
,ELG
,ELG
)586,+XOOWR%LQJKDP2FW
1$5*5HFRUGV5HODWLQJWR'LVDUPDPHQW%R[8QGDWHG1DY\'HSDUWPHQWPHPR³5HVSHFWLQJ
FUXLVHUOLPLWDWLRQRQWKHEDVLVRISUHVHQW%ULWLVKFUXLVHUVWUHQJWKSOXVFUXLVHUVEXLOGLQJDQGDSSURSULDWHG
IRU´
GHOHJDWHV'DYLVDQG6WDQGOH\ERWKLQVLVWHGWR5RRVHYHOWWKDW³RXU1DY\LVLQFOLQHGWR
FRQVLGHU*UHDW%ULWDLQ¶VLQVLVWHQFHRQDGGLWLRQDOFUXLVHUVV\PSDWKHWLFDOO\EHDULQJLQ
PLQG%ULWLVKUHVSRQVLELOLW\WKURXJKRXWWKHZRUOG´6WDQGOH\DGGHGWKDW³WKH8QLWHG6WDWHV
KDGEHHQLQWKHXQGHVLUDEOHSRVLWLRQLQWKHSDVWRIDWWHPSWLQJWRSURYHWRWKH%ULWLVKWKDW
WKH\GLGQRWQHHGZKDWWKH\FODLPHGWKH\QHHGHG´ 5RRVHYHOWDJUHHGWKDWWKH86
VKRXOGDYRLGWU\LQJWRGHWHUPLQH%ULWLVKVHFXULW\UHTXLUHPHQWVDQGLQIRUPHGWKH
GHOHJDWHVWKDWWKH\ZHUHDXWKRUL]HGWRDFFHSWWRQLQFUHDVHDERYHSUHVHQWWRQQDJH
OHYHOVWKRXJKWKH\VKRXOGLQVLVWWKDWWKHLQFUHDVHEHRIIVHWDVPXFKDVSRVVLEOHE\
UHGXFWLRQVLQRWKHUFDWHJRULHV²DVWDUNFRPHGRZQIURPWKH3UHVLGHQW¶VERWWRPOLQH
SRVLWLRQIURPD\HDUEHIRUH 5RRVHYHOWGHHPHGDELODWHUDOWUHDW\ZLWKWKH%ULWLVK³SROLWLFDOO\XQGHVLUDEOH´DVLW
ZRXOGJLYHDSHUFHSWLRQRI$QJOR$PHULFDQHQWDQJOHPHQWWKDWZRXOGEHRIISXWWLQJWR
ERWKWKH-DSDQHVHDQGWRGRPHVWLFQRQLQWHUYHQWLRQLVWV,IWKHFRQIHUHQFHFROODSVHG
5RRVHYHOWZDVFRQILGHQWWKDWWKHWZRQDWLRQVZRXOGEHDEOHWRFRRSHUDWHMXVWDV
HIIHFWLYHO\LQ³QRQFRQWUDFWXDOIRUP´LQRWKHUZRUGVZLWKRXWDSROLWLFDOO\ULVN\
WUHDW\ 5RRVHYHOWDQGWKHGHOHJDWHVDOVRDSSURYHGWKH6WDWH'HSDUWPHQW¶VGUDIW
UHJDUGLQJ$PHULFD¶VFRRSHUDWLRQZLWK%ULWDLQZKLFKUHDG
,WLVSRVVLEOHWKDWWKH%ULWLVK*RYHUQPHQWPD\DJDLQEULQJXSWKHWKRXJKW
WKDWVRPHIRUPRIDJUHHPHQWIRU$QJOR$PHULFDQSROLWLFDOFRRSHUDWLRQ
SDUWLFXODUO\LQWKH)DU(DVWPLJKWEHDGHWHUPLQLQJIDFWRULQ*UHDW
%ULWDLQ¶VDWWLWXGHWRZDUGQDYDOOLPLWDWLRQ7KH'HOHJDWLRQVKRXOGUHSHDW
WKHSRVLWLRQWDNHQLQWKHFRQYHUVDWLRQVD\HDUDJRQDPHO\WKDWDQ\
DJUHHPHQWRIWKLVVRUWLVRXWRIWKHTXHVWLRQ2QWKHRWKHUKDQGWKH
'HOHJDWLRQPD\HPSKDVL]HWKHLQHYLWDEOHDQGJURZLQJFRPPXQLW\RI
/2&0DQXVFULSW'LYLVLRQ'DYLV3DSHUV%R[0HPRRIPHHWLQJEHWZHHQ$PHULFDQGHOHJDWLRQ
+XOODQG5RRVHYHOW1RYHPEHU
,ELG
)586,+XOOWR'DYLV1RY
LQWHUHVWVRIWKH%ULWLVK(PSLUHDQGWKH8QLWHG6WDWHVWKURXJKRXWWKHZRUOG
DQGSDUWLFXODUO\LQWKH)DU(DVWPDLQWHQDQFHRIWUHDWLHVDQGULJKWV
DFFUXLQJWKHUHXQGHUVWDELOL]DWLRQRISROLWLFDODQGHFRQRPLFUHODWLRQV
PDLQWHQDQFHRI2SHQ'RRURSSRVLWLRQWRH[SDQVLRQE\PHDQVRIPLOLWDU\
DJJUHVVLRQHWFHWHUD)URPWKLVFRPPXQLW\RILQWHUHVWVLWZRXOGDSSHDU
HYLGHQWWKDWGHVSLWHWKHDEVHQFHRIDQ\PXWXDOFRPPLWPHQWVWKH8QLWHG
6WDWHVDQGWKH%ULWLVK(PSLUHDUHOLNHO\LQWKHLURZQLQWHUHVWVDQGLQWKH
LQWHUHVWVRIWKHFRPPXQLW\RIQDWLRQVWRIROORZLQJHQHUDODSDUDOOHO
WKRXJKLQGHSHQGHQWSROLF\QRWDEO\LQWKH)DU(DVW 5RRVHYHOW¶VDGPLQLVWUDWLRQZDVFOHDUO\VWLOOH[KLELWLQJWKHVDPHUHOXFWDQFHWR
DFFHGHWRDQ\DSSHDUDQFHRIHQWDQJOHPHQWEXWWKHUHZDVDGHILQLWHFKDQJHLQWKHWRQHRI
$PHULFDQSROLF\WRZDUGV%ULWDLQ7KLVVWDWHPHQWDSSHDUVWRLPSOLFLWO\DFNQRZOHGJHWKDW
WKH8QLWHG6WDWHVLQWHQGHGWRSXUVXHDQXQRIILFLDO³QRQFRQWUDFWXDO´SROLF\RI
FRRSHUDWLRQZLWK%ULWDLQLQWKH3DFLILFUHJDUGOHVVRIWKHRXWFRPHRIWKHFRQIHUHQFH
:KLOHWKHRIILFLDOOHJLVODWLRQDQGSROLF\RXWSXWVRIWKH8QLWHG6WDWHVLQWKHPLGV
PD\DSSHDUWREHFRQVLVWHQWZLWKDQLVRODWLRQLVWLQWHUSUHWDWLRQPDQ\RIWKHSROLF\PDNHUV
LQWKHH[HFXWLYHZHUHVKLIWLQJ$PHULFDLQDPXFKPRUH³HQWDQJOHG´GLUHFWLRQ
7KH%ULWLVKDWODVWJDYHIRUPDOQRWLFHIRUWKHFRQIHUHQFHRQ2FWREHUWREHKHOG
LQHDUO\'HFHPEHU$PEDVVDGRU%LQJKDPGHVLUHGWREHWKHFKLHIGHOHJDWHDWWKH
FRQIHUHQFHEXWWKH1DY\IDYRUHG'DYLVDQG5RRVHYHOWFDPHGRZQLQIDYRURI'DYLVDV
ZHOO 7KHSULQFLSDOFRQFHUQZDV³KRZVHULRXVO\WKHFRQIHUHQFHLVWREHWDNHQE\WKH
%ULWLVKDQGRXUVHOYHV´ $SSRLQWLQJWKHSUHVHQWDPEDVVDGRUWR/RQGRQWRKDQGOHWKH
FRQYHUVDWLRQVUDWKHUWKDQVHQGLQJDVSHFLDOGHOHJDWLRQZRXOGUXQWKHULVNRIDSSHDULQJWR
WDNHWKHFRQIHUHQFHZLWKRXWGXHVHULRXVQHVV$VHYHUSROLWLFDOFRQVLGHUDWLRQVZHUHRQWKH
/2&0DQXVFULSW'LYLVLRQ'DYLV3DSHUV%R[0HPRRIPHHWLQJEHWZHHQ$PHULFDQGHOHJDWLRQ
+XOODQG5RRVHYHOW1RYHPEHU
1L[RQ5RRVHYHOW,,,5RRVHYHOWWR%LQJKDP1RY7KH1DY\SUHIHUUHG'DYLVRQWKHEDVLV
WKDWKHKDGEHHQEULHIHGRQ1DYDOLVVXHVVLQFHKLVLQYROYHPHQWZLWKWKH*HQHUDO'LVDUPDPHQW&RQIHUHQFH
DQGWKH\GLGQRWZLVKWRVWDUWIURPVFUDWFKZLWK%LQJKDP
)586,5RRVHYHOWWR%LQJKDP1RY
3UHVLGHQW¶VPLQGEXWWKH\ZHUHQRWVXIILFLHQWO\ULVN\IRU5RRVHYHOWWRDVVXPHWKHEODPH
IRUWKHFRQIHUHQFH¶VIDLOXUHZKHQWKH$PHULFDQVWUDWHJ\VLQFHWKHHDUO\SUHOLPLQDULHVKDG
EHHQWRPDQHXYHUWKHEODPHWR-DSDQ¶VGRRUVWHS³:KLOHLWLVLPSRUWDQWWKDWRXUSXEOLF
PXVWQRWEHOHGWRH[SHFWWRRPXFKIURPWKHFRQIHUHQFH´WKH3UHVLGHQWZURWHWR%LQJKDP
RQ1RYHPEHU³LWLVHTXDOO\LPSRUWDQWIRUXVWRGRQRWKLQJWKDWZRXOGPDNHLWDSSHDU
WKDWZHDUHWDNLQJWKLVQDYDOFRQIHUHQFHFDXVDOO\DQGOHVVVHULRXVO\WKDQZHKDYHWDNHQ
SUHYLRXVQDYDOFRQIHUHQFHVDQGWKXVUXQWKHULVNRIEHLQJEODPHVIRULWVIDLOXUH´ $IWHU
PXFKKDQGZULQJLQJ$PHULFDZRXOGFRPPLWZKROHKHDUWHGO\WRWKHFRQIHUHQFHLQDQ
HIIRUWWRGLYHVWLWVHOIRIUHVSRQVLELOLW\IRULWVSUREDEOHFROODSVH
'HVSLWHDQQRXQFLQJEHIRUHKDQGWKDWWKH\ZRXOGQRWVLJQDQ\WUHDW\WKDWGLGQRW
DGGUHVVWKHLUTXDQWLWDWLYHFRQFHUQVWKH-DSDQHVHOLNHZLVHVHQWDVSHFLDOGHOHJDWLRQWR
/RQGRQLQ1RYHPEHU7KHFRQIHUHQFHZKRVHWHQDELOLW\KDGEHHQTXHVWLRQHGE\DOO
SDUWLHVIRUWKHSUHFHGLQJ\HDUZDVWRFRQYHQHRQ'HFHPEHU2Q'HFHPEHUWKH
86DQG8.GHOHJDWLRQVPHWIRUDILQDOGLVFXVVLRQWRKDUPRQL]HWKHLUSRVLWLRQV7KH
%ULWLVKVWLOOH[SUHVVHGKRSHWKDWWKH-DSDQHVHGHOHJDWLRQZRXOGEDFNGRZQIURPWKHLU
GHPDQGIRUSDULW\RQFHLWEHFDPHFOHDUWKDW$PHULFDDQG%ULWDLQDQGSUREDEO\)UDQFH
DQG,WDO\DVZHOOUHMHFWHGWKHLUWKHVLVRIDFRPPRQXSSHUOLPLWHQWLUHO\ :KLOHWKLVGLG
QRWDOLJQZLWKWKH$PHULFDQGHOHJDWLRQ¶VH[SHFWDWLRQV'DYLVQRQHWKHOHVVSOHGJHGWKDWWKH
8QLWHG6WDWHVZRXOGQRWREMHFWWR%ULWLVKFUXLVHULQFUHDVHVZKLFKDPRXQWHGWRDWRWDORI
XQGHUDJHDQGRYHUDJHFUXLVHUV+HDOVRSURPLVHGWKDWWKH$PHULFDQGHOHJDWLRQ
ZRXOGPDNHQRPDMRULVVXHRIWKHWRQKHDY\FUXLVHU ,I%ULWDLQ¶VVHFXULW\
,ELG
1$5*5HFRUGV5HODWLQJWR'LVDUPDPHQW%R[0HPRRIPHHWLQJEHWZHHQ%ULWLVKDQG$PHULFDQ
GHOHJDWLRQV'HF
,ELG
HVWLPDWLRQVGHHPHGWKDWDFUXLVHUIOHHWZDVQHFHVVDU\DQGLIWKLVZDVWKHRQO\
³VWXPEOLQJEORFNÍRU$QJOR$PHULFDQXQLW\DWWKHFRQIHUHQFHWKHQWKH8QLWHG6WDWHV
ZDVZLOOLQJWRVZDOORZLWVGHPDQGIRUUHGXFWLRQV7KH%ULWLVKGHOHJDWHVZHUH³IXOO\
VDWLVILHGÉ\WKH³PRVWUHDVRQDEOHDWWLWXGHRQWKHSDUWRIWKH$PHULFDQ'HOHJDWLRQ´ %RWKSDUWLHVDJUHHGWREHSDWLHQWZLWKWKH-DSDQHVHSURSRVDOVDQGQRWWRIUXVWUDWHWKHP
LQWRDQHDUO\H[LWEXWWKH\DOVRDJUHHGWRSUHVHQWDXQLWHGIURQWRIREMHFWLRQV
7KHFRQIHUHQFHRSHQHGWKHIROORZLQJGD\ZLWKVWDWHPHQWVE\DOOWKHGHOHJDWLRQV
VWDWLQJWKHLUDLPV6WDQOH\%DOGZLQWKHQHZ3ULPH0LQLVWHUZKRKDGUHSODFHG
0DF'RQDOGRYHUWKHVXPPHUODLGRXWWKH%ULWLVKSURSRVDORIFRQWLQXHGTXDQWLWDWLYH
UDWLRVVXSSOHPHQWHGE\VWULFWHUTXDOLWDWLYHFRQWUROV7KH\DOVRSOHGIRUWKHDEROLVKPHQWRI
WKHVXEPDULQHD%ULWLVKGHVLUHKHOGVLQFHWKH:DVKLQJWRQ&RQIHUHQFHEXWDOZD\V
RYHUULGGHQE\WKHRWKHUGHOHJDWLRQV 'DYLVGHOLYHUHGWKH$PHULFDQSURSRVDO'DYLV
PHQWLRQHG$PHULFD¶VFRPPLWPHQWWRDSHUFHQWUHGXFWLRQPRVWO\IRUIRUP¶VVDNHEXW
PDLQO\KLVVSHHFKZDVGHVLJQHGWRSUHHPSWWKH-DSDQHVHSURSRVDO:LWKQHDUO\HYHU\
QDWLRQLQWKHZRUOGVWUXJJOLQJWRUHFRYHUIURPDZRUOGZLGH'HSUHVVLRQLWVHHPHG
REYLRXVIROO\WRDVVXPHWKHHQRUPRXVH[SHQVHRIDQDUPVUDFHQRZ³1RQDWLRQGHVLUHVWR
HQWHUVXFKDUDFH´'DYLVVDLG³1RJRYHUQPHQWFDQDIIRUGWKHUHVSRQVLELOLW\IRU
LQDXJXUDWLQJLW´ ,QRUGHUWRKHDGRIIDQ\DFFXVDWLRQWKDWWKH9LQVRQ7UDPPHOO$FW
FRQVWLWXWHGDQ³LQDXJXUDWLRQ´RIDQDYDODUPVUDFH'DYLVSRLQWHGRXWWKDWWKH8QLWHG
6WDWHVYLUWXDOO\FHDVHGFRQVWUXFWLRQIRU\HDUVZKLOHRWKHUQDWLRQVEXLOWWRWKHLUOLPLWV
9LQVRQ7UDPPHOOKHVDLGZDVHVVHQWLDOO\D³UHSODFHPHQW´SURJUDPWKDWZDVFRQVLVWHQW
,ELG
1$5*5HFRUGV5HODWLQJWR'LVDUPDPHQW%R[6WHQRJUDSKLFQRWHVRIWKHILUVWFRPPLWWHHRI
/RQGRQ1DYDO&RQIHUHQFH'HF
,ELG
ZLWKWKHRULJLQDOWHUPVRIWKH:DVKLQJWRQ7UHDW\ 7KH)UHQFKDQG,WDOLDQVGHOHJDWLRQV
ERWKGHOLYHUHGUHODWLYHO\YDJXHFRPPLWPHQWVWRWKHWHQHWVRIDUPVFRQWUROZLWKWKH
)UHQFKVSHFLILFDOO\UHIXWLQJWKH%ULWLVKGHVLUHWRDEROLVKVXEPDULQHV 7KHFKLHI
-DSDQHVHGHOHJDWH$GPLUDO1DJDQRFRQFOXGHGDQGUHLWHUDWHGWKH-DSDQHVHSURSRVDORID
FRPPRQXSSHUOLPLWDQGHTXDOLW\RIDUPV
7KHFRQIHUHQFHZDVLPPHGLDWHO\FRQVXPHGE\WKHSUREOHPRIWKHFRPPRQXSSHU
OLPLW2Q'HFHPEHU)LUVW/RUGRIWKH$GPLUDOW\DQG&RQIHUHQFH&KDLUPDQ(\UHV
0RQVHOOIORDWHGWKHSRVVLELOLW\RI³XQLODWHUDODQGYROXQWDU\GHFODUDWLRQVE\HDFKRIWKH
VLJQDWRU\3RZHUVOLPLWLQJLWQHZ1DYDOFRQVWUXFWLRQRYHUDSHULRGRI\HDUV´DVDPHDQV
RI³SHUSHWXDWLQJWKHXQGHUO\LQJSULQFLSOHVRIWKH7UHDW\RI:DVKLQJWRQ´²LQRWKHUZRUGV
WKH³PLGGOHFRXUVH´ 'DYLVVROLGLILHG$PHULFD¶VFODLPWROHJLWLPDF\LQWKHDUHQDRI
DUPVFRQWUROE\FLWLQJWKHIDFWWKDWWKH8QLWHG6WDWHVVDFULILFHGWKHJUHDWHVWWRQQDJHDWWKH
:DVKLQJWRQ&RQIHUHQFHLQFOXGLQJVRPHYHU\YDOXDEOHYHVVHOVWKDWZHUHDOPRVW
FRPSOHWH <HWKHDOVRPDQHXYHUHGWKHGHOHJDWLRQWRWKHVSRWWKDW5RRVHYHOWKDG
GHVLUHGFODLPLQJWKDWWKH8QLWHG6WDWHVZDV³GHPDQGLQJDEVROXWHO\QRWKLQJ´DQGWKDWLW
ZDVHQWLUHO\FRQWHQWWRFRQWLQXHWKHWUHDWLHVDVWKH\ZHUHSUHVHQWO\IRUPXODWHG 7KHIORRUZDVWKHQRSHQHGWRTXHVWLRQVRI-DSDQ¶VFRQWURYHUVLDOFRPPRQXSSHU
OLPLW'DYLVDVNHGLIWKH-DSDQHVHLQWHQGHGWKDWWKH,-1VKRXOGEXLOGXSWRWKHWRQQDJH
OHYHOVRIWKH861DQGWKH51RULIWKH:HVWHUQSRZHUVZHUHH[SHFWHGWRVFUDSXQWLOWKH\
KDGUHDFKHGWKH-DSDQHVHOHYHO+HDOVRDVNHGZKLFKQDYDOSRZHUVWKHFRPPRQXSSHU
,ELG
,ELG
1$5*5HFRUGV5HODWLQJWR'LVDUPDPHQW%R[6WHQRJUDSKLFQRWHVRIILUVWFRPPLWWHHRI/RQGRQ
1DYDO&RQIHUHQFH'HF
,ELG
,ELG
OLPLWZDVLQWHQGHGWRDSSO\WR 7KH%ULWLVKIROORZHGXSTXHVWLRQLQJWKHZLVGRPRI
DOORZLQJDQ\QDYDOSRZHUWREXLOGXSH[FHSWIRUWKHSRZHUSRVVHVVLQJWKHODUJHVW1DY\
ZKRPXVWVWDQGVWLOORUZRUVHVFUDSGRZQ³$V,VHHLW´0RQVHOOSURFODLPHG³DODUJH
1DY\LVPDLQWDLQHGQRWDVDOX[XU\EXWRQO\EHFDXVHRIDYLWDOQHFHVVLW\´ 7KH
$PHULFDQDQG%ULWLVKGHOHJDWLRQVZRUNHGWRJHWKHUDQGLQVXFFHVVLRQWRSRNHKROHVLQWKH
-DSDQHVHWKHVLV
7KH-DSDQHVHGHVLUHGWLPHWRIRUPXODWHDQVZHUVWRWKH$QJOR$PHULFDQEDUUDJH
DQGWKHPHHWLQJZDVDGMRXUQHGXQWLOWKHQH[WGD\2Q'HFHPEHUWKH\UHSOLHGWKDWLW
ZDV³QHFHVVDU\IRUWKHODUJHUQDYLHVWRPDNHWKHJUHDWHVWVDFULILFH´DQGWKDWWKH
³FRPPRQXSSHUOLPLW´ZDVWREH³IL[HGDWDVORZDILJXUHDVSRVVLEOH´SHUKDSVHYHQ
EHORZWKHFXUUHQW,-1WRQQDJH ,QRWKHUZRUGVWKH-DSDQHVHSODQZRXOGUHTXLUHWKH
8QLWHG6WDWHVDQG*UHDW%ULWDLQWRVFUDSKXJHSRUWLRQVRIWKHLUQDYLHV²DUDGLFDODQG
XQDFFHSWDEOHGHPDQGWKDWREYLRXVO\WHOHJUDSKHGLWVLQWHQWLRQWREHDVSRLOHUSURSRVDO
1DJDQRUHIXVHGWRJLYHVSHFLILFVRIWKH-DSDQHVHSODQXQWLODOOWKHGHOHJDWLRQVDFFHSWHG
WKHSULQFLSOHRIWKHFRPPRQXSSHUOLPLW 1DJDQREXQJOHGKLVDQVZHUWRZKLFKSRZHUV
WKHFRPPRQXSSHUOLPLWZDVWRDSSO\WRKRZHYHULGHQWLI\LQJRQO\³*UHDW%ULWDLQWKH
8QLWHG6WDWHVDQG-DSDQ´VLQFH³WKHUHKDVDOZD\VH[LVWHGDQGVWLOOH[LVWVWRGD\DVSHFLDOO\
LQWLPDWHUHODWLRQVKLSEHWZHHQWKRVHWKUHH3RZHUVRQWKHGLVDUPDPHQWTXHVWLRQ´ %\
H[FOXGLQJWKH)UHQFKDQGWKH,WDOLDQVIURPWKHFRPPRQXSSHUOLPLW-DSDQVTXDQGHUHG
DQ\FKDQFHLWKDGRIVHFXULQJWKHFRRSHUDWLRQRIWKHOHVVHUQDYDOSRZHUVWKDWZRXOG
,ELG
,ELG
1$5*5HFRUGV5HODWLQJWR'LVDUPDPHQW%R[6WHQRJUDSKLFQRWHVRIILUVWFRPPLWWHHRI/RQGRQ
1DYDO&RQIHUHQFH([WUDFWRIWKHUHSOLHVRIWKH-DSDQHVHGHOHJDWLRQ'HF
,ELG
,ELG
DFWXDOO\EHQHILWIURPWKHLUWKHVLVRIHTXDOLW\RIDUPV1DJDQRODWHUEDFNSHGDOOHGDQG
RSHQHGXSWKHSRVVLELOLW\RIDSSO\LQJWKHFRPPRQXSSHUOLPLWWRDOOSRZHUVEXWWKH
GDPDJHZDVDOUHDG\GRQH
7KH%ULWLVKDQG$PHULFDQGHOHJDWLRQVDJDLQODXQFKHGDFRRUGLQDWHGDWWDFNDJDLQVW
WKH-DSDQHVHSURSRVDO0RQVHOOVWDWHGWKDWHTXDOLW\RIQDYLHVZRXOGPHDQLQHTXDOLW\RI
VHFXULW\DV%ULWDLQKDGJOREDOUHVSRQVLELOLWLHVWKDWZRXOGSUHYHQWWKHFRQFHQWUDWLRQRILWV
IRUFHVDQGWKXVPDNHWKHPYXOQHUDEOHHYHU\ZKHUH&KDWILHOGSRVHGWKHK\SRWKHWLFDO
VLWXDWLRQRIDODUJHFRXQWU\ZLWKPDQ\QHLJKERUVIRUFHGWRPDNHGRZLWKWKHVDPHVL]HG
DUP\DVDVPDOOFRXQWU\ZLWKRQO\RQHRUWZRQHLJKERUVWRLOOXVWUDWHWKH8.¶VVHFXULW\
SUREOHPVDQGWKHJHQHUDOIROO\RIWKHFRPPRQXSSHUOLPLW )XUWKHUPRUH%ULWDLQ¶V
³DEVROXWHQHHGVRIQDYDOVHFXULW\ÉDVHGRQLWVJOREDOUHVSRQVLELOLWLHVDQGWRWDO
GHSHQGHQFHRQVHDERUQHFRPPHUFHPHDQWWKDWWKH\ZRXOGEHREOLJHGWRVHWWKHOLPLWRQ
WKHFRPPRQXSSHUOLPLW$V%ULWDLQDOUHDG\SRVVHVVHGWKHZRUOG¶VODUJHVW1DY\WKDW
PHDQW³WKHUHVXOWPXVWEHODUJHO\WRLQFUHDVHDUPDPHQWVDOORYHUWKHZRUOGDQGRIWHQ
LQFUHDVHDUPDPHQWVLQFRXQWULHVWKDWGRQRWUHDOO\ZDQWWKHPDWDOOEHFDXVHLIE\WUHDW\
DQ\FRXQWU\LVDOORZHGWREXLOGXSWRDFHUWDLQOHYHO\RXPD\EHTXLWHVXUHWKDWDVHFWLRQ
ZLOO«DOZD\VEHSUHVVLQJLWVJRYHUQPHQWWREXLOGXSIRUWKHSXUSRVHRISUHVWLJHWRWKH
OLPLWWKDWLWLVDOORZHGWREHWUHDW\´ 7KHLQHYLWDEOHUHVXOWRIWKH-DSDQHVHSURSRVDO
ZRXOG³HQRUPRXVO\LQFUHDVHWKHDUPDPHQWVRIWKHZRUOG´ 'DYLVUHPDUNHG³,ILQGP\VHOILQJHQHUDODFFRUGZLWKWKHYLHZVH[SUHVVHGE\WKH
%ULWLVK'HOHJDWLRQUHJDUGLQJWKHLPSUDFWLFDELOLW\RIDQGDOVRWKHIXQGDPHQWDOREMHFWLRQV
1$5*5HFRUGV5HODWLQJWR'LVDUPDPHQW%R[6WHQRJUDSKLFQRWHVRIILUVWFRPPLWWHHRI/RQGRQ
1DYDO&RQIHUHQFH'HF
1$5*5HFRUGV5HODWLQJWR'LVDUPDPHQW%R[6WHQRJUDSKLFQRWHVRIILUVWFRPPLWWHHRI/RQGRQ
1DYDO&RQIHUHQFH'HF
,ELG
WRWKHSURSRVDOIRUDFRPPRQXSSHUOLPLW´3ULRUWRWKH:DVKLQJWRQ7UHDW\WKHUHH[LVWHG
DWKHRUHWLFDOFRPPRQXSSHUOLPLWLQZKLFKDQ\QDWLRQFRXOGEXLOGWRWKHOHYHORIWKHPRVW
SRZHUIXOQDWLRQLQWKHV\VWHPLILWVRGHVLUHG7KLVRIFRXUVHFUHDWHGDIHHOLQJRIGHHS
LQVHFXULW\DQGOHGWRGDQJHURXVDQGH[SHQVLYHDUPVUDFHV 'DYLVDFFXVHGWKH-DSDQHVH
RIDWWHPSWLQJWRUHYHUWWKHZRUOGWRWKHVWDWHRILQVHFXULW\WKDWH[LVWHGEHIRUHDUPVFRQWURO
DQGZKLFKKDGSUHFLSLWDWHGWKH)LUVW:RUOG:DU)XUWKHUPRUH'DYLVTXHVWLRQHGWKH
ZLVGRPRIWKURZLQJRXWWKHH[SHULHQFHDQGVWDELOLW\RIWKH:DVKLQJWRQ6\VWHPDQG
DGRSWLQJDQHQWLUHO\QHZWKHRU\ZKHQWKHZRUOGZDVLQWKHWKURHVRI'HSUHVVLRQDQG
ZDU 7KHSRLQWVRIERWKWKH$PHULFDQVDQGWKH%ULWLVKRYHUODSSHGDQGFRPSOHPHQWHG
WKHRWKHURZLQJLQQRVPDOOSDUWWRWKHIDFWWKDWWKHGHOHJDWLRQVIUHTXHQWO\PHWEHIRUHWKH
VHVVLRQVWRUHKHDUVHWKHTXHVWLRQVWKH\LQWHQGHGWRSXWWRWKH-DSDQHVH 7KH86DQG8.GHOHJDWLRQVZHUHVRRQKHOSHGE\WKH)UHQFKDQG,WDOLDQVZKR
KDGEHHQVXEMHFWHGWRLQWHQVH%ULWLVKGLSORPDWLFHIIRUWVRYHUWKHSDVW\HDUDQGZKRKDG
EHHQDOLHQDWHGE\-DSDQ¶VH[FOXVLRQIURPWKHFRPPRQXSSHUOLPLW2Q'HFHPEHU
,WDOLDQGHOHJDWH5DLQHUL%LVFLDVDLGWKDWWKHFRPPRQXSSHUOLPLWZDVVLPSO\WKHROGUDWLR
V\VWHPLQGLIIHUHQWFORWKLQJWKDWZRXOGFUHDWHD³KLHUDUFK\EHWZHHQWKHQDWLRQV´DQG
ZRXOGFDXVHQRHQGRIGLIILFXOWLHV4XDQWLWDWLYHOLPLWDWLRQKDGSURYHQDIDLOXUHHYHQE\
-DSDQ¶VRZQDGPLVVLRQ²LWZRXOGEHEHWWHUKHVDLGWRSURGXFHDWUHDW\ZLWK³TXDOLWDWLYH
OLPLWDWLRQDFFRPSDQLHGE\LQGLUHFWPHWKRGVRITXDQWLWDWLYHOLPLWDWLRQ´7KH)UHQFK
GHOHJDWLRQHYHQPRUHGLUHFWO\PLUURUHG%ULWLVKDQG$PHULFDQVHQWLPHQWVSURFODLPLQJ
1$5*5HFRUGV5HODWLQJWR'LVDUPDPHQW%R[6WHQRJUDSKLFQRWHVRIILUVWFRPPLWWHHRI/RQGRQ
1DYDO&RQIHUHQFH'HF
,ELG
'%)3QG6HULHV9RO;,,,5HFRUGRIFRQYHUVDWLRQEHWZHHQ(GHQDQG'DYLV-DQ
1$5*5HFRUGV5HODWLQJWR'LVDUPDPHQW%R[6WHQRJUDSKLFQRWHVRIILUVWFRPPLWWHHRI/RQGRQ
1DYDO&RQIHUHQFH'HF
³HTXDOLW\RIULJKWVGRHVQRWQHFHVVDULO\LPSO\HTXDOLW\RIDUPDPHQWVDQGHTXDOLW\RI
DUPDPHQWVLVQRWDOZD\VWKHVDPHWKLQJDVHTXDOLW\RIVHFXULW\´ :KLOHWKH)UHQFKDOVR
HODERUDWHGRQWKHLURZQGHVLUHVVSHFLILFDOO\VRPHELQGLQJSROLWLFDOJXDUDQWHHVRI
VHFXULW\LWZDVFOHDUWKDWVNLOOIXOGLSORPDF\DQGVRPHEOXQGHUVIURPWKH-DSDQHVHKDG
XQLWHGWKHIRXUSRZHUVDJDLQVWWKHFRPPRQXSSHUOLPLW
7KH-DSDQHVHGHOHJDWLRQPHDQZKLOHSURYLGHGIHZDQVZHUVWRWKHSRLQWHG
TXHVWLRQVFRQWLQXDOO\OHYHOHGDWWKHPIURPWKH$QJOR$PHULFDQTXDUWHU7KH8.
GHOHJDWLRQUHSHDWHGO\DVNHG-DSDQKRZWKH\LQWHQGHGWRFRPSHQVDWHWKH51IRULWV
ZRUOGZLGHLQWHUHVWVYHUVXV-DSDQ¶VUHJLRQDOLQWHUHVWVLQYLHZRIWKHLUSURSRVDOIRUHTXDO
WRQQDJHOLPLWV1DJDQRDWILUVWUHIXVHGWRDQVZHUWKRXJKLQWKHIROORZLQJGD\VKHVWDWHG
WKDWWKHXQLTXHPDQHXYHUDELOLW\RIQDYDOFUDIWPHDQWWKDWDVXSHULRUIRUFHFRXOGEH
FRQFHQWUDWHGGHFLVLYHO\VWURQJO\LQGLFDWLQJWKDWWKH-DSDQHVHSODQDOORZHGIRUQRVXFK
³FRPSHQVDWLRQV´ 'DYLVFDPHWR%ULWDLQ¶VGHIHQVHVD\LQJWKDWWKHHQWLUHEDVLVRIWKH
:DVKLQJWRQ7UHDW\ZDVWRILQGDOHYHORIDUPDPHQWWKDWSURYLGHG³HTXDOLW\DWWKHSRLQWRI
DWWDFN´*LYHQWKHJOREDOUHVSRQVLELOLWLHVRIFHUWDLQSRZHUVLQDGGLWLRQWRWKHEDVLF
GHIHQVHUHTXLUHPHQWVIRUWKHLUKRPHZDWHUV³HTXDOLW\DWWKHSRLQWRIDWWDFN´QHFHVVLWDWHG
KLJKHUWRQQDJHVIRUJOREDOSRZHUV 'DYLVDOVROHQWDKDQGWRWKH³PLGGOHFRXUVH´RQWKHFRQIHUHQFHIORRUHQGRUVLQJLW
DVDPHDQVWRSUHYHQWDQDUPVUDFHDQGVWDWLQJWKDW³LWLVQRWLQWHQGHGDVDPHDQVIRU
FKDQJLQJWKHUHODWLYHSRVLWLRQVRIWKH1DYDO3RZHUV,WLVPHUHO\WREULGJHRYHU
WHPSRUDULO\XQWLOZHPD\VRPHGD\EHDEOHWRILQGDGHILQLWHZD\RIOLPLWLQJQDYDO
,ELG
1$5*5HFRUGV5HODWLQJWR'LVDUPDPHQW%R[6WHQRJUDSKLFQRWHVRIILUVWFRPPLWWHHRI/RQGRQ
1DYDO&RQIHUHQFH'HF
,ELG
VWUHQJWK´ 7KH-DSDQHVHGHOHJDWLRQUHMHFWHGWKHPLGGOHFRXUVHKRZHYHUVD\LQJWKDW
WKHYROXQWDU\OLPLWDWLRQVRQEXLOGLQJZHUHVLPSO\WKHUDWLRV\VWHPLQFDPRXIODJH:KLOH
1DJDQRDFNQRZOHGJHGWKDWWKH%ULWLVKZHUHDWWHPSWLQJWRVROYHWKHSUREOHPRISUHVWLJH
KHLQVLVWHGWKDWWKHGLVFULPLQDWRU\UDWLRVZHUHDVHFXULW\FRQFHUQILUVWDQGIRUHPRVWDQG
WKHUHIRUHQRWDFFHSWDEOHWR-DSDQ 7KH-DSDQHVHDOVRODXQFKHGWKHLUODVWDWWHPSWWR
GULYHDZHGJHLQWKH$QJOR$PHULFDQIURQW2Q'HFHPEHULQUHSO\WR6WDQGOH\¶V
DVVHUWLRQWKDWWKH8QLWHG6WDWHVQHHGHGDKLJKHUUDWLRWRGHIHQGLWVSRVVHVVLRQVLQ-DSDQ¶V
YLFLQLW\1DJDQRVDLGWKDWLIWKLVDFFHSWHGWKHQDQ\(XURSHDQSRZHUZLWKWHUULWRU\LQWKH
:HVWHUQKHPLVSKHUHRXJKWWREHFRPSHQVDWHGDVZHOOLQRUGHUWRGHIHQGDJDLQVW
$PHULFDQDJJUHVVLRQ 2Q'HFHPEHUWKH-DSDQHVHGHOHJDWLRQIOLSSHGWKHVFULSW
VD\LQJWKDWZKLOHWKH$PHULFDQSODQDWOHDVW³H[SUHVVO\DLPVDWUHGXFWLRQ´WKH%ULWLVK
SODQZRXOGXQGRXEWHGO\OHDGWRQDYDOLQFUHDVHV 7KHFRQIHUHQFHDGMRXUQHGIRUWKHKROLGD\VHDVRQZLWKQRSURJUHVVZKDWVRHYHU\HW
WKH$QJOR$PHULFDQUHODWLRQVKLSUHPDLQHGVWURQJDQGHYHQLPSURYHGE\WKHKHDWHG
GHEDWHVRQWKHIORRU$PEDVVDGRU'RGGZKRFORVHO\IROORZHGWKHFRQIHUHQFHUHPDUNHG
WR'DYLVWKDWLI-DSDQDQG*HUPDQ\WRJHWKHU³EHFRPHVRGRPLQHHULQJ\RXZLOOVHHWKDW
(QJODQGDQGWKH8QLWHG6WDWHVZLOOEHIRUFHGLQWRDFRPSOHWHUFRRSHUDWLRQWKDQWKH\KDYH
HYHUSUDFWLFHGEHIRUHOLWWOHDVW\SLFDO(QJOLVKPHQOLNH$PHULFDQV´ 'DYLVUHSOLHGRQ
'HFHPEHUZULWLQJWKDWZKLOH³RXU%ULWLVKDQG)UHQFKIULHQGVGHOD\HGDQGGLFNHUHG
HQWLUHO\WRRORQJ´RQDWODVWFRPLQJWRWHUPVRQWKHFRQIHUHQFHKHZDVFRQILGHQW³WKDW
1$5*5HFRUGV5HODWLQJWR'LVDUPDPHQW%R[6WHQRJUDSKLFQRWHVRIILUVWFRPPLWWHHRI/RQGRQ
1DYDO&RQIHUHQFH'HF
1$5*5HFRUGV5HODWLQJWR'LVDUPDPHQW%R[6WHQRJUDSKLFQRWHVRIILUVWFRPPLWWHHRI/RQGRQ
1DYDO&RQIHUHQFH'HF
)5863DSHUV5HODWLQJWR)RUHLJQ5HODWLRQVRIWKH8QLWHG6WDWHV-DSDQ,0HPRRI
FRQYHUVDWLRQEHWZHHQWKH$PHULFDQDQG-DSDQHVHGHOHJDWLRQV'HF
,ELG
/2&0DQXVFULSW'LYLVLRQ'DYLV3DSHUV%R['RGGWR'DYLV'HF
(QJODQGDQG$PHULFDWKHWZRJUHDWGHPRFUDFLHVZKRPRVWZDQWSHDFHZLOOEHIRUFHGWR
FRRSHUDWHPRUHDQGPRUHFORVHO\WRSURWHFWWKHPVHOYHVDJDLQVWGLFWDWRUVKLSVDQG
PLOLWDULVWV´ 7R5RRVHYHOW'DYLVUHSRUWHG³%ULWLVKFRRSHUDWLRQVRIDUKDVEHHQ´
DQGWKDWWKH\KDYHFRQWLQXDOO\UHIXVHGWRULVHWR-DSDQHVHEDLWWKDWZRXOGGULYHWKH
GHOHJDWLRQVDSDUW 8QGHUVHFUHWDU\RI6WDWH:LOOLDP3KLOOLSVZKRDFFRPSDQLHGWKH
GHOHJDWLRQUHSRUWHGWR5RRVHYHOWWKDW³ZKLOHDFWXDODFFRPSOLVKPHQWVXSWRGDWHDUHQLO
RZLQJWRWKHDGDPDQWSRVLWLRQRIWKH-DSDQHVHZLWKUHVSHFWWRWKHµFRPPRQXSSHUOLPLW¶´
WKHUHDOWDNHDZD\IURPWKHFRQIHUHQFHWKXVIDUZDV
WKHGHFLGHGO\FRRSHUDWLYHVSLULWRQEHKDOIRIWKH%ULWLVK'HOHJDWLRQ)URP
WKHPRPHQWRIRXUILUVWFDOODW$GPLUDOW\+RXVHXSRQ/RUG>VLF@0RQVHOO
$GPLUDO&KDWILHOGDQG&UDLJLHWKHUHKDVEHHQQRWKLQJEXWWKHFORVHVW
FROODERUDWLRQ,QIDFWWKH%ULWLVKGRQRWPDNHDPRYHZLWKRXWWDONLQJLW
RYHUZLWK1RUPDQ>'DYLV@E\WHOHSKRQHRURWKHUZLVH9LQFHQW0DVVH\
>&DQDGLDQGHOHJDWH@UHPDUNHGODVWQLJKWDWWKH3LOJULP¶V'LQQHUWKDWWKH
HYLGHQWXQGHUVWDQGLQJDQGFRRSHUDWLYHVSLULWEHWZHHQWKH$PHULFDQVDQG
%ULWLVKZDVWKHRXWVWDQGLQJDQGPRVWVDWLVIDFWRU\SDUWRIWKH&RQIHUHQFHVR
IDU«WKHJHQHUDODWPRVSKHUHRIWKH&RQIHUHQFHFRXOGQRWLQP\RSLQLRQ
EHLPSURYHGXSRQ 7KH%ULWLVKZHUHOLNHZLVHHQWKXVLDVWLFDERXWWKHLUUHODWLRQVKLSZLWKWKH
$PHULFDQV7KH\FRQWLQXDOO\SUHVVHGIRUELODWHUDOWDONVZLWKWKH$PHULFDQVWKURXJKRXW
WKHSURFHHGLQJVWRFRRUGLQDWHVWUDWHJ\$QWKRQ\(GHQZDVFDUHIXOWRVWUHVVWR%LQJKDP
DQG3KLOOLSVWKDWWKH)RUHLJQ2IILFHKDGD³VWURQJGHVLUHWRGRZKDWZDVSRVVLEOHWR
PDLQWDLQFORVHDQGIULHQGO\UHODWLRQVZLWKWKH8QLWHG6WDWHV´ 7KH%ULWLVKSUHVVPRVWO\
UHIOHFWHGWKH$QJOR$PHULFDQJRRGZLOO7KH6FRWVPDQDQG7LPHVZHUHERWKJHQHUDOO\
SRVLWLYHRQWKH$PHULFDQSRVLWLRQDQGDSSURYHGRIWKHGHYHORSLQJXQLW\EHWZHHQWKH8.
1$5*5HFRUGV5HODWLQJWR'LVDUPDPHQW%R['DYLVWR'RGG'HF
6LPSVRQ$QJOR$PHULFDQ1DYDO5HODWLRQV'DYLVWR5RRVHYHOW'HF
1L[RQ5RRVHYHOW,,,3KLOOLSVWR5RRVHYHOW'HF
'%)3QG6HULHV9RO;,,,(GHQWR6LU5/LQGVD\-DQ
DQGWKH86$'HFHPEHUDUWLFOHLQWKH(FRQRPLVWZDVHVSHFLDOO\DJJUHVVLYHLQ
DGYRFDWLQJIRUDFORVHUUHODWLRQVKLSEHWZHHQWKHWZRQDWLRQVVWDWLQJ³-DSDQ¶VDFWLRQKDV
RYHUWKURZQWKHVWDWXVTXRRQZKLFK$QJOR$PHULFDQUHODWLRQVKDYHUHVWHGVLQFHWKHWLPH
RIWKH:DVKLQJWRQ&RQIHUHQFH,QRWKHUZRUGVLI-DSDQ¶VDFWLRQGRHVQRWEULQJWKH
%ULWLVK(PSLUHDQGWKH8QLWHG6WDWHVWRJHWKHULWZLOOVXFFHHGLQGULYLQJWKHPDSDUW«ZH
PD\SHUKDSVLQHYLWDEO\H[SHFWWRVHHVRPHWKLQJOLNHDµJHQWOHPDQ¶VDJUHHPHQW¶EHWZHHQ
WKH%ULWLVK(PSLUHDQGWKH8QLWHG6WDWHV6XFKDQDJUHHPHQWZRXOGUHSO\WRDQ\-DSDQHVH
DWWHPSWDWDQDUPDPHQWVUDFHZLWKDQRYHUZKHOPLQJO\JUHDWHUFRPELQHGFRQVWUXFWLRQ
SURJUDP«´ 7KH-DSDQHVHSUHVVDOVRQRWLFHGWKHWUHQGZLWKDJUHDWGHDOPRUHLUHZLWK
WKH$VDKLQRWLQJ³WKDW$QJOR$PHULFDQFRRSHUDWLRQDWWKH&RQIHUHQFHLVXQGHQLDEOHDQG
WKDWDEUHDNGRZQLVLQHYLWDEOH´ :KHQWKH&RQIHUHQFHUHFRQYHQHGLQHDUO\-DQXDU\LWZDVTXLFNO\ERJJHGGRZQ
RYHUWKHHVVHQWLDOSUREOHPRIWKHFRPPRQXSSHUOLPLW6WLOOWKH%ULWLVKEHVHHFKHGWKH
$PHULFDQVWREHSDWLHQWDQGWRVHHNDOWHUQDWLYHPHWKRGVRIDUULYLQJDWDQDJUHHPHQW
&UDLJLHIORDWHGWKHLGHDRIDQRQDJJUHVVLRQSDFWLQWKH3DFLILFGXULQJD-DQXDU\
ELODWHUDOPHHWLQJEXW'DYLVGHHPHGVXFKDVFKHPHWREH³SHUIHFWO\ZRUWKOHVV´LILWGHDOW
ZLWKQHLWKHUWKHFDXVHVIRUDJJUHVVLRQQRUWKHPHDQVWRFDUU\RXWVXFKDJJUHVVLRQ:KLOH
'DYLVSOHGJHGWR³FRRSHUDWHZLWKLQUHDVRQDEOHOLPLWV´KHZDUQHGWKDW$PHULFDQSDWLHQFH
ZDVILQLWH $VLWKDSSHQHGWKHSRLQWZDVVRRQPRRW-RVHSK*UHZUHSRUWHGIURP7RN\RRQ
-DQXDU\WKDWWKHFRQIHUHQFHKDGRQO\EHHQNHSWDIORDWE\WKH-DSDQHVH)RUHLJQ2IILFH
1$5*5HFRUGV5HODWLQJWR'LVDUPDPHQW%R[$WKHUWRQWR+LOO-DQ
1$5*%R[1DYDO$WWDFKH*UHDW%ULWDLQ6HULDO1R'HF
1$5*5HFRUGV5HODWLQJWR'LVDUPDPHQW%R['DYLVPHPRRQPHHWLQJZLWK&UDLJLHDQG
$WKHUWRQ-DQ
ZKRKDGGLVVXDGHG1DJDQRIURPDQHDUO\ZLWKGUDZDOLQDQDWWHPSWWRPDLQWDLQJRRG
UHODWLRQVZLWKWKH:HVWHUQ3RZHUV*UHZUHSRUWHGWKDW³WKH-DSDQHVH1DY\LQGHPDQGLQJ
SDULW\KDGSULQFLSDOO\WKH$PHULFDQ1DY\LQYLHZEXWIDLOHGWRIRUHVHHWKHFRPSOLFDWLRQV
ZKLFKWKHLUDWWLWXGHZRXOGFUHDWHLQ(XURSH´:LWKWKH-DSDQHVHGHOHJDWLRQ³KDYLQJ
EXUQHGWKHLUEULGJHV´WKH)RUHLJQ2IILFHZDVLQFUHDVLQJO\GLVWUHVVHGE\WKHQHJDWLYH
HIIHFWWKH-DSDQHVHSRVLWLRQZDVKDYLQJRQZRUOGRSLQLRQ 2Q-DQXDU\1DJDQR
RIILFLDOO\ZLWKGUHZWKH-DSDQHVHIURPWKHFRQIHUHQFH
7KH)LYH3RZHUFRQIHUHQFHFROODSVHGZLWKRXWDQ\GLVFHUQLEOHSURJUHVVRQWKH
TXHVWLRQRIQDYDODUPVOLPLWDWLRQ<HWWKHVKRUWWHUPREMHFWLYHVRIWKH$PHULFDQ
GHOHJDWLRQKDGEHHQDFFRPSOLVKHG&OHDUO\WKH8QLWHG6WDWHVKDGDYRLGHGDQ\EODPHIRU
LWVIDLOXUHDQGLQFRQMXQFWLRQZLWKWKH%ULWLVKWKH\KDGODLGWKHEODPHILUPO\RQ-DSDQ¶V
GRRUVWHS,WZDVHYLGHQWIURPWKH-DSDQHVHGHOHJDWLRQ¶VLQIOH[LEOHDGKHUHQFHWRDUDGLFDO
UHLPDJLQLQJRIVHFXULW\LQWKH3DFLILFWKDWWKHLURQO\UHDOLQWHQWLRQZDVWRVSRLOWKH6HFRQG
/RQGRQ1DYDO&RQIHUHQFHLQWKHKRSHRIGULYLQJDZHGJHEHWZHHQWKH8QLWHG6WDWHVDQG
*UHDW%ULWDLQ7KH-DSDQHVHOLQHZDVDEVROXWHO\ULJLGIURPLWVLQFHSWLRQLQDWWKH
:RUOG'LVDUPDPHQW&RQIHUHQFHWKURXJKWKHGLVDVWURXVSUHOLPLQDULHVDQGXOWLPDWHO\
DWWKHIORRURIWKH1DYDO&RQIHUHQFHLWVHOI<HWLWLVDOVRFOHDUWKDWWKHGLSORPDWLF
DGYDQFHVPDGHEHWZHHQ%ULWDLQDQG$PHULFDVLQFHODWHKDGFUDIWHGDUHODWLRQVKLS
VXIILFLHQWO\UHVLOLHQWWRZLWKVWDQGWKH-DSDQHVHDVVDXOWXSRQQDYDOOLPLWDWLRQ,QGHHGLWLV
SRVVLEOHWRYLHZWKHHQWLUHILUVWSRUWLRQRIWKHFRQIHUHQFHUXQQLQJIURP'HFHPEHU
XQWLOWKH-DSDQHVHZLWKGUDZDORQ-DQXDU\DVDQHODERUDWHDQGHPLQHQWO\
VXFFHVVIXOSLHFHRI$QJOR$PHULFDQWKHDWHUGHVLJQHGWRSUHYHQWWKH-DSDQHVHIURP
OHDYLQJRQWKHLUWHUPV:KLOHWKH%ULWLVKH[SUHVVHGKRSHHYHQLQWRHDUO\-DQXDU\WKDWWKH
)586,*UHZWR+XOO-DQ
-DSDQHVHPLJKWFRPHDURXQGLWZDVFOHDUWKDWERWKWKH86DQG8.ZHUHOD\LQJWKH
JURXQGZRUNIRUDQ$QJOR$PHULFDQRUGHUWRFRSHZLWKDSRVW:DVKLQJWRQZRUOG
&+$37(572:$5'6$3$&,),&$//,$1&(
'HVSLWHWKHVXFFHVVRIWKHVKRUWWHUP$PHULFDQJRDORIRYHUVHHLQJDPDQDJHG
FROODSVHRIWKH)LYH3RZHUWDONVWKHUHZDVGLVDJUHHPHQWDPRQJ$PHULFDQSROLF\PDNHUV
DVWRWKHLPSOLFDWLRQVRIWKH-DSDQHVHZLWKGUDZDODQGRQVWUDWHJ\UHJDUGLQJKRZWR
SURFHHG6HQDWRU.H\3LWWPDQWKHLQIOXHQWLDO&KDLUPDQRIWKH6HQDWH&RPPLWWHHRQ
)RUHLJQ5HODWLRQVDQGRQHRI5RRVHYHOW¶VOHJLVODWLYHSRLQWPHQPDGHDVWDWHPHQWLQ
&RQJUHVVVXJJHVWLQJWKDWWKHFRQIHUHQFHKDGEHHQUHQGHUHGSRLQWOHVVDQGWKDW-DSDQ¶V
ZLWKGUDZDOPHDQWWKDWLWSODQQHGWRFRPPHQFHDQDUPVUDFH'DYLVZURWHWR+XOOWR
SUHYHQWRIILFLDOVIURPPDNLQJVWDWHPHQWVRIWKLVW\SHZKLOHWKHFRQIHUHQFHZDVVWLOO
RQJRLQJ³7KHJHQHUDOFRQVHQVXVKHUHLVWKDW-DSDQLVQRWLQWHQGLQJWRVWDUWDQDYDOUDFH´
'DYLVVDLGEXWWKDWWKHQDYDOLVWIDFWLRQKDG³IRUFHGWKH*RYHUQPHQWWRWDNHWKH
XQUHDVRQDEOHDQGXQZLVHSRVLWLRQLWGLG«´,WZDVYLWDOO\LPSRUWDQWWKDWRIILFLDOVLQ
:DVKLQJWRQH[SUHVVWKHEHOLHIWKDWOLPLWDWLRQFRXOGSURFHHGZLWKRXW-DSDQHOVHWKH
FRQIHUHQFHZRXOGHQGZLWKQRWKLQJJDLQHGDQGWKH-DSDQHVHZLWKGUDZDOZRXOGKDYH
DWWDLQHGLWVJRDORIVSRLOLQJWKHSURFHHGLQJV 6WDQOH\+RUQEHFNZKRUHFHLYHGDFRS\
RI'DYLV¶PLVVLYHUHIXWHGWKHGHOHJDWH¶VDVVHUWLRQVDQGVLGHGZLWK3LWWPDQ,WVHHPHG
FOHDUWR+RUQEHFNWKDWWKH-DSDQHVHGLGLQWHQGWRFRPPHQFHDEXLOGLQJSURJUDPWKDW
ZRXOGEULQJWKH,-1DVFORVHWRSDULW\ZLWKWKH861DVSRVVLEOH²ZKHWKHULWEHFDPHD
³UDFH´GHSHQGHGRQZKHWKHUWKH8QLWHG6WDWHVDQG%ULWDLQURVHWRWKHFKDOOHQJH )XUWKHUPRUH+RUQEHFNQRWRQO\EHOLHYHGWKDWFRQWLQXLQJWKHFRQIHUHQFHZDVSRLQWOHVV
EXWWKDWLWPLJKWDFWXDOO\EHKDUPIXO³7KH-DSDQHVHGHVLUHWKDWWKHUHEHQDYDOOLPLWDWLRQ´
)586,'DYLVWR+XOO-DQ
)586,0HPRE\+RUQEHFN-DQ
+RUQEHFNDVVHUWHG³7KHIDFWRIWKHUHEHLQJOLPLWDWLRQDQGRIWKHLUNQRZLQJWKHOLPLWDWLRQ
WRZKLFKWKHRWKHUSRZHUVDJUHHZLOOEHLIDQGZKHQRIGHILQLWHYDOXHWRWKH-DSDQHVH«
EHLQJRXWVLGHKDVLWVFRPSHQVDWLRQVLQWKLVFDVHLWZLOOHQDEOHWKHPWRNQRZWRZKDWWKH
RWKHUVDUHFRPPLWWHGZLWKRXWWKHLUEHLQJWKHPVHOYHVFRPPLWWHG´ 7KHZKROHWKHRU\RI
DUPVFRQWURODVLWKDGH[LVWHGLQWKH:DVKLQJWRQV\VWHPKDGEHHQXQGRQH+RUQEHFN
FODLPHGVD\LQJWKDW
LWPD\ZLWKUHDVRQEHGRXEWHGZKHWKHULQWKHZRUOGDVLWLVPXOWLODWHUDO
DJUHHPHQWVZLWKUHJDUGWRDUPDPHQWFDQXQOHVVSUHFHGHGDQGFRQQHFWHG
ZLWKDJUHHPHQWVZLWKUHJDUGWRSROLWLFDOPDWWHUVUHVWRQDQ\VRXQG
IRXQGDWLRQDQGZKHWKHUHYHQLIDVVRFLDWHGZLWKSROLWLFDODJUHHPHQWVWKHLU
QHWHIIHFWLVQRWWKDWRIGHFHLYLQJWKHSHDFHIXOO\LQFOLQHGQDWLRQVLQWRD
IDOVHVHQVHRIVHFXULW\ZLWKRXWLQDQ\ZD\UHDOO\SODFLQJHIIHFWLYH
REVWDFOHVLQWKHZD\RIDJJUHVVLYHO\GLVSRVHGQDWLRQV,QRWKHUZRUGVLW
PD\EHDVNHGVKRXOGQDWLRQVULFKLQUHVRXUFHVDQGGHVLURXVRISHDFHOLPLW
WKHLUULJKWWRDUPDQGWKHUHE\PDNHHDVLHUIRUQDWLRQVOHVVULFKEXW
DJJUHVVLYHO\GLVSRVHGWRSUHSDUHIRUDQGHQJDJHLQSUHGDWRU\DFWLYLWLHV"
+RUQEHFNUHFRPPHQGHGWKDWWKH8QLWHG6WDWHVDQG%ULWDLQHQWHULQWRDSHULRGRI
XQUHVWULFWHGQDYDOEXLOGLQJLQRUGHUWRFRZWKH-DSDQHVHLQWRVXEPLVVLRQ 7KH%ULWLVKSUHVVHGWKH$PHULFDQGHOHJDWLRQWRFRQWLQXHWKHFRQIHUHQFHDV
SROLF\PDNHUVLQ:DVKLQJWRQHYDOXDWHGWKHVLWXDWLRQ7KH\ZHUH³GLVWXUEHGE\WKH
SRVVLELOLW\RIDQ$QJOR$PHULFDQGLVDJUHHPHQW´RYHUTXDOLWDWLYHOLPLWDWLRQVWKDWDOOWKH
UHPDLQLQJSRZHUVZHUHZLOOLQJWRDFFHSWHVSHFLDOO\LIVXFKGLVDJUHHPHQWEHFDPHNQRZQ
LQ-DSDQDQGUXLQWKHHIIHFWRIWKHIURQWWKH\KDGSUHVHQWHGDWWKHFRQIHUHQFH $WDQ\
UDWHLWZDVKRSHGWKDWLIWKHIRXUSRZHUVSURGXFHGDWUHDW\WKHQWKH\FRXOGKRSHWKDWWKH
,ELG
,ELG
)586,'DYLVWR+XOO-DQ
PRGHUDWHVUHWDNHFRQWURORIWKH-DSDQHVHJRYHUQPHQWDQGJHWWKHPWRVLJQRQDWDODWHU
GDWHRUHOVHSUHVVXUHWKHPWRGRVRE\VRPHRWKHUPHDQV
2Q-DQXDU\WKH86DQG8.GHOHJDWLRQVKDGDELODWHUDOPHHWLQJWRKDPPHURXW
WKHGHWDLOVRIDQ\DJUHHPHQWWKDWFRXOGEHPDGHLQWKHDEVHQFHRI-DSDQDQGRI
TXDQWLWDWLYHOLPLWDWLRQ&KDWILHOGH[SUHVVHGKLVFRQFHUQUHJDUGLQJ86DGKHUHQFHWRWKH
WRQFUXLVHUDQG6WDQGOH\UHYHDOHGWKDWWKH86ZDVZLOOLQJWRDFFHSWDILYH\HDU
EXLOGLQJKROLGD\RQWKLVYHVVHOW\SH6WDQGOH\ZHQWRQWRVD\WKDW$PHULFDZRXOGPDWFK
%ULWDLQ¶VFUXLVHUIOHHWXSWRYHVVHOVEXWWKDWWKH\ZHUHXQOLNHO\WRH[FHHGWKLVQXPEHU
LIWKH%ULWLVKLQVLVWHGRQJRLQJWR 'DYLVDQG6WDQGOH\ERWKDJUHHGWKDWWKH%ULWLVK
QDYDOSUREOHPZDVPXFKPRUHFRPSOH[WKDQWKHLURZQDQGZHUHZLOOLQJWRUHDFKD
UHDVRQDEOHFRPSURPLVH 6WDQGOH\KHDGHGRIIDQ\UHGXFWLRQLQEDWWOHVKLSWRQQDJH
KRZHYHUGHVSLWHSURPLVHVIURPWKH%ULWLVKWKDWDVXEVWDQWLDOO\VPDOOHUYHVVHOFRXOGPHHW
DOOWKH861¶VUHTXLUHPHQWV,WZDVFOHDUWKDW'DYLVDQG6WDQGOH\ZHUHHQWKXVLDVWLFWR
FRQWLQXHEXWVWLOOKDGWRZDLWRQZRUGIURP:DVKLQJWRQ7KH*HQHUDO%RDUGUHJLVWHUHG
LWVGLVSOHDVXUHZLWK%ULWDLQ¶VGHPDQGIRUDEXLOGLQJKROLGD\RQFUXLVHUVKHDYLHUWKDQ
WRQVEXW6WDQGOH\KDGDOUHDG\FRUUDOOHGWKH1DY\'HSDUWPHQWEHKLQGWKLV
FRQFLOLDWRU\PHDVXUHDQGKDGWKHDGGLWLRQDOEDFNLQJRIWKH6WDWH'HSDUWPHQW 7KHUH
ZDVKRZHYHUWKHDGGHGFRPSOLFDWLRQWKDWWKH)UHQFKH[SUHVVHGDQXQZLOOLQJQHVVWRJR
IRUZDUGZKLOHERWK-DSDQDQG*HUPDQ\WKHOLNHO\HQHPLHVLQDQ\IXWXUHZDUZHUHQRW
1$5*%R[0HPRE\&DSWDLQV,QJHUVROODQG'DQFNZHUWVUHJDUGLQJ%ULWLVKDQG-DSDQHVH
FUXLVHUIRUFHV)HE%\-DQWKH%ULWLVKZHUHVWLOORQO\DWNWRIFUXLVHUVXQLWVWKHLU
/RQGRQDOORWPHQWWRJHWWRZRXOGUHTXLUHPXFKPRUHEXLOGLQJ
)586,'DYLVWR+XOO-DQ
1L[RQ5RRVHYHOW,,,3KLOOLSVWR5RRVHYHOW)HE³7KH1DY\'HSDUWPHQWDQGRXUVHOYHV
KDYHQRZUHDFKHGWKHFRQFOXVLRQWKDWZHFRXOGYHU\ZHOODFTXLHVFHLQWKHQDYDOKROLGD\RQWRQ
FUXLVHUV«´
LQYROYHGLQWKHSURFHHGLQJV $VKDGKDSSHQHGVRPDQ\WLPHVDOUHDG\WKHIXWXUHRIWKH
VHFRQG/1&ZDVLQGRXEW)RUWXQDWHO\WKHVWDWHRI$QJOR$PHULFDQUHODWLRQVZDVQRWLQ
GRXEWDV'DYLVLQIRUPHGWKH3UHVLGHQWRQ-DQXDU\³,PXVWVD\RXUUHODWLRQVZLWKWKH
%ULWLVKZLWKWKH%ULWLVKKDYHLPSURYHGUHPDUNDEO\VLQFHODVW\HDU´'DYLVZURWH³7KH\
KDYHVWRRGZLWKXVWDNLQJWKHLUIXOOVKDUHRIUHVSRQVLELOLW\ZLWKRXWDQ\DWWHPSWWRSDVV
WKHEXFNWRXV:KDWHYHUWHQGHQF\WKHUHZDVEHIRUHWRFRGGOH-DSDQLQWKHKRSHRIWKXV
SODFDWLQJKHUKDVGLVDSSHDUHG´ :KDWHYHUWKHUHVXOWRIWKHGRXEWIXOFRQIHUHQFHPLJKW
EHWKHPLVVLRQRILPSURYLQJWKH$QJOR$PHULFDQUHODWLRQVKLSKDGDOUHDG\EHHQ
DFFRPSOLVKHG
$IWHUIXUWKHUFRUUHVSRQGHQFHDPRQJ'DYLVWKH3UHVLGHQWDQG+XOOWKH$PHULFDQ
GHOHJDWLRQZDVRUGHUHGWRFRQWLQXHQHJRWLDWLRQVLQ/RQGRQDQGWKHSOHQDU\VHVVLRQV
UHVXPHGLQ)HEUXDU\7KH)UHQFKDOVRUHOXFWDQWO\UHWXUQHGWRWKHWDEOH,WZDVTXLFNO\
DSSDUHQWWKDWWKHQHJRWLDWLRQVZRXOGEHPXFKVPRRWKHUIROORZLQJWKHZLWKGUDZDORI
-DSDQ6WDQGOH\UHFHLYHGVRPHIODNIURPWKHRWKHUSRZHUVRYHUWKH861¶VUHIXVDOWR
FRPHGRZQIURPWKH:DVKLQJWRQWRQQDJHFDSRQEDWWOHVKLSXQLWVZKHQDOORWKHUSRZHUV
ZHUHVDWLVILHGZLWKDFDSDWWRQV6WDQGOH\DOOXGHGWRWKHIDFWWKDWDVDUHVXOWRI
UHFHQWFRPSHWLWLYHEXLOGLQJSURJUDPVLQ(XURSHWKDWKDGEHHQWRXFKHGRIIE\WKH*HUPDQ
9HUVDLOOHVYLRODWLRQV*HUPDQ\)UDQFHDQG,WDO\ZHUHDOOFXUUHQWO\EXLOGLQJWRQ
EDWWOHVKLSVZLWKLQFKEDWWHULHV6WDQGOH\DOVRSRLQWHGRXWWKHIDFWWKDW-DSDQVRRQWREH
XQERXQGE\DQ\WUHDW\ZRXOGVXUHO\QRWOLPLWWKHPVHOYHVWRVPDOOHUFDSLWDOVKLSV +H
FDQQLO\VKLIWHGWKHUHVSRQVLELOLW\WRWKH)UHQFKGHOHJDWLRQZKLFKIDYRUHGWKH%ULWLVK
/2&0DQXVFULSW'LYLVLRQ'DYLV3DSHUV%R['DYLVWR5RRVHYHOW)HE
/2&0DQXVFULSW'LYLVLRQ'DYLV3DSHUV%R['DYLVWR5RRVHYHOW-DQ
1$5*5HFRUGV5HODWLQJWR'LVDUPDPHQW%R[6WHQRJUDSKLFQRWHVRIILUVWFRPPLWWHHRI/RQGRQ
1DYDO&RQIHUHQFH)HE
TXDOLWDWLYHUHGXFWLRQRIEDWWOHVKLSVDVNLQJZK\WKH\UHIXVHGWRDEROLVKVXEPDULQHVZKHQ
DOOSRZHUVDJUHHGWKDWWKLVYHVVHOW\SHZDVDSULPDU\UHDVRQIRUWKHLQFUHDVLQJWRQQDJHV
RIFDSLWDOVKLSV :KLOH6WDQGOH\FRQFHGHGWKDWDUHGXFWLRQLQFDSLWDOVKLSXQLWVL]H
ZRXOGEHDQHIILFDFLRXVSDWKWRUHGXFWLRQLQFRVWVKHDVVHUWHGWKDW³WKHUHLVQRHFRQRP\
LQEXLOGLQJDFDSLWDOVKLSXQVXLWHGWRRQH¶VQHHGV:HIHHOWKDWDQ\PRQH\VSHQWRQVXFKD
VKLSZRXOGEHPRQH\ZDVWHG´ 2Q)HEUXDU\&KDWILHOGDOORZHGWKDWDQ\VLJQLILFDQW
UHGXFWLRQWREDWWOHVKLSXQLWWRQQDJHZKLOHGHVLUDEOHIRUWKH%ULWLVK³ZHUHDOL]HWKDWWKH
IDFWVWKDWDUHEHIRUHXVQRZPDNHWKDWLPSRVVLEOH´ 7KLVFRQFOXGHGWKHODVWOLQJHULQJ
$QJOR$PHULFDQGLVSXWHDWWKHFRQIHUHQFH
7KHIROORZLQJZHHNVZHUHVSHQWKDPPHULQJRXWWKHILQDOGHWDLOVRIWKHWUHDW\
%H\RQGWKHEXLOGLQJKROLGD\IRUWRQFUXLVHUVWKHSRZHUVDOVRDJUHHGWRDFDOLEHU
OLPLWRQEDWWOHVKLSVRI´DVOLJKWGHFUHDVHLQWKHPD[LPXPGLVSODFHPHQWRIDLUFUDIW
FDUULHUVDQGD³]RQHRIQRFRQVWUXFWLRQÍRUYHVVHOVGLVSODFLQJEHWZHHQDQG
WRQVLQRUGHUWRSUHYHQWDQ\SRZHUEXLOGLQJDQHZYHVVHOW\SHVXFKDVWKH³SRFNHW
EDWWOHVKLS´ 3HUKDSVPRVWLPSRUWDQWO\WKHGHOHJDWHVDJUHHGWRQRWLILFDWLRQFODXVHV
ZKLFKUHTXLUHGVLJQDWRULHVWRDQQRXQFHWKHLUEXLOGLQJSURJUDPVDQQXDOO\DQGSURYLGH
IRXUPRQWKV¶QRWLFHEHIRUHOD\LQJGRZQWKHNHHORIDQ\VKLS 7KHSRZHUVDJUHHGWR
EURDG³HVFDSHFODXVHV´ZKLFKZRXOGDOORZDQ\VLJQDWRU\WRDEDQGRQWKHWHQHWVRIWKH
1$5*5HFRUGV5HODWLQJWR'LVDUPDPHQW%R[6WHQRJUDSKLFQRWHVRIILUVWFRPPLWWHHRI/RQGRQ
1DYDO&RQIHUHQFH)HE6WDQGOH\TXRWHGDVWDWHPHQWIURPWKH)UHQFK&RPPLWWHHRQ
1DYDO$IIDLUVEODPLQJWKHVXEPDULQHIRUWKHHYHUJURZLQJVL]HRIEDWWOHVKLSVDVWKH\QHHGJUHDWHUVSHHG
DQGDUPRUWRVXUYLYHWKHP
1$5*5HFRUGV5HODWLQJWR'LVDUPDPHQW%R[6WHQRJUDSKLFQRWHVRIILUVWFRPPLWWHHRI/RQGRQ
1DYDO&RQIHUHQFH)HE
,ELG&KDWILHOG³,WLVYHU\GLIILFXOWWRDVND3RZHUWROD\GRZQDEDWWOHVKLSRQWKHVWRI-DQXDU\RI
WRQVLIRQWKHVW'HFHPEHUSUHFHGLQJLWDVKLSRIWRQVKDVMXVWEHHQODLGGRZQ´
1$5*5HFRUGV5HODWLQJWR'LVDUPDPHQW%R[6WHQRJUDSKLFQRWHVRIWKHWHFKQLFDOVXEFRPPLWWHH
RI/RQGRQ1DYDO&RQIHUHQFH0DU
1$5*5HFRUGV5HODWLQJWR'LVDUPDPHQW%R[6WHQRJUDSKLFQRWHVRIWKHWHFKQLFDOVXEFRPPLWWHH
RI/RQGRQ1DYDO&RQIHUHQFH-DQ
WUHDW\SURYLGHGWKH\JLYHWKHRWKHUVLJQDWRULHVGXHQRWLILFDWLRQDQGMXVWLILHGWKHLUHVFDSH
DORQJFOHDUDQGSUHVHQWVHFXULW\WKUHDWV 7KHEURDGHVFDSHFODXVHZDVHVVHQWLDOO\
GHVLJQHGWRDOORZWKHSRZHUVWRRSSRUWXQLW\WRUHVSRQGWRQDYDOFRQVWUXFWLRQE\DQRQ
VLJQDWRU\SRZHULH-DSDQRU*HUPDQ\
7KHRQO\UHPDLQLQJREVWDFOHWRVLJQLQJDWUHDW\EHFDPH)UDQFR*HUPDQKRVWLOLW\
7KH)UHQFKGHVLUHGWRDWWDFKVHFXULW\JXDUDQWHHVWRWKHWUHDW\DSROLF\WKDWWKH8QLWHG
6WDWHVZDVDEVROXWHO\RSSRVHGWR$WDSULYDWHPHHWLQJEHWZHHQ'DYLVDQG(GHQRQ
)HEUXDU\(GHQDJUHHGZLWKWKH$PHULFDQGHOHJDWHWKDWLIWKH)UHQFKLQVLVWHGRQ
EULQJLQJLQ³H[WUDQHRXV(XURSHDQSROLWLFDOTXHVWLRQV´WKDW%ULWDLQZRXOGVWDQGZLWKWKH
8QLWHG6WDWHVLQRSSRVLQJLW $V'DYLVH[SODLQHGWR5RRVHYHOWRQ)HEUXDU\³WKH
FKLHIUHPDLQLQJREVWDFOHWRQDYDODJUHHPHQWLVWKHTXHVWLRQRI*HUPDQSDUWLFLSDWLRQ´
7KH)UHQFKVWLOOUDQNOHGE\%ULWDLQ¶VLQVWLJDWLRQRIWKH$*1$VWXEERUQO\UHVLVWHG
ILQDOL]LQJWKHWUHDW\VLQFH%ULWDLQLQWHQGHGWRLQFOXGHWKH*HUPDQVDVVLJQDWRULHV
ELODWHUDOO\DIWHUWKHFRQIHUHQFHZDVFRQFOXGHG7KH%ULWLVKMXVWLILHGWKHLUSODQRQWKH
VDPHEDVLVWKH\KDGMXVWLILHGWKH$*1$VD\LQJWKDW³WKH7UHDW\RI9HUVDLOOHVKDG
EHFRPHDILFWLRQ´DQGWKH:HVWHUQSRZHUVVKRXOGQRWQRZRYHUORRNDQ\SRVVLELOLW\RI
UHVWUDLQLQJ*HUPDQDUPDPHQWE\DQ\PHDQV
)XUWKHU'DYLVUHSRUWHGWKDWWKH%ULWLVKGHOHJDWLRQIHOWWKDW³LQWKHODVWDQDO\VLV
*UHDW%ULWDLQKDVWRGHIHQG)UDQFHDQGWKDWWKH)UHQFKVKRXOGUHDOL]HWKDWLWLVQRWLQWKHLU
RZQLQWHUHVWVWRKDYHWKH%ULWLVKVRWLHWKHPVHOYHVDVWROHDYHRQO\WKHDOWHUQDWLYHRI
1$5*5HFRUGV5HODWLQJWR'LVDUPDPHQW%R[6WHQRJUDSKLFQRWHVRIWKHWHFKQLFDOVXEFRPPLWWHH
RI/RQGRQ1DYDO&RQIHUHQFH)HE7KH\WUHDW\VWDWHGWKDWWKHPD[LPXPJXQFDOLEHUZRXOG
UHYHUWWR´LI-DSDQGLGQRWVLJQRQE\PLG
)586,'DYLVWR+XOO)HE
ZDU´ 7KH)UHQFKLQDQDWWHPSWWRVSUHDGWKHEODPHIRUWKHVWDOHPDWHDOVRDFFXVHGWKH
$PHULFDQVRIVWXEERUQQHVVIRUUHIXVLQJWRFRPHGRZQRQWKHEDWWOHVKLSLVVXH $0DUFK
PHPRUDQGXPE\$PHULFDQGHOHJDWH1RHO+)LHOGH[SODLQHGWKDWWKH%ULWLVKZHUH
QDWXUDODOOLHVLQGHDOLQJZLWKWURXEOHVRPH)UDQFHSRVLWLQJWKDWWKH³$QJOR6D[RQ6FKRRO´
RQ³SHDFHHQIRUFHPHQW´HPSKDVL]HGDUELWUDWLRQGLVDUPDPHQWWKH³SUHVVXUHRIDQ
HQOLJKWHQHGZRUOGSXEOLFRSLQLRQ´DQG³SUHYHQWLRQLQVWHDGRISXQLVKPHQW´$VZLWK
-DSDQ)LHOGFRQWHQGHGWKH8QLWHG6WDWHVZRXOGILQGFRPPRQJURXQGZLWKWKH%ULWLVK
RYHUWKH)UHQFKGLVSXWHDVERWKQDWLRQVRSSRVHGWKH³)UHQFK6FKRRO´ZKLFKKHOGWKDWWKH
RQO\YLDEOHPHDQVWRDUPVFRQWUROZHUH³GHILQLWHDVVXUDQFHVRIPXWXDODVVLVWDQFHDJDLQVW
DJJUHVVLRQ´²LQRWKHUZRUGVVHFXULW\SDFWV 'DYLVH[SUHVVHGFRQILGHQFHWRWKH
3UHVLGHQWWKDWWKH%ULWLVKZRXOGILQGDZD\WREUHDNWKHLPSDVVHEXWWKHHSLVRGHZDVD
VWDUNUHPLQGHUWKDWHYHQZLWK-DSDQRXWRIWKHSLFWXUHQDYDODUPVFRQWUROUHVWHGRQDQ
H[WUHPHO\XQVWDEOHIRXQGDWLRQ7KHROGHQPLWLHVRI(XURSHZKLFKPDQ\$PHULFDQ
SROLF\PDNHUVKDGWULHGVRKDUGWRLQVXODWHWKHLUFRXQWU\IURPQRQHWKHOHVVKDXQWHGDQ\
IRUD\WKH8QLWHG6WDWHVPDGHLQWRWKHLQWHUQDWLRQDOUHDOP
2Q)HEUXDU\WKH,WDOLDQVQRWLILHGWKHRWKHUGHOHJDWLRQVWKDWWKH\ZRXOGQRWEH
VLJQDWRULHVWRWKH6HFRQG/RQGRQ7UHDW\*UDQGLH[SODLQHGWKDWWKHWXUEXOHQWVWDWHRIWKH
,WDOLDQSROLWLFDOVFHQHFRPSOLFDWHGE\,WDO\¶VRQJRLQJZDULQ(WKLRSLDSUHYHQWHG,WDO\
IURPVXEPLWWLQJWRDELQGLQJDJUHHPHQWDWWKHPRPHQW 7KH)UHQFKVWLOOGLGQRWVHHP
ZLOOLQJWREXGJH'DYLVUHOD\HGWR+XOO(GHQ¶VFRQWLQXHGDVVXUDQFHVWKDWWKH%ULWLVK
ZRXOGWDNHHYHU\HIIRUWWRSUHYHQWSROLWLFDOFRPSOLFDWLRQVIURPWHUPLQDWLQJDQ\WDQJLEOH
/2&0DQXVFULSW'LYLVLRQ'DYLV3DSHUV%R['DYLVWR5RRVHYHOW)HE
)586,+XOOWR'DYLV)HE
1$5*5HFRUGV5HODWLQJWR'LVDUPDPHQW%R[8QGDWHGPHPRE\'LYLVLRQRI:HVWHUQ(XURSHDQ
$IIDLUV³7KH6HFXULW\4XHVWLRQ6LQFHWKH3HDFH&RQIHUHQFH´
)586,'DYLVWR+XOO)HE
DFFRPSOLVKPHQWDWWKHFRQIHUHQFHEXWVXJJHVWHGWKDWWKH3UHVLGHQWPLJKWZDQWWR
UHFRQVLGHUKLVKDUGOLQHDJDLQVWDELODWHUDOWUHDW\ZLWKWKH%ULWLVK $V0DUFKGDZQHGWKHFRQIHUHQFHHQWHUHGLWVIRXUWKPRQWKZLWKWZRGHOHJDWLRQV
GRZQDQGDWUHDW\YHU\PXFKLQGRXEW%\0DUFKUHJXODUVHVVLRQVUHVXPHGDQGWKH
ILQHUGHWDLOVRIWKHWUHDW\FRQWLQXHGWREHZRUNRXW2Q0DUFK+LWOHURUGHUHGWKH
UHPLOLWDUL]DWLRQRIWKH5KLQHODQGLQGLUHFWFRQWUDYHQWLRQRIWKH7UHDW\RI9HUVDLOOHV7KH
UHDSSHDUDQFHRI*HUPDQWURRSVRQWHUULWRU\ZKLFKDEXWWHGWKHLURZQZDVDSSDUHQWO\
VXIILFLHQWWRVSRRNWKH)UHQFKLQWRFRRSHUDWLRQDV'DYLVQRWHGWR+XOO 'DYLVUHSRUWHG
WKDWWKHWUHDW\ZDVJRLQJWREHILQDOL]HGDQGVLJQHGVRRQDQGXUJHGWKHDGPLQLVWUDWLRQWR
SUHVHQWWKHWUHDW\IRUUDWLILFDWLRQLQWKH6HQDWHDVVRRQDVSRVVLEOHZDV
XQIRUWXQDWHO\IRUWKHGHOHJDWHVDQHOHFWLRQ\HDUIRU5RRVHYHOWDQGWKH3UHVLGHQWZDV
QRQHWRRNHHQWRSUHVHQWDQLQWHUQDWLRQDOWUHDW\WRWKHVDPH&RQJUHVVWKDWKDGMXVW
UHFHQWO\GHIHDWHGWKH:RUOG&RXUWDQGLQVWLJDWHGWKH1HXWUDOLW\$FW7KHSUREOHPDVWKH
%ULWLVKZDUQHGZDVWKDWLIWKHWUHDW\ZDVQRWUDWLILHGE\WKHHQGRIWKH\HDUWKHUHZRXOG
EHDSHULRGGXULQJZKLFKQRQDYDOWUHDW\ZRXOGEHLQHIIHFW 7KHSUREOHPZRXOGEH
PRVWO\SV\FKRORJLFDOEXWLWZDVLPSRUWDQWWRPDLQWDLQWKHDSSHDUDQFHRIFRQWLQXLW\RIWKH
WUHDW\V\VWHPDQGWRGLVSOD\WR-DSDQDQG*HUPDQ\DFRQWLQXHGDGKHUHQFHWRWKH
SULQFLSOHVRIDUPVFRQWURO5RRVHYHOWZDVQRQFRPPLWWDOWKRXJK3KLOOLSVDQG'DYLV
XUJHGDVFKHPHXSRQWKH3UHVLGHQWWKDWZRXOGIXOILOOWKHQRWLILFDWLRQSRUWLRQRIWKHWUHDW\
IRUDQ\JDSZKLFKPD\RFFXUEHWZHHQ-DQXDU\DQG$PHULFDQUDWLILFDWLRQ )586,'DYLVWR+XOO)HE
)586,'DYLVWR+XOO0DUFK
7KH/RQGRQ1DYDO7UHDW\H[SLUHGRQ'HFHPEHU
1L[RQ5RRVHYHOW,,,3KLOOLSVWR5RRVHYHOW0DUFK
$WORQJODVWRQ0DUFKDIWHUQHDUO\IRXUPRQWKVRIQHJRWLDWLRQVWKH8QLWHG
6WDWHV*UHDW%ULWDLQDQG)UDQFHVLJQHGWKH6HFRQG/RQGRQ1DYDO7UHDW\(DFKGHOHJDWH
GHOLYHUHGDVSHHFKZKLFKH[WROOHGWKHDFFRPSOLVKPHQWJLYHQWKHDLURISHVVLPLVPWKH
ZLWKGUDZDOVDQGWKHGHVWDELOL]LQJLQWHUQDWLRQDOHYHQWVZKLFKSUHFHGHGLWDQGRFFXUUHG
GXULQJLWVFRXUVH 'DYLVZURWH(GHQDFRQJUDWXODWRU\QRWHRQWKHWKH[SUHVVLQJWKH
86GHOHJDWLRQ¶V³DSSUHFLDWLRQRIWKHSDWLHQWDQGXQWLULQJHIIRUWVRIWKH8QLWHG.LQJGRP
GHOHJDWLRQ´DQGFRQILGHQFHLQWKHHQGXUDQFHRIWKHDFFRUGUHDFKHGEHWZHHQWKHWZR
QDWLRQV(GHQUHSOLHGLQDVLPLODUO\FRUGLDOWRQHVD\LQJ³,FDQDVVXUH\RXWKDWWKH
IULHQGO\UHODWLRQVZKLFKKDYHSUHYDLOHGEHWZHHQWKH8QLWHG6WDWHVDQGWKH8QLWHG
.LQJGRPGHOHJDWLRQVKDYHEHHQDVRXUFHRISOHDVXUHWRDOORIXV«,DPJODG
IXUWKHUPRUHWREHDEOHWRFRQILUPWKHFRUUHFWQHVVRI\RXUXQGHUVWDQGLQJLQUHJDUGWRWKH
PDLQWHQDQFHRIWKHSULQFLSOHRISDULW\«,FDQLQGHHGJRIXUWKHUWKDQWKLVDQGVD\WKDWLQ
HVWLPDWLQJRXUQDYDOUHTXLUHPHQWVZHKDYHQHYHUWDNHQWKHVWUHQJWKRIWKH8QLWHG6WDWHV
1DY\LQWRDFFRXQW´ 7KH$QJOR$PHULFDQUHODWLRQVKLSHPHUJHGIURPWKHFRQIHUHQFHDW
DQKLVWRULFDOKLJKSRLQWH[FHHGLQJFRQVLGHUDEO\WKHIURVW\\HDUVZKLFKKDGIROORZHGWKH
VRPHWLPHVFRQWHQWLRXVILUVW/RQGRQ&RQIHUHQFH
7KHWUHDW\KDGDWODVWEHHQSDVVHG,WZDVPXFKOHVVDPELWLRXVLQVFRSHWKDQ
SUHYLRXVWUHDWLHVDQGHYHQLWVUDWKHUEURDGSURYLVLRQVZHUHRQO\WRODVWMXVWVL[\HDUV
1RQHWKHOHVVWKHWUHDW\V\PEROL]HGDUHPDUNDEOHFRPPLWPHQWRIWKHGHPRFUDFLHVWRDUPV
FRQWURODWDWLPHZKHQWKHZRUOGRUGHUZDVUDSLGO\IDOOLQJDSDUW0RUHSDUWLFXODUO\LWLV
GHPRQVWUDWLYHRIWKHFRPPLWPHQWRIWKH8QLWHG6WDWHVWRWKHSUHVHUYDWLRQRIWKHZRUOG
1$5*5HFRUGV5HODWLQJWR'LVDUPDPHQW%R[6WHQRJUDSKLFQRWHVRIILUVWFRPPLWWHHRI/RQGRQ
1DYDO&RQIHUHQFH0DU
1$5$,)RUHLJQ5HODWLRQV6HQ%%6HQDWH+HDULQJRQ/RQGRQ1DYDO7UHDW\0D\
RUGHUJLYLQJOLHWRGHFDGHVRIKLVWRULRJUDSK\ZKLFKKDVVWXEERUQO\ODEHOHG$PHULFD
³LVRODWLRQLVW´LQWKLVSHULRG7KHUHLVQRGRXEWWKDW$PHULFDQSROLF\PDNHUVH[HUFLVHG
H[WUHPHFDXWLRQWKURXJKRXWWKHQHJRWLDWLRQVEXWFDXWLRQFDQQRWEHHTXDWHGZLWK
LVRODWLRQLVP:DVKLQJWRQZDVLQXQGDWHGZLWKZDUQLQJVRILPSHQGLQJZDUVLQ(XURSHDQG
$VLDVLQFHDQGWKHFRQIHUHQFHLWVHOIZDVPDUUHGE\WKHYLROHQWDGYHQWXULVPRI,WDO\
LQ(WKLRSLD7KH8QLWHG6WDWHVKDGDJHRJUDSK\ZKLFKOHQWLWVHOIWRGHIHQVHDQGD1DY\
ZKLFKHVVHQWLDOO\PDGHWKH:HVWHUQ+HPLVSKHUHXQDVVDLODEOH5RRVHYHOWKDGPDGHLW
FOHDUWKDWWKH8QLWHG6WDWHVZRXOGQRWJRWRZDUZLWK-DSDQGXHVROHO\WRDQ\YLRODWLRQVRI
WKH1LQH3RZHU7UHDW\²LPSO\LQJWKHRQO\FDXVHIRUZDUZKLFKZRXOGEHDFFHSWHGZRXOG
EHLQGHIHQVHRI$PHULFDQWHUULWRU\ :LWKWKHOLQHWKXVGUDZQDQGFRQVLGHULQJ
$PHULFD¶VFHQWXULHVROGWUDGLWLRQRIDYRLGLQJIRUHLJQHQWDQJOHPHQWVWKHVXFFHVVRIWKH
6HFRQG/RQGRQ1DYDO&RQIHUHQFHFDQSURSHUO\EHVHHQDVDUHPDUNDEOHDFKLHYHPHQW
:KLOHWKHWUHDW\KDGQRVHFXULW\JXDUDQWHHVDWWDFKHGWRLWQR$PHULFDQSROLF\PDNHU
FRXOGKDYHPLVVHGWKDWWKHZKROHH[SHULHQFHRIWKHFRQIHUHQFHKDGFUHDWHGDQXQRIILFLDO
EXWXQGHQLDEOHOLQNDJHEHWZHHQWKH8QLWHG6WDWHVDQGWKHRWKHUVLJQDWRULHVEXWRIFRXUVH
LQSDUWLFXODUZLWK*UHDW%ULWDLQ7KHVWUHQJWKHQLQJRIWKH$QJOR$PHULFDQUHODWLRQVKLS
RYHUWKHFRXUVHRIWKHFRQIHUHQFHDQGLWVSUHOLPLQDULHVZRXOGSURYHDQLQYDOXDEOHWRROWR
ERWKQDWLRQVLQWKH\HDUVDKHDG
,PPHGLDWH$PHULFDQUDWLILFDWLRQRIWKHWUHDW\DSSHDUHGLQGRXEWDVDUHVXOW
5RRVHYHOW¶VFDXWLRXVFRQFHUQRYHUWKHWURXEOHWKDWFRXOGEHVWLUUHGE\DUGHQWLVRODWLRQLVWV
LQWKHFRPLQJHOHFWLRQ+RZHYHULQWKHPRQWKVSUHFHGLQJDQGIROORZLQJWKHFRQIHUHQFH
WKHUKHWRULFRIWKH5RRVHYHOWDGPLQLVWUDWLRQDSSHDUHGWRWDNHDGHFLGHGWXUQWRZDUGV
LQWHUQDWLRQDOFRQFHUQV²ZHOOEHIRUHWKH4XDUDQWLQH6SHHFKWKDWLVLGHQWLILHGDVWKH
+RRNHU0RIIDW3DSHUV
ZDWHUVKHGIRU5RRVHYHOW¶VLQWHUQDWLRQDOLVPE\QXPHURXVKLVWRULDQV6SHDNLQJRXWDJDLQVW
WKH,WDOLDQLQYDVLRQRI(WKLRSLDLQ2FWREHU5RRVHYHOWZDUQHGWKH$PHULFDQSHRSOH
WKDWD³IRUHLJQZDU´ZDVD³SRWHQWGDQJHUDWWKLVPRPHQWWRWKHIXWXUHRIFLYLOL]DWLRQ,WLV
QRWVXUSULVLQJWKDWPDQ\RIRXUFLWL]HQVIHHODGHHSVHQVHRIDSSUHKHQVLRQOHVWVRPH
QDWLRQVRIWKHZRUOGUHSHDWWKHIROO\RIWZHQW\\HDUVDJRDQGGUDJFLYLOL]DWLRQWRDOHYHO
IURPZKLFKZRUOGZLGHUHFRYHU\PD\EHDOOEXWLPSRVVLEOH´+HFRQWLQXHGE\VWDWLQJWKDW
³2XUQDWLRQDOGHWHUPLQDWLRQWRNHHSIUHHRIIRUHLJQZDUVDQGIRUHLJQHQWDQJOHPHQWV
FDQQRWSUHYHQWXVIURPIHHOLQJGHHSFRQFHUQZKHQLGHDOVDQGSULQFLSOHVWKDWZHKDYH
FKHULVKHGDUHFKDOOHQJHG´DQGZDUQHGWKDW$PHULFDZRXOGQHHGWRSOD\DQDFWLYHUROHWR
PDLQWDLQLQWHUQDWLRQDOSHDFHDORQJWKHOLQHVRIKLV³*RRG1HLJKERU´SROLF\ )RXUGD\V
ODWHU5RRVHYHOWLQYRNHGWKH1HXWUDOLW\$FWLQWKH,WDOLDQ$E\VVLQLDQ:DUDVDPHDQVWR
LPSRVHVDQFWLRQVRQ,WDO\WKRXJKWKHSRRUO\FUDIWHG$FWOLNHO\RQO\KXUWWKH$E\VVLQLDQ
UHVLVWDQFHZKLOHVWLOOVXSSO\LQJPXFKQHHGHGRLOWR,WDO\ 5RRVHYHOW¶V6WDWHRIWKH8QLRQDGGUHVVVLPLODUO\VWUHVVHGWKHGDQJHUVRIZDU
DQGWKHQHHGIRU$PHULFDQDFWLRQDEURDG³$PHULFDQVPXVWWDNHFRJQL]DQFHRIJURZLQJ
LOOZLOORIPDUNHGWUHQGVWRZDUGVDJJUHVVLRQRILQFUHDVLQJDUPDPHQWVRIVKRUWHQLQJ
WHPSHUV´WKH3UHVLGHQWZDUQHG³1DWLRQVVHHNLQJH[SDQVLRQ«KDYHWKHUHIRUH
LPSDWLHQWO\UHYHUWHGWRWKHROGEHOLHILQWKHODZRIWKHVZRUG´5RRVHYHOWHPSKDVL]HG
$PHULFD¶VOHDGLQJUROHLQDUPVFRQWURODQGLQSHDFHIXODUELWUDWLRQDQGLWVFRQWLQXHG
HIIRUWVWR³H[HUWRXUPRUDOLQIOXHQFHDJDLQVWUHSUHVVLRQDJDLQVWLQWROHUDQFHDJDLQVW
DXWRFUDF\«´:KLOHKHOLPLWHGWKHUROHRI$PHULFDLQPDQDJLQJWKHGHWHULRUDWLQJZRUOG
1L[RQ5RRVHYHOW,,,6SHHFKE\5RRVHYHOWLQ6DQ'LHJR2FW
7KHLWHUDWLRQRIWKH1HXWUDOLW\$FWRQO\EDQQHGDUPVDQGDPPXQLWLRQQRWRLO)UDQFHDQG%ULWDLQ
FRQVLGHUHGLPSRVLQJD/HDJXHRLOHPEDUJRWKRXJKWKH\FRQVLGHUHGLWSRLQWOHVVVLQFH,WDO\FRXOGVWLOOREWDLQ
LWVRLOIURP$PHULFDDQRQ/HDJXHQDWLRQ
VFHQHWRSHDFHIXODUELWUDWLRQKHPLVSKHULFGHIHQVHDQG³DZHOORUGHUHGQHXWUDOLW\WRGR
QDXJKWWRHQFRXUDJHWKHFRQWHVW´QRQHWKHOHVVWKHVSHHFKZDVDIUDQNGLVFXVVLRQWRWKH
$PHULFDQSHRSOHRIWKHOLNHOLKRRGRIDJHQHUDOZDUEUHDNLQJRXWDQGOLQNHGVXFKDZDUWR
$PHULFDQIRUWXQHV :KLOH5RRVHYHOWDYRLGHGQDPLQJDQ\QDWLRQVVSHFLILFDOO\LQWKHVH
DGGUHVVHVKHGLGWDUJHW*HUPDQ\LQD0DUFKVSHHFKZDUQLQJRI+LWOHU¶VZDUOLNH
SURSDJDQGDDQGRIODUJH*HUPDQDLUSODQHRUGHUV+HDOVRZDUQHGRIWKHSRVVLELOLW\RI
³(XURSHDQQDWLRQVFRPLQJLQDQGDWWDFNLQJLQGHSHQGHQWFRXQWULHVRQWKLVKHPLVSKHUHLQ
RUGHUWRJHWUDZPDWHULDOV´DWKUHDWWKH3UHVLGHQWZRXOGUHSHDWZLWKLQFUHDVLQJIUHTXHQF\
LQWKH\HDUVDKHDG &OHDUO\WKH3UHVLGHQWVWLOOIHOWWKHQHHGWRFORDNLQWHUQDWLRQDO
FRQFHUQLQWKHODQJXDJHRIVHOILQWHUHVWHGGHIHQVH6WLOOLWZDVDKHDUWHQLQJVLJQWRWKH
%ULWLVKDQGWRWKH$PHULFDQGHOHJDWLRQWKDWWKH5RRVHYHOWDGPLQLVWUDWLRQZRXOGSUHVVIRU
LPPHGLDWHUDWLILFDWLRQRIWKHWUHDW\
7KH5RRVHYHOWDGPLQLVWUDWLRQZDVKHOSHGVRPHE\DJHQHUDOO\SRVLWLYHUHVSRQVH
IURPWKH86SUHVVWRWKHFRQIHUHQFH$VXUYH\RIHGLWRULDOVIURPDOPRVWHYHU\
VWDWHLQWKHQDWLRQE\WKH1DY\'HSDUWPHQW¶V'LYLVLRQRI3UHVV,QWHOOLJHQFHVKRZHGWKDW
SHUFHQWRIWKHUHVSRQVHUDQIURPSRVLWLYHWRQHXWUDODQGHYHQWKHSHUFHQWZKR
REMHFWHGWRWKHWUHDW\XQLYHUVDOO\FRQGHPQHG-DSDQ 7KHVROLGPDMRULW\VDZWKHYDOXH
LQOLPLWDWLRQLQJHQHUDODQGVRPHHYHQLGHQWLILHGWRYDOXHRIFRRSHUDWLRQZLWK*UHDW
%ULWDLQPRUHSDUWLFXODUO\3HUKDSVWKHPRVWHIIXVLYHSUDLVHIRUWKHWUHDW\ZDVIRXQGLQDQ
HGLWRULDOE\:DOWHU/LSSPDQQLQWKH1HZ<RUN7ULEXQH³$WILUVWVLJKWRIFRXUVHLWZRXOG
VHHPWREHQRWUHDW\DWDOO´/LSSPDQQZURWHFRQFHGLQJWKDWWKHDEVHQFHRI-DSDQ,WDO\
5RVHQPDQ3XEOLF3DSHUV96WDWHRIWKH8QLRQ$GGUHVV-DQ
1L[RQ5RRVHYHOW,,,6SHHFKE\5RRVHYHOWWR3HRSOH¶V0DQGDWHWR(QG:DU&RPPLWWHH0DUFK
1$5*%R[*HQHUDO%RDUG0HPRE\)%8SKDP0DUFK
DQG*HUPDQ\ZDVGLVDSSRLQWLQJ1RQHWKHOHVVKHLQVLVWHG³DFORVHVWXG\ZLOOVKRZ,
EHOLHYHWKDWWKLVWUHDW\ELQGVDOOQDYDOSRZHUVRIWKHZRUOGDWOHDVWDVHIIHFWLYHO\DQG
SUREDEO\PRUHHIIHFWLYHO\WKDQWKHWUHDWLHVZKLFKLWUHSODFHVDQGWKDWLVDVSRZHUIXOD
VDIHJXDUGDJDLQVWDUDFHRIQDYDODUPDPHQWVDVFRXOGQRZEHHUHFWHGE\GLSORPDF\´7KH
WUHDW\ZRXOGSUHYHQWQDYDOFRPSHWLWLRQEHWZHHQWKHWKUHHVLJQHUVZKLOHE\LWVEURDG
HVFDSHFODXVHVPDNHQRQVLJQDWRULHVXQOLNHO\WRFRPPHQFHDQDUPVUDFHDQGIDFHWKH
FRPELQHGLUHRIWKHWKUHH/LSSPDQQFRQFOXGHGWKDW³WKHWUHDW\UHVWVRQWKHVLPSOH
SULQFLSOHWKDWWKHVWURQJHVWQDYDOSRZHUVUHWDLQWKHLUIUHHGRPWREHFRPHHYHQVWURQJHUEXW
LQWHQGWRXVHLWWRPDLQWDLQWKHLUSUHVHQWEXWQRJUHDWHUUHODWLYHVXSHULRULW\,QGLYLGXDOO\
DQGFROOHFWLYHO\WKH\KDYHWKHULJKWDQGWKHSRZHUWRPDLQWDLQWKHVWDWXVTXRDQGPDNHD
QDYDOUDFHLQWROHUDEOHFRVWO\WRWKHFKDOOHQJHU´ 7KHHGLWRULDOZDVFHUWDLQO\RSWLPLVWLF
EXWLWZDVZHOFRPHGDQGEDQGLHGDERXWE\WKH$PHULFDQGHOHJDWLRQZKRVWURQJO\GHVLUHG
WRVHHWKHLUKDUGZRUNUDWLILHGE\WKH6HQDWH 7KHHGLWRULDOVZKLFKRSSRVHGWKHWUHDW\GLGVRKDUVKO\KRZHYHU)RUWKHPRVW
SDUWWKHWUHDW\¶VRSSRQHQWVLQWKHSUHVVVLPSO\GHFULHGWKHSHUFHLYHGXVHOHVVQHVVRIWKH
WUHDW\IRUIDLOLQJWRDFWXDOO\UHGXFHQDYDODUPDPHQWV7KH:DVKLQJWRQ3RVWIRULQVWDQFH
FDOOHGLWD³FRVWO\VFUDSRISDSHU´ 7KHPRVWELWLQJFULWLFLVPZDVWREHIRXQGLQWKH
+HDUVWSDSHUVZKLFKWRRNWKHLUWUDGLWLRQDOO\QDWLRQDOLVWLFDQG$QJORSKRELFVWDQFHLQWKHLU
DQDO\VLV2QH+HDUVWSXEOLFDWLRQSRVWHGDVXUYH\ZKLFKWRUHDSDUWWKHWUHDW\FODLPLQJWKDW
WKH8QLWHG6WDWHVJDLQHGQRWKLQJDQGORVWPXFKE\VLJQLQJLW7KHRQO\W\SHRIYHVVHO
DFWXDOO\OLPLWHGE\WKHWUHDW\ZDVWKHKHDY\FUXLVHUDFDWHJRU\ZKLFKWKH8QLWHG6WDWHV
/2&0DQXVFULSW'LYLVLRQ'DYLV3DSHUV%R[5HEHUWR'DYLV0D\
,ELG
³/RQGRQ7UHDW\/HDYHV:D\&OHDUIRU8QEULGOHG1DYDO5DFH´:DVKLQJWRQ3RVW0D\
%
KDGFRQWLQXDOO\VWDWHGDQHHGIRUZKLFKWKH%ULWLVKKDGQRQH)XUWKHUPRUHWKHWUHDW\
FRQWDLQHGRQO\TXDOLWDWLYHSURYLVLRQVDEXJEHDUIRUWKH%ULWLVKEXWQRWWUDGLWLRQDOO\DQ
REMHFWRIJUHDWFRQFHUQWRWKH8QLWHG6WDWHV7KHDXWKRUDOVRZRQGHUHGZK\³WKH%ULWLVK
ZLVKWRZHDNHQDSRZHUIULHQGO\WRWKHPDVZHXQGRXEWHGO\DUH´DQGFRQFOXGHGWKDW
WKH\ZHUHDQ[LRXVWRORVHWKHLUKLVWRULFDOFRQWURORIWKHVHDVDQGWKHLUDELOLW\WR³>GHSULYH@
XVRIRXUULJKWVWRFRPPHUFHRQWKHKLJKVHDV´DVWKH\GLGGXULQJ:RUOG:DU2QH³7KH
VHDSRZHURIWKH8QLWHG6WDWHVLVZKDWWKH%ULWLVKUHDOO\IHDU´WKHDXWKRUDVVHUWHGZKLFK
ZDVZK\³*UHDW%ULWDLQVRHYLGHQWO\>VWRRG@DWWKHVLGHRI-DSDQLQWKLVEXVLQHVV´ 7KH
+HDUVWSDSHUVZHUHVRPHRIWKHPRVWZLGHO\UHDGSXEOLFDWLRQVLQWKH8QLWHG6WDWHVDQG
HYHQWKRXJKWKH\KHOGDPLQRULW\SRVLWLRQWKHLUFULWLFLVPZDVLQIOXHQWLDO
7KH+HDUVWVXUYH\IRXQGDQXQOLNHO\RSSRQHQWLQWKH*HQHUDO%RDUGZKLFK
UHOHDVHGDQ$SULOPHPRWDNLQJGLUHFWDLPDWWKHVXUYH\DQGLWVDXWKRU7KH8QLWHG
6WDWHVORVWQRWKLQJE\VLJQLQJWKHWUHDW\WKHPHPRVWDWHGVLQFHWKH861KDGHLWKHUEXLOW
RUZDVEXLOGLQJLWVIXOODOORWPHQWRIKHDY\FUXLVHUVDQGZDVSUHVHQWO\IRFXVLQJRQ
UHSODFLQJRYHUDJHEDWWOHVKLSVDQGOLJKWHUDX[LOLDULHVVXFKDVVXEPDULQHVDQGGHVWUR\HUV
2QWKHFRQWUDU\WKH86KDGPXFKWRJDLQIURPWKHWUHDW\DQGLQMXVWLILFDWLRQWKHPHPR
UHSHDWHGWKH%ULWLVKOLQHKHOGVLQFHWKHSUHOLPLQDULHVVWDWLQJWKDW³DUDFHLQVL]HPD\EHDV
FRVWO\DVDUDFHLQQXPEHUV´7KHFODLPWKDWWKH861FRQVWLWXWHG%ULWDLQ¶VJUHDWHVW
VHFXULW\FRQFHUQZDVGLVPLVVHGDVULGLFXORXVDQGLWZDVPDGHFOHDUWKDWQXPHURXV%ULWLVK
SROLF\PDNHUVKDGVWDWHGVLQFHWKDWWKH51³LVXQFRQFHUQHGZLWKKRZPDQ\VKLSVZH
EXLOG´,QGHHGWKH*HQHUDO%RDUGUHSRUWFRQWLQXHGEDFNEHQFKHU:LQVWRQ&KXUFKLOOZHQW
VRIDUDVWRFODLPGXULQJWKHUHDUPDPHQWGHEDWHVLQ3DUOLDPHQWWKDW³WKHVWURQJHUWKH
8QLWHG6WDWHV1DY\EHFRPHVWKHVXUHUDUHWKHIRXQGDWLRQVRISHDFHWKURXJKRXWWKH
1$5*%R[*HQHUDO%RDUG0HPRE\)%8SKDP0DUFK
ZRUOG´)LQDOO\WKHFODLPWKDW%ULWDLQVWRRGE\-DSDQZDVUHMHFWHGHQWLUHO\VWDWLQJ³*UHDW
%ULWDLQJDYHQRHYLGHQFHRIVWDQGLQJE\WKHVLGHRI-DSDQDQGWRRNWKHOHDGLQRSSRVLQJ
-DSDQ¶VGHPDQGV´ %\WKH*HQHUDO%RDUGKDGPRYHGGHFLGHGO\WRZDUGVDSUR
WUHDW\VWDQFHDQGHYHQGHIHQGHGLWIURPQDWLRQDOLVWFULWLFLVP
,PPHGLDWHO\IROORZLQJWKHVLJQLQJRIWKHWUHDW\$GPLUDO6WDQGOH\FRQWLQXHGKLV
FDPSDLJQVWXPSLQJIRUVXSSRUWIRUWKHWUHDW\,QDQ$SULODGGUHVV6WDQGOH\DGPLWWHG
WKHWUHDW\ZDVD³GLVDSSRLQWPHQWÍRUDQ\RQH³ZKRH[SHFWHGUDGLFDOUHGXFWLRQLQ
DUPDPHQWVÉXWKHHPSKDVL]HGWKDWJLYHQWKHFLUFXPVWDQFHV³LWVHHPVUDWKHUDPLUDFOH
WKDWZHFRXOGUHDFKDQ\DJUHHPHQWZKDWHYHU´7KHWUHDW\ZDV³ZHOOZRUWKZKLOHÉ\
FRQWLQXLQJWROLPLWWKHEXUGHQRIDQXQEULGOHGDUPVUDFH6WDQGOH\SOHGJHGWKDWZKLOHWKH
VWDWHG861SROLF\RIEXLOGLQJDQGPDLQWDLQLQJD³WUHDW\VWUHQJWK´1DY\QRORQJHUPDGH
VHQVHJLYHQWKHODFNRITXDQWLWDWLYHSURYLVLRQVLQWKHQHZWUHDW\QRQHWKHOHVVWKH
FRQWLQXHGSROLF\ZRXOGEHWRNHHSSDFHZLWK$PHULFD¶VQDYDOSHHUVDQGFXOWLYDWHD
VKLSEXLOGLQJLQGXVWU\VHFRQGWRQRQH 6WDQGOH\FRQWLQXHGDORQJVLPLODUOLQHVZLWKD
0D\DGGUHVVDVVXULQJWKHSXEOLFWKDWDQDYDODUPVUDFHZRXOGQRWHQVXHDVDUHVXOWRI
WKHODFNRITXDQWLWDWLYHSURYLVLRQVLQWKHWUHDW\VLQFH³QRFRXQWU\WKDW,NQRZRIFRXOG
DIIRUGWRHQJDJHLQDQDYDOEXLOGLQJUDFHZLWKXVLIZHZHUHGHWHUPLQHGWRRXWEXLOG
WKHP´6WDQGOH\ODLGRXWWKHFRVWVRIPDLQWDLQLQJD³WUHDW\1DY\´²DSSUR[LPDWHO\
PLOOLRQGROODUVSHU\HDUIRUFRQVWUXFWLRQDQGPLOOLRQSHU\HDUIRUPDLQWHQDQFHDQG
VDODULHV²DGPLWWLQJWKDWLWFRQVWLWXWHGDJUHDWH[SHQVHEXWVD\LQJWKDWWKHDPRXQWHTXDOHG
RQO\FHQWVDGD\SHU$PHULFDQFLWL]HQLQUHWXUQIRUZKLFKWKHQDWLRQERXJKWVHFXULW\
IRULWVKRPHODQGDQGLWVJOREDOLQWHUHVWV,ILWEHFDPHQHFHVVDU\6WDQGOH\VDLGWKH8QLWHG
1$5*%R[*HQHUDO%RDUG0HPRRQSUHVVGLJHVW$SULO
/2&0DQXVFULSW'LYLVLRQ6WDQGOH\3DSHUV%R[³$GGUHVVE\:+6WDQGOH\861DY\EHIRUH
$PHULFDQ6RFLHW\RI1DYDO(QJLQHHUV´$SULO
6WDWHVFRXOGVKRXOGHUDPXFKODUJHUEXUGHQWREXLOGDQLQFRPSDUDEOH1DY\7KHVLJQDWXUH
RIWKHWUHDW\WKHQZDVDQRORVVVFHQDULRIRUWKH86 :LWKWKHPDMRULW\RIWKHSUHVVRQVLGHDQGWKHHQGRUVHPHQWRIWKH1DY\
'HSDUWPHQWWKHZD\DSSHDUHGUHODWLYHO\FOHDUIRUWKHDGPLQLVWUDWLRQWRVXEPLWWKHWUHDW\
WRWKH6HQDWHZLWKRXWXQGXHEDFNODVK$VLWKDSSHQHGWKH3UHVLGHQWPRYHGVZLIWO\WR
LQWURGXFHWKHWUHDW\GHVSLWHSULRUZDUQLQJVWKDWWKHVWDWHRI&RQJUHVVZDV³ILFNOH´DQG
WKDWULVNLQJLWVGHIHDWZDVPRUHGDQJHURXVWKDQDODWHUDWLILFDWLRQ 3HUKDSVKHDUWHQHGE\
WKHSUHVVUHVSRQVH5RRVHYHOWVXEPLWWHGWKHWUHDW\WRWKH6HQDWHZLWKKLVDSSURYDORQ0D\
ZLWKWKHDGGLWLRQDOHQGRUVHPHQWRI&RUGHOO+XOO7KHWUHDW\ZDVUHDGRQWKH6HQDWH
IORRURQWKHWKDQGWKHGHOHJDWHVZHUHVHWWRWHVWLI\EHIRUHWKH6HQDWH)RUHLJQ5HODWLRQV
&RPPLWWHHRQWKHWK
'DYLVEHJDQWKHWHVWLPRQ\ZLWKDVWDWHPHQWLQZKLFKKHGHIHQGHGKLVZRUNRQWKH
JURXQGVWKDWZKLOH³VRPHWKLQJVZKLFKZHZDQWHGDUHQRWLQWKLVWUHDW\WKHUHLVQRWKLQJ
LQLWWRZKLFKZHREMHFW´ 7KH86VDFULILFHGQHLWKHUSULQFLSOHQRUDQ\SRLQWRIVHFXULW\
E\VLJQLQJWKHWUHDW\DQGLWZDVSRVVLEOHWKDWRWKHUSRZHUVVXFKDV*HUPDQ\RUHYHQ
-DSDQZRXOGDWDODWHUGDWHEHFRPHVLJQDWRULHVDVZHOO'DYLVHYHQH[SUHVVHGDSHUVRQDO
EHOLHIWKDW³,VRPHKRZFDQQRWEHOLHYHWKDW-DSDQZLOOUHIXVHWRDGKHUHWRWKHSURYLVLRQVRI
WKHWUHDW\´ 7KHWUHDW\LIQRWKLQJHOVHZRXOGUHDIILUPWKHSULQFLSOHRISDULW\ZLWKWKH
8QLWHG.LQJGRPDQG$PHULFD¶VFRPPLWPHQWWRDUPVFRQWURO
/2&0DQXVFULSW'LYLVLRQ6WDQGOH\3DSHUV%R[6WDQGOH\6SHHFK³&RPPRQ,QWHUHVWVRIWKH
1DWLRQDO5LYHUVDQG+DUERUV&RQJUHVVDQGWKH8QLWHG6WDWHV1DY\´0D\,QFLGHQWDOO\6WDQGOH\
DOVRVWXPSHGIRUIXQGVIRUWKH0HUFKDQW0DULQHLQWKLVVSHHFK
)586,+XOOWR'DYLV0DUFK
1$5$,)RUHLJQ5HODWLRQV6HQ%%6HQDWH+HDULQJRQ/RQGRQ1DYDO7UHDW\0D\
,ELG
7KHIORRUZDVRSHQHGWRGHEDWHDQGVHQDWRUVZLWKDQLVRODWLRQLVWEHQWJRWWKHLU
VKRWVLQ6HQDWRU$UWKXU9DQGHQEHUJZKRSOD\HGDOHDGLQJUROHLQRSSRVLQJWKH3UHVLGHQW
RYHUWKH:RUOG&RXUWRIIHUHGWKHPRVWELWLQJFURVVH[DPLQDWLRQ+HFODLPHGWKDWWKH
TXDOLWDWLYHSURYLVLRQVRIWKHWUHDW\ZHUHUHQGHUHGSRLQWOHVVE\*HUPDQ\¶VEXLOGLQJRIWKH
SRFNHWEDWWOHVKLSVZKLFKYLRODWHGWKHWUHDW\¶V³]RQHRIQRQFRQVWUXFWLRQ´DQGWKDWHYHQLI
WKH-DSDQHVHVLJQHGWKHUHZRXOGEHQRWKLQJVWRSSLQJWKHPIURPEXLOGLQJWRWKHOHYHORI
WKH861'DYLVFRXQWHUHGE\VD\LQJWKDWWKHWUHDW\ZRXOGGHDORQO\ZLWKWKHIXWXUH
FRQVWUXFWLRQRIYHVVHOVLQWKHWRQQDJH]RQHUHVWULFWHGE\WKHWUHDW\DQGWKDWWKH*HUPDQ
LVVXHZDVEHLQJGHDOWZLWKE\WKH%ULWLVKRQDVHSDUDWHDQGELODWHUDOEDVLV)XUWKHUPRUH
WKHDFWLRQVRIWKH-DSDQHVHZHUHQRWGHSHQGHQWRQWKHWUHDW\LI-DSDQVWDUWHGDQDUPV
UDFHWKH\ZRXOGRQO\³EXLOGD1DY\HTXDOWRRXUV´LI³ZHVLWVWLOO´²LQRWKHUZRUGVLI
&RQJUHVVDOORZHGLWWRKDSSHQ6HQDWRU-DPHV/HZLVDWWDFNHGWKHWUHDW\RQWKHFXULRXV
JURXQGVWKDWLWFRQWDLQHGQRWKLQJWUXO\ELQGLQJDQGWKDWLWVHVFDSHFODXVHVZHUHVREURDG
WKDWLWZDVHVVHQWLDOO\QRWUHDW\DWDOO'DYLVVNLOOIXOO\VKXWGRZQWKLVOLQHRITXHVWLRQLQJ
DVNLQJWKHVHQDWRU³ZRXOG\RXEHOLHYHWKDWZHRXJKWWRWLHRXUKDQGVVRWKDWZHFRXOGQRW
GRZKDWZHVDZILWLIZHJRWLQWRZDU"´7RZKLFK/HZLVUHSOLHG³7RWKHFRQWUDU\,DP
RQHZKRLQVLVWVZHRXJKWQRWWROHWRWKHUQDWLRQVWLHRXUKDQGV´³7KHQZHVKRXOGQRWDVN
WKHRWKHUQDWLRQVWRWLHWKHLUV´'DYLVILQLVKHG $KDQGIXORIVHQDWRUVRQWKHFRPPLWWHHDVVLVWHGWKHGHOHJDWLRQLQFOXGLQJ6HQDWRU
5RELQVRQDQGWKHFRPPLWWHH&KDLUPDQ.H\3LWWPDQZKREDWWHGDZD\VRPHRIWKHPRUH
SHUVLVWHQWO\FULWLFDOPHPEHUV7KHPRVWFRQWHQWLRXVSRUWLRQRIWKHKHDULQJDUULYHGZLWK
WKHGLVFXVVLRQRQWKHKHDY\FUXLVHUKROLGD\DQKLVWRULFDOO\SUREOHPDWLF$QJOR$PHULFDQ
LVVXHDQGWKHERJH\PDQRIWKH+HDUVW3UHVV6HQDWRUV:DJQHUDQG-RKQVRQUHOHQWOHVVO\
,ELG
SUHVVHGWKHROG$PHULFDQOLQHRIWKHODVWFRQIHUHQFHDVNLQJZK\WKHRQO\YHVVHOEHLQJ
OLPLWHGZDVRQHZKLFKWKH%ULWLVKGLGQRWQHHGDQGWKH8QLWHG6WDWHVGLG$GPLUDO
6WDQGOH\DIWHUPXFKHIIRUWODLGWKHLVVXHWRLWVILQDOUHVW³*UHDW%ULWDLQLVQRWDOORZHGWR
KDYHFUXLVHUVVXSHULRUWRRXUVDQGVKHKDVQRWJRWWKHP´WKH$GPLUDOVDLGUHSO\LQJWRD
VXJJHVWLRQWKDWWKLVZDVWKHFDVH
XQGHUWKH>@/RQGRQ7UHDW\«ZHH[FHHGKHUE\WKUHHLQFKJXQ
FUXLVHUV«LQZHIHOWWKDWWKHODUJHVL]HFUXLVHUZLWKWKHLQFKJXQV
ZDVWKHPRVWDOOURXQGFUXLVHUIRURXUQHHGV$WWKHWLPHZHZHUH
GLVFXVVLQJWKDW6HQDWRUZHRQO\KDGWZRRIWKRVHW\SHVEXLOW«$QG
VLQFHWKDWWLPH,KDYHFRPPDQGHGWKHP,ZDVWKHFUXLVHUFRPPDQGHURI
WKDWW\SHRIVKLSDQG6HQDWRURXULGHDVKDYHFKDQJHGDOLWWOHELWDVD
UHVXOWRIWDFWLFDOH[SHULHQFH7KHLQFKFUXLVHULVWKHEHVWIRUFHUWDLQ
NLQGVRIGXW\FRPPHUFHSURWHFWLRQDQGIRURXWVLGHVFRXWLQJ:HVWLOO
KDYHWKRVHQHHGVEXWZHILQGWKDWWKHLQFKFUXLVHUFDQQRWSHUIRUPDOO
WKHIXQFWLRQVWKDWWKHLQFKFUXLVHUFDQ«,Q,VWDWHGWKDWLI>,@KDG
XQOLPLWHGIXQGVDQGXQOLPLWHGWRQQDJH,ZRXOGEXLOGWKHPDOORILQFK
,ZRXOGQRWGRWKDWWRGD\VLU ,WZDVDQLPSRUWDQWVWDWHPHQWIRUD&12WRPDNHEHIRUHDFRPPLWWHHZLWKVRPH
PHPEHUVEHQWRQWKURZLQJRXWWKHWUHDW\RQWKHROGREMHFWLRQVRIWKH/1&,WZDV
DOVRDVWURQJLQGLFDWLRQRIWKHHYROXWLRQRILGHRORJ\DQGVWUDWHJ\WKDWZDVXQGHUZD\
ZLWKLQWKH861GXULQJWKHPLGV:KHUHEHIRUHVWUDWHJLVWVKDGIRFXVHGVRVWURQJO\
XSRQVXSHULRULW\DWWKHSRLQWRIDWWDFN²DORQJWKHOLQHVRI0DKDQ¶VVWUDWHJ\RIWKH
³GHFLVLYHEDWWOH´²LQFUHDVLQJO\WKH861ZDVFRPLQJDURXQGWRWKH%ULWLVKVWUDWHJ\RI
WRWDOVHDFRQWUROZLWKDQHPSKDVLVRQVPDOOHUDX[LOLDULHV
6WDQGOH\DOVRGHOLYHUHGDQLPSRUWDQWVWDWHPHQWRQDUPVFRQWUROLQJHQHUDODOVR
UHIOHFWLQJDPDWXUDWLRQLQ861LGHRORJ\DQGDVWHSDZD\IURPWKHQDWLRQDOLVWLF³ELJ
1DY\´HQWKXVLDVWVRIWKHV³,KDYHFRPHWRIHHOWKDWDQDYDOUDFHLVDPRVWGLVDVWURXV
,ELG
WKLQJIRUD1DY\´6WDQGOH\WROGWKHVHQDWRUVE\ZD\RIUHFRPPHQGLQJWKHXWLOLW\RIWKH
QRWLILFDWLRQFODXVHLQSUHYHQWLQJVXFKDUDFH
7KHVHFRQGSDUWRIWKHWUHDW\LVDOVRDGYDQWDJHRXV,GLGQRWLQWKH
EHJLQQLQJIHHOWKDWDOLPLWDWLRQRQDUPDPHQWZDVGHVLUDEOH,IHOWZKHQ
WKH:DVKLQJWRQ7UHDW\ZDVVLJQHGWKDWLWZDVKLJKO\XQGHVLUDEOHWROLPLW
E\DJUHHPHQWRXUQDYDOQHHGVSDUWLFXODUO\LIZHIHOWWKDWZHGLGQRWJHWDOO
WKHDGYDQWDJHV,KDYHFRPHWRWKHRSLQLRQWKDWOLPLWDWLRQLVDGHVLUDEOH
WKLQJDQGWKDWLIZHFDQOLPLWRXUQDYDOSRZHUWRRXUQDYDOQHHGVDQGEDVH
LWRQWKDWIUDQNO\VRVWDWLQJWKDWLWLVDGHVLUDEOHWKLQJWRKDYHIRUWKH
1DY\ 6WDQGOH\PDGHDVROLGDUJXPHQWIRUWKHFDVHWKDWUDWLRQDODFWRUVPD\VHHNWR
FRQVWUDLQWKHPVHOYHVDVORQJDVRWKHUDFWRUVLQWKHV\VWHPDJUHHWRWKHVDPHFRQVWUDLQWV
0LOLWDULHVVLQFHWKHLUZKROHH[LVWHQFHLVSUHGLFDWHGRQWKHXVHRIIRUFHDUHRIWHQVHHQE\
KLVWRULDQVDQGSROLWLFDOVFLHQWLVWVDV³SRZHUPD[LPL]HUV´LQWKHWHUPLQRORJ\RI
LQWHUQDWLRQDOUHODWLRQV &HUWDLQO\WKHUHZHUHPDQ\LQWKH8QLWHG6WDWHVGXULQJWKH
LQWHUZDUSHULRGVXEVFULEHGWRWKLVQRWLRQ,Q6HQDWRU*HUDOG1\HKDGODXQFKHGD
VSHFLDOFRPPLWWHHWRLQYHVWLJDWHDPRQJRWKHUWKLQJVWKHPXQLWLRQVLQGXVWU\¶VUROHLQ
$PHULFDHQWU\LQWRWKH)LUVW:RUOG:DU7KHFRPPLWWHH¶VILQGLQJVUHOHDVHGQRWORQJ
EHIRUHWKH/17VHQDWHKHDULQJVIRXQGWKDWWKHPXQLWLRQVLQGXVWU\DQGWKHVKLSEXLOGLQJ
LQGXVWU\LQSDUWLFXODUKHOGH[FHVVLYHLQIOXHQFHRYHUWKHGHFLVLRQRIWKH8QLWHG6WDWHVWRJR
,ELG
0LOLWDULHVDUHRIWHQVHHQDVERWKWRROVDQGSURSDJDWRUVRI³RIIHQVLYHUHDOLVP´DGRFWULQHLQZKLFKVWDWHV
VHHNWRLQFUHDVHWKHLUPLOLWDU\SRZHUWRWKHOLPLWRIZKDWLWPD\SURYLGHLQRUGHUWRDFKLHYHDEVROXWH
VHFXULW\6HHIRULQVWDQFH-RKQ-0HDUVKHLPHU7KH7UDJHG\RI*UHDW3RZHU3ROLWLFV1HZ<RUN::
1RUWRQDQG&R0LOLWDULHVFRQJHQLWDOO\RYHUHVWLPDWHH[WHUQDOWKUHDWVZKLFKLQWXUQOHDGVWRODUJH
DSSURSULDWLRQVUHTXHVWV3UHVVXUHVIURPPLOLWDULHVXSRQJRYHUQPHQWVDUHRIWHQVHHQWRGULYH³VHFXULW\
GLOHPPDV´DFRQGLWLRQRIVSLUDOOLQJLQVHFXULW\EURXJKWDERXWE\DQLQFUHDVHLQDUPVE\RQHDFWRULQWKH
V\VWHP7KLVKDVEHHQLQWHQVHO\H[DPLQHGXQGHUWKH³PLOLWDU\LQGXVWULDOFRPSOH[´WKHRU\WKDWKDVEHHQ
SUHYDOHQWDPRQJSROLWLFDOVFLHQWLVWVVLQFHWKHVDQGVVHHIRULQVWDQFH&KDOPHUV-RKQVRQ7KH
6RUURZVRI(PSLUH0LOLWDULVP6HFUHF\DQGWKH(QGRIWKH5HSXEOLF1HZ<RUN0HWURSROLWDQ%RRNV
WRZDULQ(XURSHLQ 7KHSROLWLFVRIWKH1\H&RPPLWWHHGHFLVLRQPXVWUHPDLQD
GLVFXVVLRQIRUDQRWKHUSODFHDQGKDVDOUHDG\EHHQFRYHUHGLQQXPHURXVKLVWRULHV 7KH
WDNHDZD\LVWKDWPDQ\VHQDWRUVLQFOXGLQJPDQ\PHPEHUVRIWKH)RUHLJQ5HODWLRQV
&RPPLWWHHVXEVFULEHGWR1\H¶VILQGLQJVDQGHYHQOHJLVODWHGRQWKHPLQWKHIRUPRIWKH
1HXWUDOLW\$FW7KDW6WDQGOH\SHUFHLYHGDWWKHWLPHDVD³ELJ1DY\´XQLIRUPHGRIILFHU
DQGDUHSUHVHQWDWLYHRIWKHRIWPDOLJQHGDUPHGIRUFHVVWDWHGEHIRUHWKHFRPPLWWHHWKDW
DUPVFRQWUROPD\EHDGYDQWDJHRXVWRQDWLRQDOVHFXULW\DQGQRWMXVWQDWLRQDOHFRQRP\ZDV
DQLPSRUWDQWVWDWHPHQWIRUDUPVFRQWURODQGWKH861LQWKHV
,WZDV'DYLVLQFLGHQWDOO\ZKRUHPLQGHGWKHVHQDWRUVWKDWHYHQLIDUPVFRQWURO
ZDVGHVLUDEOHLWZDVHVVHQWLDOWKDWWKH8QLWHG6WDWHVPDLQWDLQDFRQVLVWHQWEXLOGLQJ
SURJUDPDQGNHHSSDFHZLWKFRQVWUXFWLRQLQWKH8.DQG-DSDQ³,WKLQNRQHWKLQJWKDWKDG
DEDGHIIHFWIUDQNO\ZDVIRUXVWRJRIRUVHYHUDO\HDUVZLWKRXWOD\LQJGRZQDVLQJOH
QDYDOYHVVHO´'DYLVH[SODLQHGWRWKHVHQDWRUVLPSOLFDWLQJWKHVWLQJLQHVVRI&RQJUHVVLQ
WKHV³,WKLQNVRPHFRXQWULHVJRWDQLPSUHVVLRQWKDWZHKDYHJRQHVRIDUSDFLILVW
WKDWZHZHUHQRWFRQFHUQHGDERXWRXUVHFXULW\DQG,IUDQNO\WKLQNWKDWLIWKH6HQDWHZLOO
VHHILWWRUDWLI\WKLVWUHDW\TXLFNO\WKHSV\FKRORJLFDOHIIHFWRQWKHUHVWRIWKHZRUOGZRXOG
EHYHU\JRRGLQGHHG´ $UPVFRQWURO'DYLVLQVLVWHGPXVWQRWEHFRQIXVHGZLWK
XQLODWHUDOGLVDUPDPHQWRU³GLVDUPDPHQWE\H[DPSOH´DVWKH5HSXEOLFDQDGPLQLVWUDWLRQV
RIWKHVKDGRSWLPLVWLFDOO\ODEHOHGLW7KH8QLWHG6WDWHVKDGWRUHDIILUPLWV
FRPPLWPHQWWRDUPVFRQWUROIRUSV\FKRORJLFDOUHDVRQVEXWLWDOVRKDGWRPDLQWDLQDIRUFH
5RVHQ³7UHDW\1DY\´
6HHIRULQVWDQFH3DXO$&.RLVWLQHQ3ODQQLQJ:DU3XUVXLQJ3HDFH7KH3ROLWLFDO(FRQRP\RI
$PHULFDQ:DUIDUH±/DZUHQFH8QLYHUVLW\3UHVVRI.DQVDVRU-(:LOW]³7KH1\H
&RPPLWWHH5HYLVLWHG´7KH+LVWRULDQ±
1$5$,)RUHLJQ5HODWLRQV6HQ%%6HQDWH+HDULQJRQ/RQGRQ1DYDO7UHDW\0D\
VXIILFLHQWIRUSODXVLEOHUHWDOLDWLRQLQRUGHUWRPDLQWDLQWKHSHDFH7KH8QLWHG6WDWHVKDG
FRPPLWWHGWRRILUPO\WRWKHIRUPHUVWUDWHJ\VLQFHVLJQLQJWKH:DVKLQJWRQ7UHDW\DQGWKH
/1&GHOHJDWLRQDORQJZLWKWKHLUDOOLHVLQWKH5RRVHYHOWDGPLQLVWUDWLRQVRXJKWWREULQJ
EDODQFHWRWKHHTXDWLRQ
'HVSLWHWKHSUHVHQFHRIVHYHUDOVWDXQFKLVRODWLRQLVWVLQWKH)RUHLJQ5HODWLRQV
&RPPLWWHHWKHWHVWLPRQ\ZDVPRVWO\DVXFFHVVIRUWKHGHOHJDWHV7KHTXHVWLRQLQJ
WKRXJKDWWLPHVUHOHQWOHVVGLGQRWGHYROYHLQWRVKRXWLQJPDWFKHVWKDWRFFDVLRQDOO\DURVH
RYHULVVXHVRIIRUHLJQHQWDQJOHPHQWV&KDLUPDQRIWKH&RPPLWWHH3LWWPDQHYHQWKRXJK
KHKDGSXEOLFDOO\YRLFHGKLVGLVDSSRLQWPHQWZLWKWKHWUHDW\VRPHPRQWKVEHIRUHUDPPHG
WKHWUHDW\WKURXJKWKHVHQDWHDWWKHEHKHVWRI5RRVHYHOWRQ0D\+HFRQWLQXHGWREDW
DZD\REMHFWLRQVE\VRPHVHQDWRUVWKDWWKHWUHDW\ZDVDSXUHO\%ULWLVKGRFXPHQWWKDWWKH
$PHULFDQGHOHJDWHVKDGEHHQVZLQGOHGLQWRVLJQLQJPXFKDVWKHDFFXVDWLRQVKDGUDQIRU
WKHWZRSUHYLRXVWUHDWLHV 6HQDWRU/HZLVRIIHUHGWKHWUHDW\DQLQWHUHVWLQJHQGRUVHPHQW
WLQJHGZLWKWKHILUHEUDQGLVVXHRIRXWVWDQGLQJZDUGHEWV³)RUWXQDWHO\ZHDUHDEOHWR
SRLQWWRWKHIDFWWKDWLWLVVRPHRIRXUGHEWRUV²,PD\VD\WKHSULQFLSOHGHEWRUV²ZKR
KDYHMRLQHGLQWKHSUHVHQWDUUDQJHPHQWZKLFKZHVSHDNRIDVDWUHDW\´/HZLVVDLG³7KH
GHPRQVWUDWLRQRIWKHLULQWHQWWRKDUPRQL]HZLWKXVXSRQWKHFRXUVHVRIQDWLRQVDQGWKH
LQGLFDWLRQRIZLOOLQJQHVVRQWKHLUSDUWWRFRPHWRWHUPVZKLFKLQVRPHGHJUHHZLOOEH
PXWXDOO\VDWLVIDFWRU\WRXVDOOVHUYHVWRSURPRWHJRRGZLOODQGLVRILWVHOIDSURVSHFWDV,
VHHLWRIEHWWHUWKLQJVLQWKHIXWXUH´ (YHQLILWZDVQRWDQRWHRIXQHTXLYRFDOXQLW\WKH
VDOXWDU\SV\FKRORJLFDOHIIHFWVRIWKHWUHDW\XSRQWKHDOOLHVRIWKHODVWZDUZHUHFHUWDLQO\
UHFRJQL]HGE\VRPH$PHULFDQOHJLVODWRUV6HQDWRU1\HUHJLVWHUHGSUHGLFWDEOHGLVVHQW
&RQJUHVVLRQDO5HFRUG9RO1R6HYHQW\)RXUWK&RQJUHVV6HFRQG6HVVLRQ6HQDWH0D\
SJ
,ELG
DUJXLQJWKDWWKHGHOHJDWLRQVVHQWZHUHFRPSULVHGRIPHQ³ZKRVHLQWHUHVWZDVLQWKHQDYDO
HVWDEOLVKPHQW´DQGZKRWKHUHIRUHKDGQRLQWHUHVWLQSURGXFLQJDWUHDW\RIUHDODUPV
OLPLWDWLRQ 'HVSLWHWKLVDQGRWKHUREMHFWLRQVWKHWUHDW\ZDVUDWLILHGE\DUREXVW
PDMRULW\$OWKRXJKWKH&RQJUHVVHVRIWKHVVKRZHGDWHQGHQF\WRZDUGVQRQ
LQWHUYHQWLRQLVWOHJLVODWLRQWKHUHZDVFRQWLQXHGUHFRJQLWLRQDPRQJWKHVHQDWRUVRIWKH
YDOXHRILQWHUQDWLRQDOFRRSHUDWLRQLQWKHOLPLWDWLRQRIDUPV
7KHSURPSW$PHULFDQUDWLILFDWLRQRIWKHVHFRQG/17ZDVDERRQWR$QJOR
$PHULFDQUHODWLRQVDWOHDVWDVIDUDVWKH%ULWLVKJRYHUQPHQWZDVFRQFHUQHG7KHUHZDVD
IDFWLRQLQ3DUOLDPHQWWKDWVDZWKHVHFRQG/17DVDIXWLOHHIIRUWDWUHYLYLQJDIDLOHG
V\VWHPDQGVDZFRPSOLDQFHDVSRLQWOHVVDQGHYHQSRWHQWLDOO\GDPDJLQJ 7KH8.SUHVV
UHFHLYHGWKHWUHDW\WHSLGO\DVZHOOZLWKPDQ\H[SUHVVLQJVNHSWLFLVPWKDWWKHWHUPVZRXOG
KDYHDQ\HQGXUDQFHZLWKRXWWKHLQFOXVLRQRI-DSDQ 1RQHWKHOHVVWKHUHODWLYHO\
DFFRPPRGDWLQJDWWLWXGHRIWKH8QLWHG6WDWHVHVSHFLDOO\LQFRPSDULVRQWRWKHVRPHWLPHV
KRVWLOHFRQIHUHQFHVLQWKHSDVWZDVQRWHGHYHQE\WKHVNHSWLFV³,WLVDGHILQLWHJDLQWKDW
E\WKHLUVLJQDWXUHVWKHQDYDO3RZHUVVKRXOGJLYHDILUPEDVLVWRZRUOGFRQGHPQDWLRQRI
EUHDFKHVRIKXPDQLWDULDQFRQVLGHUDWLRQV´ZURWHWKH'DLO\7HOHJUDSK³7RKROGWKDW
SXEOLFRSLQLRQLQVXFKPDWWHUVPD\QRWKDYHGHFLVLYHFRQVHTXHQFHVLVWRIRUJHWKRZ
XQUHVWULFWHGVLQNLQJVDWVHDLQIOXHQFHGWKH$PHULFDQGHWHUPLQDWLRQWRDLGWKH$OOLHV
\HDUVDJR´ 7KHWUHDW\ZDVDORQJVWHSWRZDUGVWKH%ULWLVKLQVXUDQFHSROLF\RIVHFXULQJ
$PHULFDQFRRSHUDWLRQLQWKHQH[WZDU
,ELG
1$5*%R[1DYDO$WWDFKp*UHDW%ULWDLQ6HULDO1R0D\
1$5*%R[1DYDO$WWDFKp*UHDW%ULWDLQ6HULDO1R1RY
,ELG
7KHWUDQVLWLRQWRDQHZSKDVHLQ$QJOR$PHULFDQUHODWLRQVZDVQRWDVPRRWKRU
SHUIHFWRQHKRZHYHU$OPRVWLPPHGLDWHO\FRPSOLFDWLRQVDURVH7KHODUJHVWDURVHRYHU
WKHLVVXHRIFRPSOLDQFHZLWKWKHWHUPVRIWKH/17EHIRUHLWH[SLUHGDWWKHHQGRI
'HFHPEHU7KH$GPLUDOW\ZLVKHGWRUHWDLQWRQVRIRYHUDJHGHVWUR\HUVLQ
H[FHVVRIWKHOLPLWSURVFULEHGLQWKH/177KHPRUHFRQWHQWLRXVSUREOHPOD\ZLWKWKH
%ULWLVKGHVLUHWRFRQYHUWIRXU³+DZNLQV´FODVVFUXLVHUVIURPWKHLUGHVLJQDWLRQRIVXE
FDWHJRU\$FUXLVHUVLHKHDY\FUXLVHUVWRVXEFDWHJRU\%FUXLVHUVLHOLJKWFUXLVHUVDV
WKH\ZHUHRYHUVWUHQJWKLQWKHIRUPHUFDWHJRU\DQGXQGHUVWUHQJWKLQWKHODWWHU7KHIRXU
YHVVHOVZHUHGXHWREHVFUDSSHGLQLQDFFRUGDQFHZLWKWKH/17KRZHYHUWKH
ULVLQJLQWHUQDWLRQDOWHQVLRQFRPSHOOHGWKH$GPLUDOW\WRSUHVVIRUWKHLUUHWHQWLRQ
1RQHWKHOHVVWKHFRQYHUVLRQRIWKUHHRIWKHYHVVHOVWROLJKWFUXLVHUVDQGWKHIRXUWKWRD
³WUDLQLQJVKLS´ZRXOGSXWWKH%ULWLVKRYHUWKHLUDOORWWHGWRQQDJHLQVXEFDWHJRU\%LQ
YLRODWLRQRIWKH/177KH%ULWLVK*RYHUQPHQWZDQWHGWRVHWWOHWKHPDWWHURQWKH
WHUPVRID³IULHQGO\QHJRWLDWLRQ´ZLWKWKH8QLWHG6WDWHVUDWKHUWKDQLQYRNLQJWKHWUHDW\¶V
HVFDODWRUFODXVHDQGSRWHQWLDOO\DVVXPLQJWKHUHVSRQVLELOLW\RIEHJLQQLQJDQDUPVUDFH 86SROLF\PDNHUVZHUHXQIRUJLYLQJLQWKHLUDWWLWXGHWRZDUGVWKLV³IULHQGO\´
ELODWHUDOQHJRWLDWLRQ7KH*HQHUDO%RDUGLQVLVWHGWKDWWKHWRQQDJHEHUHWDLQHGOHJDOO\
ZLWKRXWPRGLI\LQJWKH/17DQGSRVVLEO\GDPDJLQJWKHLQWHUQDWLRQDOJRRGZLOOMXVW
JDLQHGE\VLJQLQJRQWRWKHVHFRQG/177KH\UHFRPPHQGHGWKDWWKH6WDWH'HSDUWPHQW
LQIRUPWKH8.WKDWWKH\PXVWLQYRNHWKHHVFDODWRUFODXVHDQGWKH86ZRXOGIROORZVXLW
DQGDOVRUHWDLQDQHTXDODPRXQWRIRYHUDJHGHVWUR\HUV 6WDQGOH\FODULILHGWKDW³WKH
1DY\'HSDUWPHQWKDVQRREMHFWLRQWRWKHSURSRVHGGHPLOLWDUL]DWLRQRIRQHRIWKH
1$5*%R[*HQHUDO%RDUG6HULDO1R0D\
1$5*%R[*HQHUDO%RDUG6HULDO1R-XO\
+$:.,16FODVVIRUXVHDVDWUDLQLQJVKLSDQGWKHFRQYHUVLRQRIWKHUHPDLQLQJWKUHHWR
VXEFDWHJRU\EFUXLVHUVLQVRIDUDVLWDIIHFWVRXUQDYDOSRVLWLRQUHODWLYHWR*UHDW
%ULWDLQ´6WDQGOH\RQO\VWUHVVHGWKDWWKHIRXUYHVVHOVEHUHWDLQHGLQD³OHJDOZD\´WKDW
ZRXOG³QRWJLYH-DSDQDQH[FXVHWRGHFODUHWKDWWKHWUHDW\KDVEHHQYLRODWHGDQGWKDW
WKHUHIRUHVKHLVIUHHWRUHWDLQH[FHVVVXEPDULQHVZLWKRXWLQYRNLQJ«WKHHVFDODWRU
FODXVH´ 7KH6WDWH'HSDUWPHQWFRQFXUUHGDQGZRXOGQRWDOORZWKH%ULWLVKWRVNLUWWKH
OHWWHURIWKH/RQGRQ7UHDW\2Q-XO\+XOOFDEOHG%LQJKDPWRZLWKLQVWUXFWLRQVWRWHOO
&UDLJLHWKDWZKLOH$PHULFDKDG³DSSUHFLDWLRQRIWKHVSLULW´ZKLFKSURPSWHGWKHGHVLUHIRU
UHWHQWLRQE\³IULHQGO\QHJRWLDWLRQ´WKH8QLWHG6WDWHVZRXOGLQVLVWWKDWWKH%ULWLVK
RIILFLDOO\LQYRNHWKHHVFDODWRUFODXVHZKLOHWKH86ZRXOG³UHVHUYHWKHULJKW´WRIROORZ
VXLW ,QRWKHUZRUGVWKH8QLWHG6WDWHVZDQWHGWKH%ULWLVKWRILUHWKHILUVWVKRWLQZKDW
ZDVVXUHWREHDQHVFDODWLRQLQQDYDODUPVZLWKRXWRIIHULQJWRVWDQGEHVLGHWKHP'DYLV
H[SUHVVHGGLVPD\RYHUWKLVVKRZRIGLVXQLW\ZULWLQJWR6WDWH'HSDUWPHQWRIILFLDO5REHUW
3HOORQ-XO\³,WKLQNLWLVVLOO\DQGXQZLVHIRUXVWRTXLEEOHRYHUWKHFRQYHUVLRQRI
WKHVHFUXLVHUVDVSURSRVHGE\WKH%ULWLVK,QIDFW,VHULRXVO\GRXEWLILWZRXOGEHLQRXU
LQWHUHVWVXQGHUSUHVHQWFLUFXPVWDQFHVIRUWKH%ULWLVKWRGRDQ\WKLQJWRZHDNHQWKHLU
1DY\,QP\MXGJPHQWZHVKRXOGKDYHWROGWKH%ULWLVKIUDQNO\WKDWZKLOHZHIHHOWKH
SURSRVHGDFWLRQLVQRWDXWKRUL]HGXQGHUWKH7UHDW\ZHGRQRWZLVKWRRIIHUDQ\IRUPDO
RSSRVLWLRQ´ 'DYLVZDVDQGZRXOGUHPDLQRQHRIVHYHUDOSHUVLVWHQWYRLFHVDGYRFDWLQJ
IRUVWURQJHU$QJOR$PHULFDQUHODWLRQVEXWWKHUHZHUHPDQ\IDFWRUVWKDWGHWHUPLQHG
/2&0DQXVFULSW'LYLVLRQ'DYLV3DSHUV%R[0HPRRIPHHWLQJEHWZHHQ1DY\'HSDUWPHQWDQG
6WDWH'HSDUWPHQW$XJXVW
)586,+XOOWR%LQJKDP-XQH2Q$XJXVWWKH8QLWHG6WDWHVIRUPDOO\GHFODUHG
LWVLQWHQWLRQWRUHWDLQWRQVRIGHVWUR\HUVLQUHVSRQVHWRWKH%ULWLVKHVFDODWLRQ
1$5*5HFRUGV5HODWLQJWR'LVDUPDPHQW%R['DYLVWR3HOO-XO\
$PHULFDQSROLF\DQGWKHQHFHVVLW\RIVHFXULQJDZDUWLPHDOO\ZDVQRWIHOWKDOIDVVKDUSO\
LQ:DVKLQJWRQDVLWZDVLQ/RQGRQ,QWKHVDPHYHLQLWZDVDJUHDWGHDOPRUHHVVHQWLDO
IRUWKH8.$GPLUDOW\WRUHWDLQRYHUDJHGHVWUR\HUWRQQDJHIRUSRVVLEOHWUDQVDWODQWLF
FRQYR\GXW\WKDQLWZDVIRUWKH8QLWHG6WDWHVVR$PHULFDQSROLF\PDNHUVKDGWKHOX[XU\
RIIRUFLQJWKH%ULWLVKWRPDNHWKHILUVWPRYHLQLQYRNLQJHVFDODWLRQ$VORQJDVWKH8QLWHG
6WDWHVZDVUHODWLYHO\VHFXUHVHOILQWHUHVWZRXOGSUHYDLORYHUVWUHQJWKHQLQJWKH$QJOR
$PHULFDQUHODWLRQVKLSDVDQHQGLQLWVHOI)RUWKH%ULWLVKZKRVHKRPHODQGDQGFRORQLHV
ERWKZHUHLQFUHDVLQJO\YXOQHUDEOHWKHPDWKZDVVLJQLILFDQWO\GLIIHUHQW
,QWKHZDNHRIWKHUDWLILFDWLRQRIWKHVHFRQG/17WKH1DY\'HSDUWPHQWZDV
FRPSHOOHGWRUHDVVHVVLWVJOREDOVWUDWHJ\$GPLUDO6WDQGOH\UHOHDVHGDPHPRRQ-XQH
XUJLQJWKH5RRVHYHOWDGPLQLVWUDWLRQWRVWDWHFOHDUO\LWVQDWLRQDODLPVDQGJRDOVVRWKDWWKH
861ZRXOGEHWWHUNQRZZKDWLWRXJKWWREHSUHSDULQJIRU³7KHQDWLRQDOSROLFLHVDUH
SRRUO\GHILQHGH[FHSWDVYHU\EURDGO\VWDWHGLQWKHSUHDPEOHWRWKH&RQVWLWXWLRQ´
6WDQGOH\ZURWH
/HVVHUSROLFLHVVXFKDVWKH0RQURH'RFWULQHWKH2SHQ'RRU3ROLF\WKH
PDLQWHQDQFHRIWKH3DQDPD&DQDODQGDPXOWLWXGHRIRWKHUVSURPXOJDWHG
DQGDOWHUHGIURPWLPHWRWLPHE\VXFFHVVLYHDGPLQLVWUDWLRQVDUHXVXDOO\
EXWYDJXHO\GHILQHG,QDVPXFKDVWKH1DY\LVPDLQWDLQHGODUJHO\WR
VXSSRUWVXFKQDWLRQDOSROLFLHVLWZRXOGEHFRQVWUXFWLYHWRGHILQHDQG
FRGLI\QDWLRQDOSROLFLHVDVDSUHOXGHWRIRUPXODWLQJDPRUHIRUPDOSROLF\
RIQDWLRQDOGHIHQVH,WZRXOGDOVREHFRQVWUXFWLYHWRGHILQHWKHWHUP
QDWLRQDOGHIHQVHDXWKRULWDWLYHO\,WLVQRZIUHTXHQWO\DFFHSWHGDVPHDQLQJ
GHIHQVHPHUHO\DJDLQVWDJJUHVVLYHLQYDVLRQRIKRPHWHUULWRULHVZKHUHDV
IRUPDQ\GHFDGHVWKHQDYDOYLHZSRLQWKDVEHHQFRQVLGHUDEO\EURDGHU
LQFOXGLQJGHIHQVHRI$PHULFDQVKLSSLQJVHDERUQHFRPPHUFHDQGJHQHUDO
RYHUVHDVFRPPHUFLDODQGSROLWLFDOLQWHUHVWV7KLVEURDGHUQDYDOYLHZSRLQW
KDVIROORZHGIURPWKHPLVVLRQVUHJXODUO\DVVLJQHGWRWKH1DY\E\KLJKHU
FLYLODXWKRULWLHV,QLWVZRUNRIVXSSRUWLQJQDWLRQDOSROLFLHVDQGGHIHQGLQJ
PDULWLPHLQWHUHVWVWKH1DY\KDVDOVRIUHTXHQWO\EHHQXVHGDVDQ
LQVWUXPHQWRIGLSORPDF\ZLWKDYLHZWRJDLQLQJWKHSROLWLFDORU
FRPPHUFLDOHQGVRIRXUJRYHUQPHQWWKURXJKWKHLQIOXHQFHRIIRUFHUDWKHU
WKDQE\LWVFRPEDWXVH«$UPDPHQWVDUHRQHRIWKHPRVWXVHIXO
LQVWUXPHQWVRIGLSORPDF\DQGQDWLRQDOSROLF\²UHJDUGHGIURPWKH
YLHZSRLQWRISHDFH 7KLVZDVDQLPSRUWDQWVWDWHPHQWIRUWKH&12WRPDNHDQGLWHFKRHG6WDQOH\
+RUQEHFN¶VFRPSODLQWRIWZR\HDUVSULRU 6WDQGOH\¶VFULWLFLVPLVFRPPRQDPRQJ
KLVWRULDQVWRWKLVGD\QDPHO\WKDWWKH8QLWHG6WDWHVLQWKHLQWHUZDUSHULRG²DQGWKH
5RRVHYHOWDGPLQLVWUDWLRQLQSDUWLFXODU²KDGDQLOOGHILQHGQDWLRQDOSROLF\:KLOHWKLVLV
QRWVWULFWO\WUXHLQDJHQHUDOVHQVH²WKH8QLWHG6WDWHVZDVFRQVLVWHQWLQLWVDLPVRI
KHPLVSKHULFGHIHQVHIUHHGRPRIWKHVHDVDQGHVWDEOLVKLQJQRHQWDQJOLQJDOOLDQFHV²WKH
DFFXVDWLRQKDVPHULWLQFHUWDLQSDUWLFXODUV7KHPRVWLPSRUWDQWDWOHDVWDVFRQFHUQHGWKH
861ZDVWKHUHIXVDORIDQ\DGPLQLVWUDWLRQWRVWDWHWKHOLPLWVRI$PHULFDQSROLF\LQWKH
)DU(DVW1DYDOVWUDWHJLVWVFHUWDLQO\QHYHUVWUD\HGIURPWKHLUFRQYLFWLRQWKDWWKHQH[W
FRQIOLFWZRXOGEHZLWK-DSDQWKHYHU\ODUJHPDMRULW\RIIOHHWSUREOHPVDQGZDUSODQQLQJ
FRQFHUQHGWKH3DFLILF7KHODFNRIFHUWDLQW\RQWKHFLYLOLDQVLGHUHJDUGLQJ86IRUHLJQ
SROLF\LQWKH)DU(DVWKRZHYHUQHJDWLYHO\DIIHFWHGWKH861DVIDUDV6WDQGOH\ZDV
FRQFHUQHG,WPHDQWWKDWWKHJRYHUQPHQWKDGUHIXVHGDQGZRXOGSRWHQWLDOO\FRQWLQXHWR
UHIXVHWRDOORFDWHVXIILFLHQWIXQGVIRUD1DY\WKDWFRXOGSRVHFUHGLEOHUHWDOLDWLRQLQWKH
3DFLILF,IWKHSDUDPHWHUVRIZDUZHUHQRWZHOOGHILQHGLWPHDQWWKH\ZHUHQRWRQWKH
QDWLRQDODJHQGD,IWKDWFRQWLQXHGWREHWKHFDVHWKH1DY\ZDVSRWHQWLDOO\LQIRUPRUH
\HDUVRIWKH³KDQGWRPRXWKÉXGJHWLQJWKDWLWKDGH[SHULHQFHGWKURXJKWKHV
5HJDUGOHVVWKH861IRUPXODWHGLWVSROLFLHVDQGVWUDWHJLHVIRUWKHSRVW
:DVKLQJWRQZRUOGDVEHVWWKH\FRXOG2QHRIWKHFKLHILVVXHVWKDWDURVHZDVWKH
UHSODFHPHQWRIWKHFDSLWDOVKLSIOHHW7KHEDWWOHVKLSKROLGD\ZKLFKKDGEHHQHVWDEOLVKHGDW
1$5*%R[6WDQGOH\WR-XGJH$GYRFDWH*HQHUDO$$-XQH
1L[RQ5RRVHYHOW,,+RUQEHFNWR+XOO$SULO
:DVKLQJWRQLQDQGH[WHQGHGDW/RQGRQLQZRXOGDWODVWHQGRQ-DQXDU\
7KH8QLWHG6WDWHVKDGDFRPSDUDWLYHO\\RXQJFDSLWDOIOHHWDWOHDVWFRPSDUHGWRWKH
8QLWHG.LQJGRPGXHWR3UHVLGHQW:LOVRQ¶V:RUOG:DU2QHEDWWOHVKLSFRQVWUXFWLRQ
SURJUDP 1RQHWKHOHVVWKUHHEDWWOHVKLSVZRXOGEHUHDFKLQJWKH\HDUDJHOLPLW
SUHVFULEHGE\WKHWUHDW\MXVWVLJQHGE\ZKLFKZRXOGPDWFKWKHDSSUR[LPDWHGDWHRI
FRPPLVVLRQIRUDQ\EDWWOHVKLSODLGGRZQLQ7KH*HQHUDO%RDUGGHVLUHGWR
DJJUHVVLYHO\UHSODFHHDFK86FDSLWDOVKLSDVLWEHFDPHRYHUDJHDQGVHHNDXWKRUL]DWLRQIRU
DILYH\HDUSODQIRUXSWRVHYHQEDWWOHVKLSV %H\RQGWKHWZREDWWOHVKLSVDOUHDG\
SURYLGHGIRULQWKH%RDUGUHFRPPHQGHGDWOHDVWWKUHHPRUHE\WKHILVFDO\HDU
7KH%ULWLVKKDGFRQILGHGLQWKH$PHULFDQGHOHJDWLRQLQ/RQGRQWKDWWKH\ZRXOG
SXUVXHDUDSLGUHSODFHPHQWRIWKHLUFDSLWDOIOHHWOD\LQJGRZQWZRWRWKUHHVXFKYHVVHOV
SHU\HDU &126WDQGOH\GLVDJUHHGZLWKWKH%RDUG¶VDVVHVVPHQWKRZHYHU³1R
EDWWOHVKLSVKDYHEHHQEXLOWE\WKLVFRXQWU\VLQFH´6WDQGOH\ZURWHWR6HFUHWDU\
6ZDQVRQRQ$XJXVW³DQGLWLVFRQVLGHUHGDGYLVDEOHWRWDNHDGYDQWDJHWRDVJUHDWDQ
H[WHQWDVLVSRVVLEOHRIWKHH[SHULHQFHWREHJDLQHGE\WKLVEXLOGLQJRIWKHWZREDWWOHVKLSV
DOUHDG\DSSURSULDWHGIRUSURYLGHGWKLVFDQEHGRQHZLWKRXWMHRSDUGL]LQJQDWLRQDO
VHFXULW\´ )XUWKHUPRUH6WDQGOH\KDGDOUHDG\FDPSDLJQHGWLUHOHVVO\IRUDUHJXODUL]HG
EXLOGLQJSURJUDPUDWKHUWKDQWKHSHOOPHOOFRQVWUXFWLRQIROORZHGE\WKHEXGJHWDU\
GURXJKWVRI\HVWHU\HDU³7KHLQFOXVLRQRIWKHVHWZRVKLSVLQWKH%XGJHWDV
1$5*%R[*HQHUDO%RDUG6HULDO1R0D\
%\RQO\RI$PHULFD¶VEDWWOHVKLSVZRXOGEHRYHUDJH,QFRQWUDVWE\RI%ULWDLQ¶V
EDWWOHVKLSVZRXOGEHRYHUDJH%\WKDWGDWH-DSDQZRXOGKDYHRILWVEDWWOHVKLSVRYHUDJH
1$5*%R[2IILFHRI&12/6HULDO1R³7HQ<HDU6KLSEXLOGLQJ3URJUDP´$XJ
,ELG
1L[RQ5RRVHYHOW,,,'DYLVWR5RRVHYHOW)HE'DYLVXUJHGWKH3UHVLGHQWWRNHHSSDFH
ZLWK%ULWLVKEXLOGLQJDQGQRWIDOOEHKLQGDVKDSSHQHGLQWKHV
1$5*%R[2IILFHRI&12/6HULDO1R³7HQ<HDU6KLSEXLOGLQJ3URJUDP´-XO\
UHFRPPHQGHGE\WKH*HQHUDO%RDUGLVQRWFRQVLVWHQWZLWKVXFKDSURJUDPDQGLV
WKHUHIRUHQRWUHFRPPHQGHG´ 6WDQGOH\GHVLUHGWKDWWKHHPSKDVLVUHPDLQRQEXLOGLQJXS
WKH861¶VIOHHWRIDX[LOLDULHVDQGWHQGHUVEHIRUHLWFRPPLWWHGWRDIOHHWRIXQWHVWHG
FDSLWDOVKLSV
$QRWKHUFRPSOLFDWLRQIRUWKH861DURVHRYHUGLSORPDWLFXQFHUWDLQW\UHJDUGLQJ
WKH-DSDQHVH,Q$XJXVWDPEDVVDGRU*UHZUHSRUWHGWKDWWKH9LFH0LQLVWHURIWKH,-1WROG
KLPWKDW³LWZRXOGEHRXWRIWKHTXHVWLRQIRU-DSDQWRHQWHUDQ\QDYDOOLPLWDWLRQWUHDW\IRU
SUREDEO\WKHQH[W\HDUV´ 7KH%ULWLVKKRSHWKDWWKH-DSDQHVHPLJKWEHLQGXFHGWR
MRLQWKHWUHDW\DIWHUDGLVSOD\RI:HVWHUQXQLW\DSSHDUHGWREHHQWLUHO\GDVKHG7KH
LPSOLFDWLRQVRIQHDUFHUWDLQ-DSDQHVHQRQSDUWLFLSDWLRQFRORUHGWKHLVVXHWKDWFRQIURQWHG
86SROLF\PDNHUVLQ6HSWHPEHUZKHQWKH%ULWLVKH[SUHVVHGLQWHUHVWLQPDLQWDLQLQJDW
OHDVW$UWLFOH;,;RIWKH:DVKLQJWRQ1DYDO7UHDW\²WKHQRQIRUWLILFDWLRQFODXVH2Q
6HSWHPEHULQDPHHWLQJEHWZHHQ$/0DOOHWDQG-RKQ+LFNHUVRQWKH%ULWLVKFKDUJH
G¶DIIDLUHVDQGWKHFKLHIRI:HVWHUQ(XURSHDQ'LYLVLRQUHVSHFWLYHO\0DOOHWVDLGWKDW
³IURPHYHU\VWDQGSRLQWSV\FKRORJLFDOSROLWLFDODVDGHWHUUHQWWRWKHUDFHLQDUPDPHQWV
DQGLQWKHJHQHUDOLQWHUHVWRISHDFHLWZRXOGEHZHOOWRSUHVHUYH$UWLFOH;,;DQGKLV
*RYHUQPHQWZDVPRVWDQ[LRXVWRKDYHLWSUHVHUYHG´ 7KH%ULWLVKGHVLUHGWKDWDQ\
UHQHZDODJUHHPHQWZRXOGLQFOXGHDSURYLVLRQWKDWZRXOGDOORZIRUWKHPRGHUQL]DWLRQRI
H[LVWLQJEDVHVEXWZRXOGSUHFOXGHWKHSUROLIHUDWLRQRIQHZIRUWLILFDWLRQV²WKLVDVLW
KDSSHQHGZDVLQOLQHZLWK%ULWLVKSODQVWRH[SDQGDQGIRUWLI\WKHLUQDYDOEDVHDW
6LQJDSRUH,ILWZHUHQRWUHQHZHGLWZRXOGEHDVVXUHGWKDWWKH3DFLILFZRXOGEHFRPH
,ELG
)586,*UHZWR+XOO$XJ
1$5*%R[2IILFHRI6HF1DY'RF6HULDO1R6WDQGOH\WR*%6HSW
GDQJHURXVO\PLOLWDUL]HGDQGDUDFHLQIRUWLILFDWLRQVFRXOGH[FHHGHYHQDUDFHLQ
DUPDPHQWVLQERWKFRVWDQGGDQJHUVWRWKHWZRSRZHUV¶)DU(DVWHUQLQWHUHVWV
2QFHDJDLQKRZHYHUWKHWZRVLGHVRIWKH$QJOR$PHULFDQUHODWLRQVKLSZHUHQRW
LQDFFRUGRQWKLVLVVXH6WDWH'HSDUWPHQW1DY\DQG$UP\RIILFLDOVLQFOXGLQJ6WDQGOH\
DQG'DYLVPHWRQ6HSWHPEHUWRGLVFXVVWKHSRVVLELOLW\RIUHQHZLQJ$UWLFOH;,;
'DYLVXVXDOO\DILUPYRLFHLQIDYRURIFRRSHUDWLRQZLWKWKH%ULWLVKZDVGHILQLWHO\DJDLQVW
WKHVXJJHVWLRQRIQHJRWLDWLQJRQWKHEDVLVRIDVLQJOHDUWLFOHIURPWKH:DVKLQJWRQ7UHDW\
7KH-DSDQHVH³KDGEURNHQWKHFKDLQLQWKUHHRUIRXUSODFHV´'DYLVVDLG³7RWDNHDQ
LVRODWHGOLQNRQWKHPRUURZRI-DSDQ¶VGHSDUWXUHIURPWKH&RQIHUHQFHDQGNHHSLWZDV
LOORJLFDO´,IWKH\ZHUHJRLQJWRQHJRWLDWHDWDOORQWKHDUWLFOHKHFRQWLQXHGWKH-DSDQHVH
KDGWREHZLOOLQJWRRIIHUFRQFHVVLRQVHOVHLWZRXOGPDNHWKHPDOODSSHDUZHDN 6WDQGOH\DJUHHGDQGIHOWWKHSRLQWRI$UWLFOH;,;ZDVPRRWDQ\ZD\VLQFH³WKH8QLWHG
6WDWHVKDGKHOGWKH3KLOLSSLQHVIRU\HDUVDQGKDGIDLOHGWRIRUWLI\WKHP,WZDVDEVXUG
WRWDONRIIRUWLI\LQJWKHPQRZ´ *HQHUDO(PELFNWKH86$UP\¶VUHSUHVHQWDWLYHDWWKH
PHHWLQJFRQILUPHG6WDQGOH\¶VYLHZ,QWKHHYHQWRIDZDUZLWKWKH-DSDQHVH(PELFN
VDLGWKH3KLOLSSLQHVZRXOGEH³DGHWULPHQWIURPDPLOLWDU\VWDQGSRLQW´ (PELFN
FRQWLQXHGWRVD\WKDWWKH%ULWLVKSURSRVDORI³PRGHUQL]DWLRQ´ZRXOG³VHUYHQRSXUSRVH´
IRUWKH86³&RUUHJLGRU´(PELFNVDLGUHIHUULQJWRWKHLVODQGIRUWDWWKHPRXWKRI0DQLOD
ED\³ZDVPHUHO\DUHIXJHDSODFHZKHUHWKHIODJPLJKWEHNHSWIO\LQJ´ /LNHWKH
1DY\WKH86$UP\KDGHYROYHGDQGFKDQJHGLWVVWUDWHJLFYLHZSRLQWRILWVSRVLWLRQLQWKH
)DU(DVW7KURXJKRXWWKHVDQGHDUO\µVVHQLRU86$UP\RIILFLDOVKDGLQVLVWHGWKDW
/2&0DQXVFULSW'LYLVLRQ'DYLV3DSHUV%R[0HPRRIPHHWLQJEHWZHHQ1DY\$UP\DQG6WDWH
'HSDUWPHQWV6HSW
,ELG
,ELG
,ELG
WKH\FRXOGKROGWKH3KLOLSSLQHVLQWKHFDVHRID3DFLILFZDUDQGPDLQWDLQLWDVDVWULNLQJ
SRLQWDJDLQVW-DSDQ 3HULRGLFDOO\LQWKHPLGµVVRPHDPELWLRXVVWUDWHJLVWZRXOG
FRQWLQXHWRFODLPWKDWWKH3KLOLSSLQHVZHUHGHIHQVLEOH²DVODWHDV0D\86$UP\
DGYLVRUVLQWKH3KLOLSSLQHVLQVLVWHGWKDWWKDW³DVXFFHVVDEULOOLDQWVXFFHVVLVDVVXUHG´LQ
GHIHQGLQJWKHLVODQGVWDWHZLWKDPLQLPXPRIDWWDFNHUVQHFHVVDU\WRGLVORGJHWKH
GHIHQGHUV %\WKHWLPHRIWKLVMRLQWPHHWLQJKRZHYHUWKHYLHZZDVLQWKHGLVWLQFW
PLQRULW\LQERWKWKH$UP\DQG1DY\'HSDUWPHQWV(PELFNDQG6WDQGOH\DJUHHGWKDWWKH
IRUWLILFDWLRQVUHTXLUHGWRPDNHWKH3KLOLSSLQHVGHIHQVLEOHZRXOGEHVRH[SHQVLYHDQGWLPH
FRQVXPLQJWKDWQR&RQJUHVVZRXOGDJUHHWRLW
7KHUHZDVDOVRVRPHTXHVWLRQRI%ULWLVKPRWLYDWLRQV(PELFNGRXEWHGWKDWWKH
%ULWLVKUHDOO\GHVLUHGWRIRUWLI\+RQJ.RQJVLQFHLWVSRVLWLRQDVWULGHWKH&KLQHVH
PDLQODQGZRXOGPDNHLW³KRVWDJHLQ-DSDQHVHKDQGV´LQWKHHYHQWRIZDU+HEHOLHYHG
WKDWWKH%ULWLVKZHUHWU\LQJ³WRGUDZXVXQWRDQHJRWLDWLRQDQGOHDYHXVKROGLQJWKH
EDJ´ 'DYLVH[SUHVVHGVLPLODUFRQFHUQ:KHQ&UDLJLHKDGILUVWDSSURDFKHGKLPRYHU
WKHLVVXHRI$UWLFOH;,;KHKDGDVVXUHG'DYLVWKDWWKHPRWLYDWLRQZDVWRUHVLVWGRPHVWLF
SUHVVXUHWRFRPPLWWRDFRVWO\DQGPLVJXLGHGIRUWLILFDWLRQRI+RQJ.RQJ1RZWKH
%ULWLVK*RYHUQPHQW¶VOLQHZDVWRLQFOXGHDQDPHQGPHQWWRDOORZIRUWKHIRUWLILFDWLRQRI
+RQJ.RQJ7KHLQFRQVLVWHQF\PDGH%ULWLVKPRWLYDWLRQVVXVSHFWLQ'DYLV¶YLHZ $OO
SDUWLHVDWWKHPHHWLQJ6WDWH1DY\DQG$UP\DJUHHGWKDWJLYHQWKHXQVHWWOHGVLWXDWLRQLQ
0LOOHU:DU3ODQ2UDQJH
1$5*%R[2IILFHRI0LOLWDU\$GYLVRUIRUWKH3KLOLSSLQHVWR6WDQGOH\HQFORVHG³1DWLRQDO
'HIHQVH3ODQIRUWKH3KLOLSSLQHV´0D\7KHEHOLHIWKDWWKH3KLOLSSLQHVFRXOGEHKHOGZDV
GHFOLQLQJIDVWLQWKHPLGVEXWH[SHULHQFHGDEHODWHGUHVXUJHQFHLQFKDPSLRQHGSULQFLSDOO\E\
'RXJODV0DF$UWKXU
/2&0DQXVFULSW'LYLVLRQ'DYLV3DSHUV%R[0HPRRIPHHWLQJEHWZHHQ1DY\$UP\DQG6WDWH
'HSDUWPHQWV6HSW
,ELG
WKH3DFLILFWKHLQWUDQVLJHQWSRVLWLRQRIWKH-DSDQHVHDQGWKHLQFRQVLVWHQF\RIWKH%ULWLVK
WKDWLWZRXOGEHEHVWWRQRWUHQHZ$UWLFOH;,;VHSDUDWHIURPWKHWUHDW\ 7KH*HQHUDO%RDUGRIIHUHGVLPLODUDGYLFHRQWKHTXHVWLRQRI$UWLFOH;,;EXWWKH
VXEVWDQFHRIWKHLUREMHFWLRQZDVGLIIHUHQW7KHLUSULPDU\FRQFHUQKDVWRGRZLWKWKH
IDLOLQJVRIWKH86*RYHUQPHQWUDWKHUWKDQ%ULWLVKPDFKLQDWLRQV2QFHDJDLQWKH\XUJHG
FODULW\RIREMHFWLYHVIURPWKHFLYLOLDQOHDGHUVKLS³8QOHVVWKHSROLF\RIWKH8QLWHG6WDWHV
DVUHJDUGVLWVPLOLWDU\DQGQDYDOVLWXDWLRQLQWKH)DU(DVWLVFOHDUO\RXWOLQHG´DQ2FWREHU
*HQHUDO%RDUGPHPRUHDG³WKH%RDUGZLOOEHFRPSOHWHO\DWDORVVWRHYDOXDWHWKH
PLOLWDU\FRQVLGHUDWLRQVLQYROYHGLQWKHTXHVWLRQRIUHQHZLQJ$UWLFOH´ ,IWKH86
*RYHUQPHQWKDGGHWHUPLQHGWKDWLWKDGQRVWDNHLQLWV)DU(DVWHUQSRVVHVVLRQVWKHQWKH
DUWLFOHKDGQRFRQVHTXHQFH,IKRZHYHUWKH8QLWHG6WDWHVGHWHUPLQHGLWKDGDOLPLWWRWKH
WUDQVJUHVVLRQVLWZRXOGDOORZIURPWKH-DSDQHVHWKHQWKH\ZDUQHGWKDWIDLOXUHWRUHQHZ
ZRXOGUHVXOWLQDQLPSUHJQDEOHULQJRIIRUWLILFDWLRQVDURXQG-DSDQ¶V+RPH,VODQGV7KH\
UHFRPPHQGHGWKDWLGHDOO\³$UWLFOHLVWREHUHQHZHGZLWKRXWFKDQJH´RWKHUWKDQD
SURYLVLRQWKDWZRXOGDOORZDOOSRZHUVFRQFHUQHGWR³LQVSHFW´FHUWDLQVLWHVWKDWZRXOGEH
DOORZHGPRGHUQL]DWLRQ
,QWHUHVWLQJO\KRZHYHUMXVWDIHZGD\VODWHUWKH%RDUGUHYHUVHGWKLV
UHFRPPHQGDWLRQ,QDPHPRLVVXHGE\WKH*HQHUDO%RDUG¶V&KDLUPDQ$GPLUDO-RVHSK
05HHYHVWKH%RDUGIRUPDOO\RSSRVHGUHQHZLQJWKHDUWLFOHVHSDUDWHO\VWDWLQJ³WKHRQO\
DGYDQWDJHDSSDUHQWLQDQDJUHHPHQWRIWKLVQDWXUHZRXOGEHWKHGRXEWIXORQHRIµJRLQJ
DORQJ¶ZLWK*UHDW%ULWDLQLQQHJRWLDWLRQV´ZKLOHDOORZLQJWKH-DSDQHVHDIUHHKDQGWR
,ELG
1$5*%R[0HPRIRU*HQHUDO%RDUG5HSO\WR6HF1DY6HULDO1R2FW
,ELG
FRQVROLGDWHLWVKROGRYHU&KLQD ³,QYLHZRIWKHXQVHWWOHGQDYDOVLWXDWLRQDVZHOODVWKH
SROLWLFDOVLWXDWLRQLQWKH)DU(DVW´5HHYHVFRQWLQXHG³DVZHOODVWKHLQDELOLW\RIWKH
8QLWHG6WDWHV*RYHUQPHQWWRFOHDUO\GHILQHLWIXWXUHSROLF\LQUHJDUGWKHUHWR´WKH*HQHUDO
%RDUGZDVFDWHJRULFDOO\DJDLQVWH[WHQGLQJQRQIRUWLILFDWLRQDVDQ³LQGHSHQGHQWGLSORPDWLF
GLVFXVVLRQ´ ,QVSLWHRIZKDWDSSHDUHGWREHVRPHGLVDJUHHPHQWZLWKLQWKH*HQHUDO
%RDUGWKHYLHZDPRQJSROLF\PDNHUVDSSHDUHGWREHXQDQLPRXVDQG+XOOLQIRUPHGWKH
%ULWLVKLQ2FWREHUWKDWWKH8QLWHG6WDWHVZRXOGQRWVWDQGZLWK%ULWDLQLQWKH
QHJRWLDWLRQV )RUWKHVHFRQGWLPHVLQFHWKHUDWLILFDWLRQRIWKHWUHDW\86SROLF\PDNHUV
VKLHGDZD\IURP%ULWDLQ¶VOHDG
2QDWOHDVWRQHSRLQWKRZHYHUWKH8QLWHG6WDWHV*RYHUQPHQWDOORZHGWKH%ULWLVK
IUHHUHLQZLWKRXWVLJQLILFDQWREMHFWLRQ,WKDGEHHQWKH%ULWLVK*RYHUQPHQW¶VLQWHQWLRQWR
QHJRWLDWHDWUHDW\ZLWKWKHILYHRULJLQDOVLJQDWRULHVWRWKH:DVKLQJWRQ7UHDW\DQGWKHQWR
ELODWHUDOO\EULQJLQRWKHUSRZHUVWRLWVWHUPV7KHWZRSRZHUVWKH%ULWLVKZHUHPRVW
FRQFHUQHGZLWKZHUHWKH8665DQG*HUPDQ\7KH%ULWLVKEHJDQQHJRWLDWLRQVZLWKWKH
6RYLHWVRYHUWKHVSULQJDQGVXPPHURI7KH8665¶VUDSLGLQGXVWULDOL]DWLRQDQG
DWWHQGDQWPLOLWDUL]DWLRQXQGHU6WDOLQZDVFDXVLQJFRQVLGHUDEOHWHQVLRQZLWK-DSDQLQWKH
)DU(DVW1XPHURXVERUGHUVNLUPLVKHVEHWZHHQ6RYLHWDQG-DSDQHVHWURRSVDORQJWKH
86650DQFKXULDERUGHUKDGVSXUUHGDPLOLWDU\EXLOGXSLQWKHDUHD,Q0D\6WDOLQ
SULYDWHO\WROG861DYDO$WWDFKp:6$QGHUVRQWKDWKHZRXOGJXDUDQWHH0RQJROLDQ
LQGHSHQGHQFHDJDLQVW-DSDQHVHHQFURDFKPHQW )URPDQDYDOVWDQGSRLQWWKH-DSDQHVH
KDGPDLQWDLQHGDYDVWOHDGRYHUWKHLUQRUWKHUQULYDOVHYHUVLQFHWKHVSHFWDFXODUGHIHDWRI
1$5*%R[*HQHUDO%RDUG6HULDO1R2FW
,ELG
1$5*3DSHUV5HODWLQJWR'LVDUPDPHQW%R[+XOOWHOHJUDPWR/RQGRQ(PEDVV\6HSW
1$5*%R[1DYDO$WWDFKp*UHDW%ULWDLQ6HULDO1R0D\
WKH5XVVLDQIOHHWDW7VXVKLPDLQ1RQHWKHOHVVJLYHQWKHODUJH86DQG8.IOHHWVWR
LWVHDVWDQGZHVW-DSDQZDVH[WUHPHO\VHQVLWLYHWRDQ\QDYDOLQFUHDVHVIURPWKH6RYLHWV
ZKRVHEDVHDW9ODGLYRVWRNWKUHDWHQHG-DSDQHVHZDWHUV%HWZHHQDQG8665
QDYDOH[SHQGLWXUHVKDGOHDSWDQDVWRXQGLQJSHUFHQW $-XQHUHSRUWIURP21,
HVWLPDWHGWKDWWKH6RYLHWVKDGYHVVHOVLQWKHLU)DU(DVWHUQIOHHWLQFOXGLQJ
VXEPDULQHV²DZRUULVRPHILJXUHIRU-DSDQHVHVKLSSLQJ %\WKH8665ZRXOG
FRPPHQFHLWVWKLUG³ILYH\HDUSODQ´DQG6WDOLQDQQRXQFHGWKDWKHZRXOGFRQFHQWUDWH
KHDYLO\RQQDYDOEXLOGLQJ %ULQJLQJWKH6RYLHWVRQVLGHZDVWKXVFRQVLGHUHGDYLWDO
REMHFWLYHIRUFRQWDLQLQJWKH-DSDQHVHWKUHDWDQGGHWHUULQJDQ\QDYDODJJUHVVLRQ
-XVWDVWKH\KDGFRQFHGHGRQWKHLVVXHRIWKH$*1$WKH8QLWHG6WDWHVDOORZHG
WKH%ULWLVKDIUHHKDQGWRGHDOZLWKWKH6RYLHWVDVDPHDQVWRDYRLGIXUWKHUHQWDQJOHPHQWV
LQWKH(XURSHDQVSKHUH$PHULFDQSROLF\PDNHUVDJUHHGWRDOORZWKH%ULWLVKWRVHFXUHWKH
VLJQDWXUHRIWKH6RYLHW8QLRQWRWKHVHFRQG/17DVORQJDVWKH\GLGVWUD\WRRIDURXWVLGH
WKHZULWWHQWHQHWVRIWKHWUHDW\7KH8.FRQFOXGHGWDONVZLWKWKH6RYLHWVRYHUWKH
VXPPHU7KHDJUHHPHQWFRQWDLQHGQXPHURXVUHVHUYDWLRQVWRZKLFKWKH6WDWH'HSDUWPHQW
REMHFWHG7KH6RYLHWVGHPDQGHGWKDWWKH\EHDEOHWRFRQVWUXFWWZREDWWOHVKLSVZLWK
LQFKJXQVE\H[FHHGLQJWKHOLPLWDJUHHGWRLQWKHVHFRQG/17WKDWWKH\EHDEOHWR
FRQVWUXFWVHYHQFUXLVHUVPRXQWLQJJXQVRIRYHULQFKHVYLRODWLQJWKHEXLOGLQJKROLGD\
RQKHDY\FUXLVHUVDQGWKDWWKHLU)DU(DVWHUQIOHHWZRXOGEHH[HPSWIURPWKHQRWLILFDWLRQ
FODXVH$QGHYHQZLWKDOOWKHVHUHVHUYDWLRQV6RYLHWSDUWLFLSDWLRQLQZKDWUHPDLQHGRIWKH
WUHDW\ZDVGHSHQGHQWRQWKHHYHQWXDODFFHVVLRQRIWKH*HUPDQVDQGWKH-DSDQHVH 86
1$5*%R[1DYDO$WWDFKp*UHDW%ULWDLQ6HULDO1R-XQH
1$5*%R[1DYDO$WWDFKp-DSDQ5HSRUW1R-XQH
,ELG
1$5*%R[$1R+XOOWR%LQJKDP6HSW
SROLF\PDNHUVZHUHJHQHUDOO\RIWKHRSLQLRQWKDWWKHDJUHHPHQWZDVVRTXDOLILHGDVWREH
ZRUWKOHVV6HFUHWDU\+XOOZDVQRWZRUULHGDERXW6RYLHWFRQVWUXFWLRQGLUHFWO\EXW
EHOLHYHGWKDWLWPD\LQGLUHFWO\DIIHFWWKHEXLOGLQJSURJUDPVRIRWKHUSRZHUV1RQHWKHOHVV
KHEHOLHYHGWKDW³WKLV*RYHUQPHQWGRHVQRWGHVLUHWRDVVXPHWKHRQXVRIRSSRVLQJWKLV
DPHQGPHQW´VLQFHLWZDV³WKHUHVSRQVLELOLW\RIWKH%ULWLVK*RYHUQPHQWDVQHJRWLDWRURI
WKH%LODWHUDO$JUHHPHQWZLWKWKH6RYLHW*RYHUQPHQWWRDFFHSWRUUHMHFWWKHDPHQGPHQWLQ
UHVSHFWRIFDSLWDOVKLSV´ 'DYLVFDPHWRDVLPLODUFRQFOXVLRQLQDQRWHWR5REHUW3HOO
ZULWLQJWKDW³LIWKH%ULWLVKZLVKWRHQWHULQWRWKHSURSRVHGDJUHHPHQWZHKDYHQR
REMHFWLRQVWRRIIHUÉXWWKDWWKH6RYLHWDJUHHPHQWDORQH³ZRXOGQRWDLGYHU\PXFKLQ
VROYLQJWKHJHQHUDOQDYDOSUREOHP´ 7KHPXWHG86UHVSRQVHDWOHDVWGLGQRWLPSHGHWKH
$QJOR$PHULFDQUHODWLRQVKLSEXWLWGLGQRWVKRZPXFKIDLWKLQWKH%ULWLVKGLSORPDWLF
VWUDWHJ\$IWHUWKHKLJKSRLQWRIWKHUHODWLRQVKLSDWWKHFRQIHUHQFHWKHOLPLWVRIWKH
UHYLWDOL]HG$QJOR$PHULFDQUHODWLRQVKLSZHUHTXLFNO\HVWDEOLVKHG
,QWKHIDOORI21,UHOHDVHGDGHWDLOHGUHSRUWRQWKH8.¶VUHDUPDPHQW
SURJUDP7KHUHSRUWFRQFOXGHGWKDW%ULWDLQZDVGDQJHURXVO\XQSUHSDUHGIRUDQRWKHUZDU
7KHUHSRUWFODLPHGWKDWWKHVRFDOOHG³WHQ\HDUSROLF\´²DQDVVXPSWLRQWKDWQRPDMRU
HPHUJHQF\ZRXOGRFFXUZLWKLQWKHQH[WGHFDGH²ZDVHVWDEOLVKHGLQDQGWKHEXGJHWV
IRUWKHVHUYLFHVZHUHGHWHUPLQHGRQWKLVEDVLV+RZHYHUGXHWRWKH'HSUHVVLRQDQGRWKHU
SROLWLFDOFRQVLGHUDWLRQVWKHWHQ\HDUSROLF\³GULIWHG´LQWRDWKLUWHHQ\HDUSROLF\WKDWZDV
RQO\EURNHQZLWKPRXQWLQJLQWHUQDWLRQDOWHQVLRQLQ 7KH51ZDVDVKDGRZRILWV
,ELG
1$5*3DSHUV5HODWLQJWR'LVDUPDPHQW%R['DYLVWR3HOO6HSW
1$5*%R[1DYDO$WWDFKp/RQGRQ5HSRUW1R2FW7KHDXWKRURIWKLVUHSRUW
IXQGDPHQWDOO\PLVXQGHUVWRRGWKH³WHQ\HDUSROLF\´,WZDVDFWXDOO\IRUPXODWHGILUVWLQDQGXQGHUZHQW
QXPHURXVLWHUDWLRQVWKURXJKRXWWKHLQWHUZDUSHULRG,WVHIIHFWDQGLQWHQWLRQZDVQHYHUDVFHUWDLQRUFOHDUFXW
DVWKHUHSRUWVXJJHVWV1RQHWKHOHVVWKHFRQFOXVLRQRIWKHUHSRUW²WKDW%ULWDLQZDVEDGO\XQSUHSDUHGIRU
DQRWKHUZDU²ZDVFRUUHFW
IRUPHUVHOIKDOIWKHVL]HLWKDGEHHQLQDQGDJLQJEDGO\,WVH[SHGLWLRQDU\IRUFH
FRQVLVWHGRIILYHZHDNGLYLVLRQVHTXLSSHGZLWKREVROHVFHQWPDWHULDO7KH5$)DQGWKH
QDWLRQ¶V$$FDSDELOLWLHVZHUHLWVPRVWLPSUHVVLYHDVVHWVEXWWKH\ZHUHVWLOOGHHPHG
LQVXIILFLHQWFRPSDUHGWRWKHVWULGHVPDGHE\WKHSRZHUVRQWKHFRQWLQHQW ,QWKH
%ULWLVKKDGGLVSDWFKHGDIOHHWWRWKH0HGLWHUUDQHDQWRGHWHU0XVVROLQLRQKLV$E\VVLQLDQ
FRQTXHVWEXWWKHVKLSVZHUHDOPRVWHQWLUHO\LJQRUHG7KHGHILDQFHRIDVHFRQGUDWHSRZHU
LQWKHIDFHRIWKH51KDV³SURGXFHGDSURIRXQGVHQVHRIZHDNQHVVLQ*UHDW%ULWDLQ´DQG
KDVWHQHGDGHFLVLRQWRUHDUP 7KHUHDUPDPHQWSURJUDPZDVQRWDVELJDVLWOLNHO\
QHHGHGWREH21,UHSRUWHGOLNHO\DVDUHVXOWRIWKHEDOORRQLQJGHEWRIWKHQDWLRQ²
ELOOLRQLQXSIURPPLOOLRQLQ 7KHOLRQ¶VVKDUHRIWKHVSHQGLQJ
LQFUHDVHVZDVJRLQJWRWKHDLUVHUYLFHVUDWKHUWKDQWKH1DY\KRZHYHUJLYHQSHUVLVWHQW
%ULWLVKIHDUVRIERPELQJUDLGVRYHU/RQGRQ 7KH21,UHSRUWQRWHGWKDWXQWLOWKH
SUHVHQW%ULWLVKUHDUPDPHQWSURJUDPZDVFRPSOHWHGLQ³WKHILUVWOLQHRI%ULWLVK
GHIHQVHZLOOEHWKH)RUHLJQ2IILFH´ 7KHILUVWOLQHRI$PHULFDQGHIHQVHFRQYHUVHO\ZDV*UHDW%ULWDLQDQGLWV1DY\
7KLVZDVHVSHFLDOO\WUXHLQWKH$WODQWLFZKHUH86QDYDOVWUDWHJLVWVZHUHTXLWHFHUWDLQWKDW
WKH51ZRXOGFRQWDLQDQ\IXWXUH*HUPDQWKUHDW+RZHYHULWZDVDOVRZLGHO\GHHPHG
WUXHLQWKH3DFLILF7KH)DU(DVW'LYLVLRQRIWKH6WDWH'HSDUWPHQWDORQJZLWKWKH861
ERWKEHOLHYHGWKDWWKH-DSDQHVHZHUHSODQQLQJDVRXWKZDUGSXVKZKLFKZRXOGSXWWKHP
LQGLUHFWFRQIOLFWZLWK%ULWLVKLQWHUHVWV²DV0DF'RQDOGKDGSXWLW%ULWDLQZDV³ILUVWRQ
,ELG
,ELG
,ELG
,ELG
,ELG
WKHILULQJOLQH´LQWKHHYHQWRID3DFLILFZDU 7KH21,UHSRUWUHYHDOHGWKDW$PHULFD¶V
ILUVWOLQHRIGHIHQVHZDVGDQJHURXVO\ZHDN1RQHWKHOHVVGHVSLWHWKHIDFWWKDWGLSORPDF\
ZRXOGUHPDLQWKH8.¶VSULPDU\ZHDSRQIRUWKHQH[WIHZ\HDUV86FRRSHUDWLRQRQ
PXOWLSOH%ULWLVKGLSORPDWLFSXVKHVZDVOLPLWHG
7KH8QLWHG6WDWHVRIFRXUVHZDVQHFHVVDULO\PRUHFRQFHUQHGZLWKLWVRZQ
UHDUPDPHQWSURJUDP$GPLUDO6WDQGOH\FRQWLQXHGKLVWRXURISXEOLFVSHDNLQJHYHQWV
VWXPSLQJIRUVXSSRUWIRUQDYDOIXQGLQJLQKLVFDSDFLW\ERWKDV&12DQGLQFUHDVLQJO\
$FWLQJ6HFUHWDU\RIWKH1DY\LQSODFHRIWKHFKURQLFDOO\LOO&ODXGH6ZDQVRQ*LYHQWKH
DSSURDFKLQJHQGRIWKHORQJEDWWOHVKLSKROLGD\DQGWKHDJLQJRIWKHFDSLWDOIOHHWWKHUH
ZDVHYHU\UHDVRQWRH[SHFWWKDWWKH1DY\'HSDUWPHQWZRXOGUHWXUQWRLWVHDUO\WK
FHQWXU\FDPSDLJQVVHHNLQJIXQGVIRUWKHFRQVWUXFWLRQRIWKHJORULRXVVKLSVRIWKHOLQH <HWWKHHPSKDVLVRI6WDQGOH\¶VVSHHFKHVFRQWLQXHGWREHWKHFRQVWUXFWLRQRIDX[LOLDULHV
WHQGHUVDQGWKHPHUFKDQWPDULQH,Q2FWREHU6WDQGOH\XUJHGWKH%DOWLPRUH3URSHOOHU
&OXERIWKHQHHGIRUD³PHUFKDQWPDULQHSROLF\ZKLFKLVVWURQJDQGHQGXULQJ´ZKLOHDOVR
VWUHVVLQJWKH³VWDELOL]LQJLQIOXHQFHRQLQGXVWU\DQGWKXVODERURIDQDQQXDOEXLOGLQJ
SURJUDPQHFHVVDU\WRPDLQWDLQDWUHDW\1DY\«´ 6WDQGOH\UHSHDWHGWKLVVHQWLPHQWLQD
1RYHPEHUDGGUHVVVD\LQJWKDW³WKHPHUHH[LVWHQFHDQGSRVVHVVLRQRIPDJQLILFHQWVKLSV
RIZDUGRHVQRWQHFHVVDULO\LQVXUHWKHPDULWLPHVHFXULW\RIDQDWLRQ)RUWKHFRPEDWDQW
XQLWVWREHHIIHFWLYH«WKH\PXVWEHDGHTXDWHO\VHUYLFHGE\DIOHHWRIDX[LOLDU\YHVVHOV
RLOHUVVXSSO\VKLSVDQGWHQGHUV´ 6WDQGOH\¶VVXFFHVVRU:LOOLDP'/HDK\ZKR
/2&0DQXVFULSW'LYLVLRQ'DYLV3DSHUV%R[0HPRRIPHHWLQJEHWZHHQ$PHULFDQDQG%ULWLVK
GHOHJDWLRQV1RY
0F%ULGH7HFKQRORJLFDO&KDQJH
/2&0DQXVFULSW'LYLVLRQ6WDQGOH\3DSHUV%R[1DY\3UHVV7UDQVFULSW$GGUHVVE\6WDQGOH\EHIRUH
3URSHOOHU&OXE2FW
/2&0DQXVFULSW'LYLVLRQ6WDQGOH\3DSHUV%R[1DY\3UHVV7UDQVFULSW$GGUHVVE\6WDQGOH\EHIRUH
6W$QGUHZ¶V6RFLHW\1RY
DVVXPHGWKHRIILFHRI&12LQ-DQXDU\FRQWLQXHGWKHVHSXEOLFDGGUHVVHVLQWKHVDPH
YHLQ³7KHSRZHUDQGLQIOXHQFHRIQDWLRQVWKURXJKRXWWKHZRUOGPD\EHDFFXUDWHO\
PHDVXUHGE\WKHLUPDLQWHQDQFHRIDQHIILFLHQWDGHTXDWH1DY\DQGWKHLURZQPHUFDQWLOH
PDULQH´/HDK\VDLGRQDQDWLRQDOO\EURDGFDVWDGGUHVVLQ2FWREHU³2XU
*RYHUQPHQWLVQRZPDNLQJHYHU\HIIRUWWRPDLQWDLQDQGWRLQFUHDVHIRUHLJQWUDGH2QHRI
WKHPRVWLPSRUWDQWRIWKHVHHIIRUWVLVWKHFUHDWLRQRIDIOHHWRI$PHULFDQPHUFKDQWVKLSV
WRFDUU\RXURZQSURGXFWVWRDQGIURPIRUHLJQPDUNHWVRIWUDGH´ /HDK\DOVRFRQWLQXHG
6WDQGOH\¶VVWUDWHJ\RIHPSKDVL]LQJWKHHFRQRPLFERRQWKDWVKLSEXLOGLQJEURXJKW
FODLPLQJWKDWQDYDOFRQVWUXFWLRQUHTXLUHGJRRGVDQGODERUIURPHYHU\VWDWHLQWKH
8QLRQ 7KLVZDVLQSDUWVDYY\DGYHUWLVLQJIRUWKH861DQGDQDWWHPSWWRMXVWLI\WKH
ODUJHH[SHQGLWXUHVUHTXLUHGIRUUHDUPDPHQWWRDUHOXFWDQWSXEOLF7KH1DY\'HSDUWPHQW
KDGLVVXHGPDQ\UHSRUWVDQGVWXGLHVGXULQJWKHLQWHUZDUSHULRGWKDWZHUHGHVLJQHGWR
FRPEDWWKHIUHTXHQWDVVHUWLRQWKDWWKH8QLWHG6WDWHVZDVDVHOIVXIILFLHQWQDWLRQDOHQWLW\
,QQDYDOFRQIHUHQFHVSDVW%ULWDLQDQG-DSDQKDGTXHVWLRQHGWKH$PHULFDQFODLPWRSDULW\
RQWKHEDVLVWKDWLWVHQRUPRXVFRQWLQHQWDOUHVRXUFHVPDGHLWRQO\IUDFWLRQDOO\DV
GHSHQGHQWRQLPSRUWVDVWKHLVODQGQDWLRQVWKDWWKH\FDOOHGKRPH2QPDQ\RFFDVLRQV
1DY\UHOHDVHGH[KDXVWLYHOLVWVRILPSRUWHGUDZPDWHULDOVDQGWUDGHGDWDLQRUGHUWR
HVWDEOLVKWKHQHFHVVLW\RIPDLQWDLQLQJDIOHHWHTXDOWRWKHODUJHVWLQWKHZRUOG ,QWKLV
/2&0DQXVFULSW'LYLVLRQ6WDQGOH\3DSHUV%R[1DY\3UHVV7UDQVFULSW1DY\'D\$GGUHVVE\
/HDK\2FW
,ELG
)RULQVWDQFH1$5*%R[*HQHUDO%RDUG5HSRUWRQUHGXFWLRQRQGLVSODFHPHQWRIFDSLWDO
VKLSVSUHSDUHGE\&RPPDQGHU(0:LOOLDPV0D\³7KH8QLWHG6WDWHVLVQRWVHOIVXSSRUWLQJ
DQGFDQQRWH[LVWLQWLPHRISHDFHRUFDUU\RQDZDUXSRQWKHUDZPDWHULDOVSURGXFHGIURPRUIRXQGLQWKH
VRLOZLWKLQWKHFRQWLQHQWDOOLPLWV6RPHRIWKHHVVHQWLDOPDWHULDOVZKLFKPXVWEHLPSRUWHGLIRXUJUHDW
LQGXVWULHVDUHWRRSHUDWHDWQHFHVVDU\FDSDFLW\DUHLPSRUWHGIURPVRXWKHDVWHUQ$VLD´DQGWKHUHIRUHUHTXLUHG
WKH1DY\WRSURWHFWWKHPIURPIODQNLQJ-DSDQHVHEDVHV
VHQVHWKHHPSKDVLVRQEXLOGLQJDODUJHPHUFKDQWPDULQHZDVDVHOIFRQVFLRXVDWWHPSWWR
DSSHDOWRWKHLQWHUHVWVRIRUGLQDU\$PHULFDQVLQDZD\WKDWLPPHGLDWHVHFXULW\WKUHDWV
FRXOGQRWGXHWRDODFNRISUR[LPDWHSRZHUV7KH1DY\FDVWLWVHOIDVERWKWKHSXUYH\RU
DQGSURWHFWRURIWUDGHDOOWKHZKLOHERRVWLQJODERUWKURXJKVKLSEXLOGLQJ
<HWWKHFRQVWDQWHPSKDVLVRQEXLOGLQJDVWURQJPHUFKDQWPDULQHDQGRWKHU
DX[LOLDULHVZDVDOVRHYLGHQFHRIDPRUHIXQGDPHQWDOVKLIWLQ861VWUDWHJ\DOUHDG\
DOOXGHGWRDERYH7KH861KDGVFDOHGEDFNLWVFDSLWDOVKLSUHSODFHPHQWSURJUDPLQIDYRU
RIDX[LOLDULHVVXFKDVGHVWUR\HUVDQGOLJKWFUXLVHUV(YHQWKH*HQHUDO%RDUGZKLFKKDG
UHFRPPHQGHGDUDSLGEDWWOHVKLSUHSODFHPHQWSURJUDPZDVPRUHIRFXVHGRQRWKHU
HOHPHQWVRIWKHIOHHW$VWKH861UHPDLQHGXQGHUVWUHQJWKLQFDUULHUWRQQDJHWKH%RDUG
ZDVDQ[LRXVWREXLOGWZRWRQFDUULHUVIRURSHUDWLRQVLQWKH3DFLILF 7KH%RDUG¶V
FUXLVHUUHFRPPHQGDWLRQVZHUHHYHQPRUHDPELWLRXVDVWKH\FDOOHGIRUWKHFRQVWUXFWLRQ
RIFUXLVHUVRIWRQVPRXQWLQJLQFKJXQVWKHPD[LPXPDOORZHGLQWKHVHFRQG
/17$GGLQJWRWKH86FUXLVHUVDOUHDG\EXLOWRUEXLOGLQJWKLVZRXOGJLYHWKH861D
IOHHWRIFUXLVHUV²IRU³IOHHW´GXW\IRU³FRQWURO´GXW\LQRWKHUZRUGVKDUDVVLQJ
HQHP\VKLSSLQJDQGFRPPXQLFDWLRQOLQHVDQGRYHUDJHYHVVHOVWREHUHWDLQHGDVD
PDWFKIRUWKHRYHUDJHFUXLVHUVLWKDGGHPDQGHGDWWKHFRQIHUHQFH ,QFRQWUDVWWKH
%RDUGUHFRPPHQGHGRQO\DVLQJOHEDWWOHVKLSIRUILVFDO\HDUWZRIRUDQGRQH
IRU 7KLVLPSOLFDWLRQVRIWKHVHSODQVRXJKWQRWWREHRYHUVWDWHG²WKHFDSLWDOVKLS
ZDVVWLOOZLGHO\FRQVLGHUHGWREHWKHEDFNERQHRIWKHIOHHW²EXWLWGRHVVKRZDQHYROXWLRQ
RI861VWUDWHJ\LQOLQHZLWKWKHGHYHORSPHQWRIWKH³FDXWLRQDU\´3DFLILFVWUDWHJ\$IOHHW
RIVXSSO\VKLSVFDUULHUVDQGFUXLVHUVZHUHDOOUHTXLVLWHIRUDVXFFHVVIXOWUDQVSDFLILF
1$5*%R[*HQHUDO%RDUG'RF³%XLOGLQJ3URJUDP)LVFDO<HDU´$SULO
,ELG
,ELG
MRXUQH\DVHQYLVLRQHGE\WKHPLGVLWHUDWLRQRI:DU3ODQ2UDQJH5DWKHUWKDQ
VHQGLQJDIOHHWRIEDWWOHVKLSVDFURVVWKH3DFLILFIRUD³0DKDQLDQ´VW\OHGHFLVLYHEDWWOHWKH
³FDXWLRQDU\´DSSURDFKFDOOHGIRUHQGXUDQFHVXSSO\VKLSVVHDFRQWUROFUXLVHUVDQG
ORQJUDQJHVFRXWLQJLQRSHQVHDVFDUULHUV,QODWHV861VWUDWHJ\EDWWOHVKLSVVWLOO
SOD\HGDSLYRWDOUROHDVWKH³OLQH´VKLSVEXWLQFUHDVLQJO\WKHIRFXVZDVRQDEDODQFHG
IOHHWWRILJKWDORQJZDU
$VGDZQHGLWEHFDPHLQFUHDVLQJO\FOHDUWKDWQDYDODUPVOLPLWDWLRQZDV
HIIHFWLYHO\RYHUDQGWKDWWKHVHFRQG/17ZRXOGQRWEHKRQRUHGLQWKHZD\WKH
GHOHJDWLRQVKDGKRSHG'HVSLWHWHQXRXVSURJUHVVPDGHZLWKWKH6RYLHWVLWDSSHDUHGWKDW
%ULWDLQ¶VELODWHUDOHIIRUWVWREULQJLQRWKHUFRQWLQHQWDOSRZHUVWRWKHWUHDW\KDGIDLOHG7KH
GRPHVWLFPRRGLQWKH8QLWHG6WDWHVVRXUHGDVZHOOZLWKQXPHURXVHGLWRULDOVFODLPLQJ
WKDWWKHQDYDOSRZHUVZHUHDERXWWRHPEDUNRQDQHZDUPVUDFH'DYLVXUJHGWKHSUHVV
GLYLVLRQRIWKH6WDWH'HSDUWPHQWWR³DWOHDVWDWWHPSWWRVFRWFKWKHZKROO\XQFDOOHGIRU
QHZVSDSHUFDPSDLJQÍRULWZRXOGEH³KLJKO\GDQJHURXVWRSHUPLWWKHLGHDWRJHWDEURDG
WKDWQDYDOOLPLWDWLRQZDVDWDQHQG«´ ,WZDVDIXWLOHHIIRUWWRVWHPWKHWLGHRIUHDOLW\
$VDSULPDU\DXWKRURIWKHWUHDW\'DYLVVWUXJJOHGDGPLUDEO\WRVHHLWVWHUPV
DGKHUHGWRLQIXWXUH861SODQV,QD0DUFKPHHWLQJEHWZHHQ6WDWHDQG1DY\
'HSDUWPHQWRIILFLDOV'DYLVKHOGWKHWUHDW\OLQHFRQFHUQLQJWKH1DY\¶VSODQVWRPRXQW
LQFKJXQVRQWKHUHSODFHPHQWFDSLWDOVKLSVGXHWREHODLGGRZQODWHULQWKH\HDU$GPLUDO
3\HVWDWHGWKDWVLQFHWKH86GLGQRW\HWNQRZZKDWFDOLEHUJXQVWKH-DSDQHVHLQWHQGHGWR
XVHLWZDVQHFHVVDU\WRHUURQWKHVLGHRIWKHKHDYLHUZHDSRQU\OHVWWKH86FRPPLVVLRQD
1$5*3DSHUV5HODWLQJWR'LVDUPDPHQW%R['DYLVWR0RRUHDW'LYLVLRQRI:HVWHUQ(XURSHDQ
$IIDLUV'HF
IOHHWRILQIHULRUEDWWOHVKLSV 'DYLVVWURQJO\REMHFWHGWRWKLVGHFLVLRQGHFODULQJ³WKHUH
ZDVVROLWWOHOHIWRIQDYDOOLPLWDWLRQDWWKHSUHVHQWWLPHWKDWZKDWZDVOHIWVKRXOGEH
FDUHIXOO\SUHVHUYHG´ $VORQJDVWKHUHZDVDQ\FKDQFHRISUHVVXULQJ-DSDQWRDFFHSW
DQ\PHDVXUHRIOLPLWDWLRQ'DYLVVDLGLWZDVLQDGYLVDEOHWKDWWKH8QLWHG6WDWHVEHWKHILUVW
SRZHUWRYLRODWHWKHWUHDW\IRUZKLFKLWKDGIRXJKWVRKDUG)XUWKHUPRUHWKH%ULWLVKZHUH
UHSRUWHGO\PRXQWLQJLQFKJXQVRQWKHLUQHZ.LQJ*HRUJH9FODVVEDWWOHVKLSVDQGLQ
WKHLQWHUHVWRIJRRG$QJOR$PHULFDQUHODWLRQVLWZDVLPSHUDWLYHWKDWWKH86IROORZHG
VXLW 3\HKRZHYHULQVLVWHGWKDWWKHFRVWRIDLQFKEDWWHU\YHUVXVDLQFKEDWWHU\
ZDVQRWVRJUHDWEXWWKHFRVWRIPRXQWLQJJXQVLQIHULRUWR-DSDQHVHEDWWOHVKLSVFRXOGEH
GLVDVWURXV 'DYLVH[SUHVVHGFRQILGHQFHWKDWWKH-DSDQHVHZRXOGQRWSUHVVWKHPDWWHUDV
KHKDVUHFHLYHGSHUVRQDODVVXUDQFHVIURP-DSDQHVH0LQLVWHURI)RUHLJQ$IIDLUV1DRWDNH
6DWRWKDWWKH)RUHLJQ2IILFHZRXOGGRDOOLWFRXOGWR³IDYRUDSROLF\RILQWHUQDWLRQDO
FRRSHUDWLRQ´ $VLWKDSSHQHGE\0DUFKWKH-DSDQHVHIRUPDOO\UHMHFWHGWKHLQFKFDOLEHU
OLPLWDWLRQ³LQVSLWHRIHYHU\HIIRUWRQWKHSDUWRI6DWR´GXHWRWKHRYHUZKHOPLQJSROLWLFDO
VWUHQJWKRIWKH)OHHW)DFWLRQ 8QGHUWKHWHUPVRIWKHVHFRQG/17WKLVJDYHWKH8QLWHG
6WDWHVWKHULJKWWRLQYRNHWKHWUHDW\¶VHVFDODWRUFODXVHWRPRXQWLQFKJXQV 'DYLV
VWLOOH[SUHVVHGKRSHWKDWWKLVPRYHZDVFRQWLQXHGEOXVWHURQWKHSDUWRIWKHKDUGOLQHUV
/2&0DQXVFULSW'LYLVLRQ'DYLV3DSHUV%R[0HPRRIPHHWLQJEHWZHHQ6WDWH'HSDUWPHQWDQG
1DY\'HSDUWPHQW0DUFK
/2&0DQXVFULSW'LYLVLRQ'DYLV3DSHUV%R[0HPRRIPHHWLQJEHWZHHQ6WDWH'HSDUWPHQWDQG
1DY\'HSDUWPHQW0DUFK
,ELG
,ELG
,ELG,QUHDOLW\WKH-DSDQHVHZHUHDOUHDG\SODQQLQJWREXLOGWKHWLWDQLF<DPDWRFODVVEDWWOHVKLSVZKLFK
ZRXOGGLVSODFHRYHUWRQVDQGPRXQWLQFKJXQV
)586,%LQJKDPWR+XOO0DUFK
7KHWUHDW\UHTXLUHGWKDWDOOSDUWLHVWRWKH:DVKLQJWRQ7UHDW\KDGWRDJUHHWRWKHLQFKOLPLWE\$SULO
HOVHWKHFDOLEHUOLPLWZRXOGDXWRPDWLFDOO\EHUDLVHGWRLQFKHV
DQGUHOD\HG%ULWLVKFRQFHUQVWKDWEXLOGLQJYHVVHOVZLWKWKHODUJHUFDOLEHUPLJKWLQGXFHD
TXDOLWDWLYHUDFHZLWKWKH-DSDQHVH +RZHYHU'DYLV¶YRLFHTXLFNO\EHFDPHDPLQRULW\
LQERWK1DY\DQG6WDWHFLUFOHV'HVSLWHVHYHUDOODVWGLWFKHIIRUWVRYHUWKHVSULQJWRJHWWKH
-DSDQHVHWRDGKHUHWRWKHORZHUOLPLW3UHVLGHQW5RRVHYHOWDQQRXQFHGRQ-XO\WKDWWKH
861ZRXOGPRXQWLQFKJXQVRQWKHWZRUHSODFHPHQWEDWWOHVKLSVODLGGRZQLQ :KLOHFDSLWDOVKLSGHVLJQVZRXOGUHPDLQZLWKLQWKHWRQUDQJHSUHVFULEHGE\WKH
WUHDW\LQVSLWHRIDSXVKE\VRPHPHPEHUVRIWKH*HQHUDO%RDUGWRFRQVWUXFWWRQ
YHVVHOVWKHVHFRQG/17ZDVFOHDUO\LQWDWWHUV 7KHPRVWHQGXULQJOHJDF\RIWKHWUHDW\ZDVQRWDQ\WKLQJFRQWDLQHGZLWKLQWKHWH[W
EXWUDWKHUWKHLPSURYHPHQWLQ$QJOR$PHULFDQUHODWLRQV.H\$PHULFDQSROLF\PDNHUV
FRQWLQXHGWRHPSKDVL]HWKHLPSRUWDQFHRIWKHUHODWLRQVKLS'DYLVZURWHWR3ULPH0LQLVWHU
1HYLOOH&KDPEHUODLQLQ-XQH³WKDWZRUOGHFRQRPLFDQGILQDQFLDOVWDELOLW\DQGKHQFH
SHDFHGHSHQGODUJHO\RQDQHQOLJKWHQHGSROLF\RI$QJOR$PHULFDQFRRSHUDWLRQ´DQG
XUJHGWKH%ULWLVKOHDGHUWRFRQWLQXHHIIRUWVDWDUPVOLPLWDWLRQ ,QDVSHHFKLQ
3KLODGHOSKLDWKHQUHWLUHG$GPLUDO6WDQGOH\SURIHVVHGKLVEHOLHIWKDW³2XUSHRSOH
JHQHUDOO\KDYHUHJDUGHG(QJODQGDVRXUPRWKHUFRXQWU\DQGKDYHDVVXPHGWKDWWKH8QLWHG
6WDWHVZDVHYHUXQGHUWKHVKHOWHUDQGSURWHFWLRQRI(QJODQG¶VVHDSRZHU´6WDQGOH\ZHQW
RQWRVD\WKDW³,WKDVDOZD\VEHHQP\SHUVRQDOEHOLHIWKDWWKH(QJOLVKVSHDNLQJUDFHPXVW
HLWKHUVWDQGRUIDOOWRJHWKHU0\REVHUYDWLRQVRYHUDSHULRGRIIRUW\ILYH\HDUVLQWKH1DY\
OHDGPHWREHOLHYHWKDWGHHSO\HPEHGGHGLQWKHVXEFRQVFLRXVPLQGRIRXUFLWL]HQU\LVWKH
IHHOLQJWKDWZKHQWKHODVWFDOOFRPHV«SHRSOHZLWKWKHVDPHRULJLQWKHVDPHFXOWXUHWKH
)586,'DYLVWR+XOO$SULO
)586,+XOOWUDQVPLWWLQJ5RRVHYHOW¶VVWDWHPHQWWR%LQJKDP-XO\
1$5*%R[2IILFHRI&12/6HULDO1R³7HQ<HDU6KLSEXLOGLQJ3URJUDP´$XJ
/2&0DQXVFULSW'LYLVLRQ'DYLV3DSHUV%R['DYLVWR&KDPEHUODLQ-XQH
VDPHODQJXDJHDQGWKHVDPHLGHDOVDQGWUDGLWLRQVZLOOEHIRXQGLQWKHVDPHOLIHERDW´ &HUWDLQO\QHDUO\DOOWKHGHOHJDWHVWRWKH&RQIHUHQFHLPEXHG$QJOR$PHULFDQ
UHODWLRQVZLWKDGHJUHHRIYLWDOLPSRUWDQFH²'DYLVDQG6WDQGOH\HVSHFLDOO\EXWDOVR
RWKHUVVXFKDVWKH6WDWH'HSDUWPHQW¶V:LOOLDP3KLOOLSVDQGWKH1DY\'HSDUWPHQW¶V
5R\DO,QJHUVROO²DVWKH\DOOKDGGHWDLOHGNQRZOHGJHRIWKHLQWUDFWDEOHQDYDOGLOHPPDWKDW
IDFHGWKH:HVWHUQ3RZHUVDQGWKHQHFHVVLW\RI%ULWLVKFRRSHUDWLRQLQVROYLQJLW
7KHUHZHUHVRPHLQGLFDWLRQVWKDWWKLVIHHOLQJSHUPHDWHGWKH:KLWH+RXVHDVZHOO
2Q2FWREHU5RRVHYHOWGHOLYHUHGKLV³4XDUDQWLQH6SHHFK´ZKLFKKDVWUDGLWLRQDOO\
EHHQFLWHGDVDWXUQLQJSRLQWLQ5RRVHYHOW¶VSUHVLGHQF\LQZKLFKWKHWRQHRIKLVGLVFRXUVH
EHFDPHPRUHLQWHUQDWLRQDO,QWKLVVSHHFK5RRVHYHOWIDPRXVO\SURFODLPHGWKDW³:KHQDQ
HSLGHPLFRISK\VLFDOGLVHDVHVWDUWVWRVSUHDGWKHFRPPXQLW\DSSURYHVDQGMRLQVLQD
TXDUDQWLQHRIWKHSDWLHQWVLQRUGHUWRSURWHFWWKHKHDOWKRIWKHFRPPXQLW\DJDLQVWWKH
VSUHDGRIWKHGLVHDVH´ :KLOHIRUSROLWLFDOUHDVRQV5RRVHYHOWPHQWLRQHGQRQDWLRQE\
QDPHLWZDVFOHDUWKDWWKH³SDWLHQWV´KHUHIHUUHGWRZHUH,WDO\*HUPDQ\DQG-DSDQ<HW
LWLVDOVRHYLGHQWWKDWKHKDGVSHFLILFSRZHUVLQPLQGZKHQKHUHIHUUHGWR³WKH
FRPPXQLW\´*LYHQ%ULWDLQ¶VSRVVHVVLRQRIWKHODUJHVW1DY\LQWKHZRUOGDQGLWVKLVWRULF
SROLF\RIEORFNDGHLWDSSHDUHGFHUWDLQWKDW5RRVHYHOWKDGWKH8QLWHG.LQJGRPLQPLQG
ZKHQKHVSRNHRIDFRPPXQLW\³TXDUDQWLQH´
7KLVLPSUHVVLRQLVVXSSRUWHGE\WKH$QJOR$PHULFDQWDONVZKLFKIROORZHGWKH
3DQD\,QFLGHQWODWHUWKDW\HDU7KH-DSDQHVHKDGODXQFKHGDODUJHVFDOHH[SHGLWLRQLQWR
WKH&KLQHVHKHDUWODQGRYHUWKHVXPPHULQYDGLQJIURPWKHLUWHUULWRU\LQ0DQFKXNXRDQG
UDLGLQJDORQJWKHFRDVW7KH861GLVSDWFKHGVHYHUDOVPDOOYHVVHOVWRSURWHFW$PHULFDQ
/2&0DQXVFULSW'LYLVLRQ6WDQGOH\3DSHUV%R[7UDQVFULSWRI6WDQGOH\$GGUHVVDWWKDQQXDOGLQQHU
RIWKH3HQQV\OYDQLD6RFLHW\'HF
5RVHQPDQ3XEOLF3DSHUV9RO9,6SHHFKLQ&KLFDJR2FW
FLWL]HQVDQGSURSHUW\LQ&KLQDZKROD\LQWKHSDWKRIWKHZDU 2Q'HFHPEHUD
VTXDGURQRI-DSDQHVHSODQHVVDQNRQHVXFKYHVVHOWKH8663DQD\RQWKH<DQJW]H5LYHU
NLOOLQJWKUHH$PHULFDQVDLORUV ,WZDVKRSHGLQ%ULWLVKFLUFOHVWKDWWKHVLQNLQJZRXOG
JDOYDQL]H86SROLF\PDNHUVDJDLQVW-DSDQDQGSURPSWWKHPWRPDNHRIILFLDOVHFXULW\
DUUDQJHPHQWVZLWKWKH8QLWHG.LQJGRPLQWKH3DFLILF5RRVHYHOWKRZHYHULQIRUPHG
(GHQWKDWWKH8QLWHG6WDWHVFRXOGHQWHULQWRQRVXFKSDFWEXWWKDWKHZDVDPHQDEOHWR
RSHQLQJ$QJOR$PHULFDQFRQYHUVDWLRQVRQWKHPDWWHU7KH3UHVLGHQW¶VUHWLFHQFH
SURPSWHG&KDPEHUODLQWRGLVPLVVWKHSURVSHFWRIUHDO$PHULFDQFRRSHUDWLRQVD\LQJ³WKH
SRZHUWKDW>KDV@WKHJUHDWHVWVWUHQJWK>LV@$PHULFDEXWKHZRXOGEHDUDVKPDQZKR
EDVHGKLVFDOFXODWLRQVRQKHOSIURPWKDWTXDUWHU´,QDVHSDUDWHVWDWHPHQWWKH3ULPH
0LQLVWHUVDLGWKDW³LWLVDOZD\VEHVWDQGVDIHVWWRFRXQWRQQRWKLQJIURPWKH$PHULFDQV
EXWZRUGV´ ,QVSLWHRI&KDPEHUODLQ¶VGLVDSSRLQWPHQW5RRVHYHOWZDVWUXHWRKLVZRUGDQGKH
DQGKLVFORVHSHUVRQDOFRQILGDQW&12:LOOLDP'/HDK\DUUDQJHGIRUWDONVWREULQJDERXW
DQDUUDQJHPHQWZLWKWKH5R\DO1DY\(YHQLI5RRVHYHOWZDVFRQVWUDLQHGE\SROLWLFDO
FRQVLGHUDWLRQVWKH861ZDVDEVROXWHO\UHDG\WRDFFHOHUDWHWKH$QJOR$PHULFDQ
UHODWLRQVKLSDIWHUWKHVLQNLQJRI3DQD\%RWK&12/HDK\DQGWKH86FRPPDQGHURIWKH
$VLDWLFIOHHW$GPLUDO+DUU\<DUQHOOZHUHGHFLGHG$QJORSKLOHVZKRIDYRUHGFORVH
FRRSHUDWLRQZLWKWKH%ULWLVKDVWKHRXWORRNLQWKH3DFLILFGDUNHQHGSUHFLSLWRXVO\IROORZHG
WKH-DSDQHVHLQYDVLRQRI&KLQD7KHGD\DIWHUWKH3DQD\ZDVVXQN/HDK\ZURWHLQKLV
)5863DSHUV5HODWLQJWR)RUHLJQ5HODWLRQVRIWKH8QLWHG6WDWHV-DSDQ,6WDWH
'HSDUWPHQWSUHVVUHOHDVH1RY3DQD\DQG/X]RQZHUHGLVSDWFKHGWR1DQNLQJWRHYDFXDWH86
FLWL]HQVZKRZLVKHGWROHDYH
$NLUD,UL\H7KH2ULJLQVRIWKH6HFRQG:RUOG:DULQ$VLDDQGWKH3DFLILF+DUORZ/RQJPDQ
3XEOLVKLQJ
3HO]5DFHWR3HDUO+DUERU
GLDU\WKDWLWZDV³WLPHQRZWRJHWWKH)OHHWUHDG\IRUVHD´DQG³WRPDNHDQDJUHHPHQW
ZLWKWKH%ULWLVK1DY\IRUMRLQWDFWLRQ´ <DUQHOOH[SUHVVHGDVLPLODUVHQWLPHQWZULWLQJ
WR/HDK\³LWLVP\ILUPFRQYLFWLRQWKDWZHVKRXOGVWLFNZLWK(QJODQGDQG)UDQFHLQDOO
RXUGHDOLQJVLQWKH)DU(DVW«$VIRUSXOOLQJFKHVWQXWVRXWRIWKHILUH(QJODQGVWDQGVWR
SXOOMXVWDVPDQ\RXWIRUXVDVZHGRIRUKHU,IWKHVHWKUHHFRXQWULHVVWDQGWRJHWKHUWKH\
FDQGRPLQDWHWKHVLWXDWLRQLQWKH)DU(DVW,IWKH\GRQRWWKH\ZLOOEHGHIHDWHGVLQJO\DQG
LQGHWDLO´ 7KHVHQWLPHQWVH[SUHVVHGWRZDUGVWKH5R\DO1DY\E\WKH861¶VWRSPHQ
KDGFRPSOHWHO\UHYHUVHGIURPWKHVXVSLFLRQDQGUHVHQWPHQWWKDWSHUYDGHGWKHVHUYLFH
GXULQJWKHHDUO\SDUWRIWKHGHFDGH)DFHGZLWKWKHVWDUNWDFWLFDODQGVWUDWHJLFUHDOLWLHVRID
3DFLILFZDUWKHDUPHGVHUYLFHVQRZH[FHHGHGWKHLUFLYLOLDQFRXQWHUSDUWVLQWKHLU
HQWKXVLDVPIRUFORVHFRRSHUDWLRQZLWKWKH%ULWLVK
/HDK\VHOHFWHG$GPLUDO5R\DO(,QJHUVROODVHQLRUWHFKQLFDODGYLVRUWRWKH86
GHOHJDWLRQDWWKHFRQIHUHQFHWRFRRUGLQDWHVWUDWHJ\ZLWKWKH$GPLUDOW\¶V3ODQ
'LYLVLRQ$UULYLQJLQ/RQGRQLQ-DQXDU\WKH,QJHUVROOFRQYHUVDWLRQVZHUHIULHQGO\
DQGIUDQN7KH%ULWLVKUHYHDOHGWKHLUH[DFWVWUHQJWKLQWKH)DU(DVWDQGWKHLUSODQVWREXLOG
XSWKHVHIRUFHVLIQHFHVVDU\$WWKHWLPHRIWKHGLVFXVVLRQVWKH%ULWLVKWROG,QJHUVROOWKDW
WKH\KDGDSDOWU\IRUFHRIWZRFDUULHUVWHQFUXLVHUVDQGDVPDWWHULQJRIGHVWUR\HUVLQWKH
)DU(DVWEXWWKDWWKH\LQWHQGHGWRVHQGDIOHHWKHDGHGE\QLQHEDWWOHVKLSVLQWKHHYHQWWKDW
ZDUZLWK-DSDQDSSHDUHGOLNHO\ ,QJHUVROOUHFLSURFDWHGDQGVKDUHGZLWKLPSUHVVLYH
GHWDLOWKHRXWOLQHRI:DU3ODQ2UDQJHDQGWKHIOHHWVWUHQJWKWKH861LQWHQGHGWR
PXVWHU %RWKSDUWLHVDVVXUHGWKHRWKHUWKDWWKHLUUHVSHFWLYHQDYLHVFRXOGPDNHXVHRI
6LPSVRQ$QJOR$PHULFDQ1DYDO5HODWLRQV/HDK\¶V'LDU\'HF
6LPSVRQ$QJOR$PHULFDQ1DYDO5HODWLRQV<DUQHOOWR/HDK\'HF
6LPSVRQ$QJOR$PHULFDQ1DYDO5HODWLRQVPHPRRIFRQYHUVDWLRQDW$GPLUDOW\-DQ
6LPSVRQ$QJOR$PHULFDQ1DYDO5HODWLRQVPHPRRIFRQYHUVDWLRQDW$GPLUDOW\-DQ
WKHWHUULWRULDOZDWHUVRIWKHRWKHUIRUWKHLURSHUDWLRQV²WKH%ULWLVKHYHQH[WHQGHGWKHXVH
RIWKHLUEDVHDV6LQJDSRUHIRUWKH86IOHHWWKRXJK,QJHUVROOZDVWROGLWZRXOGQRWEHIXOO\
FRPSOHWHGIRUDQRWKHUPRQWKV,WZDVDOVRDJUHHGWKDWERWKIOHHWVVKRXOGDUULYHDWWKHLU
UHVSHFWLYHEDVHVWKH5R\DO1DY\DW6LQJDSRUHWKH8QLWHG6WDWHV1DY\DW+DZDLLDWWKH
VDPHWLPHDQGWRV\QFKURQL]HRSHUDWLRQVDVPXFKDVSRVVLEOHLQRUGHUWRSURGXFHWKH
PD[LPXPHIIHFWXSRQ-DSDQ 7KHUHZDVDOVRGLVFXVVLRQRIDVRFDOOHG³GLVWDQW
EORFNDGH´DVWUDWHJ\ZKHUHE\WKHWZRQDYLHVZRXOGFXW-DSDQRIIIURPVXSSOLHVWKDWLW
LPSRUWHGIURPEH\RQGLWVQHDUDEURDGPRVWQRWDEO\RLO7KHURXJKOLQHVRIWKLVGLVWDQW
EORFNDGHZHUHVNHWFKHGRXWZLWKWKH5R\DO1DY\WRWDNHWKH6LQJDSRUH²1HZ*XLQHD²
$XVWUDOLDQOLQHZKLOHWKH861WRWDNHHYHU\WKLQJIURP$ODVNDWR&DSH+RUQLQWKH
SURFHVVDVVXPLQJUHVSRQVLELOLW\IRUWKHGHIHQVHRIWKH:HVW&RDVWRIWKH&RPPRQZHDOWK
QDWLRQRI&DQDGD <DUQHOOKDGRXWOLQHGWKLVGLVWDQWEORFNDGHSODQWR5RRVHYHOWLQODWHWRD
IDYRUDEOHUHFHSWLRQ³:LWKRXUDOOLHV´WKH$GPLUDOZURWHWRWKH3UHVLGHQW³ZHZRXOG
FRQWUROURXJKO\QLQHW\SHUFHQWRIWKHZRUOG¶VUHVHUYHVRILURQFRDODQGRLODVZHOODVD
PDMRUSRUWLRQRIRWKHUUDZPDWHULDOV´%\DFRPELQDWLRQRIHPEDUJRDQGEORFNDGH
<DUQHOOLQVLVWHGWKH8QLWHG6WDWHVDQG%ULWDLQFRXOGHQVXUHWKDW-DSDQZRXOGODFNWKH
PDWHULDOVQHHGHGWRVXVWDLQDZDUHFRQRP\³6RPHQDWLRQVFDQEHVWUDQJOHGWRGHDWK´KH
WROGWKH3UHVLGHQW5RRVHYHOWH[SUHVVHGKLVDSSURYDORIWKHSODQWR/HDK\FRPPHQWLQJLQ
KLVXVXDOEUHH]\ZD\WKDW³<DUQHOOWDONVDORWRIVHQVH«LWJRHVDORQJZLWKWKDWZRUG
µTXDUDQWLQH¶,XVHGLQWKH&KLFDJRVSHHFKODVWPRQWK´ 7KHSODQZDVODWHUFRGLILHGDV
-RLQW$UP\1DY\5DLQERZ7ZRSDUWRIDVHULHVRIZDUSODQVIRUDJOREDOFRQIOLFWDQGD
6LPSVRQ$QJOR$PHULFDQ1DYDO5HODWLRQVPHPRRIFRQYHUVDWLRQDW$GPLUDOW\-DQ
6LPSVRQ$QJOR$PHULFDQ1DYDO5HODWLRQVPHPRRIFRQYHUVDWLRQDW$GPLUDOW\-DQ
3HO]5DFHWR3HDUO+DUERU
WZRRFHDQZDU5DLQERZ7ZRHYHQWXDOO\HYROYHGLQWRWKHILQDOSODQEHIRUHWKHZDU
5DLQERZ)LYHZKLFKDGYRFDWHGDGHIHQVLYHZDULQWKH3DFLILFDQGD³(XURSH)LUVW´
RULHQWDWLRQ ,WVHHPHGDVWKRXJKERWKWKHDGPLQLVWUDWLRQDQGWKHPLOLWDU\KDGFRQFOXGHGWKDW
WKH$PHULFDQUHODWLRQVKLSZLWK%ULWDLQZRXOGUHPDLQDFRUQHUVWRQHIRUVHFXULW\DQGIRU
WKHSUHVHUYDWLRQRIDIDPLOLDUZRUOGRUGHU,WZDVDORQJGLVWDQFHIURPWKHFKLOO\ELODWHUDO
SUHOLPLQDULHVRYHUWKHVXPPHURI$VWKHGDZQRIWKH6HFRQG:RUOG:DUQHDUHG
$PHULFDQSROLF\PDNHUVEHFDPHLQFUHDVLQJO\UHFRQFLOHGWRWKHIDFWWKDWDJUHDWHUGHJUHH
RILQWHUQDWLRQDOFRRSHUDWLRQWKDQDVWULFWSKLORVRSK\RIQRQLQWHUYHQWLRQLVPZRXOG
QRUPDOO\DOORZZDVQHFHVVDU\WRPDLQWDLQWKHVHFXULW\RIWKH8QLWHG6WDWHV)ROORZLQJWKH
URXJKDZDNHQLQJRIWKHFRQIHUHQFH$PHULFDZDVIRUFHGWRFRPHWRWHUPVZLWKD
GHWHULRUDWLQJVLWXDWLRQRQERWKLWVIODQNVDQGD1DY\WKDWZDVLQVXIILFLHQWWRGHDOZLWK
ERWKDWRQFH7KHVLWXDWLRQFDOOHGIRULQWHUQDWLRQDODOLJQPHQWZLWKWKRVHQDWLRQVLWVKDUHG
WKHJUHDWHVWLQWHUHVWVZLWKDQGWKH$PHULFDQSROLF\PDNHUVGHPRQVWUDWHGWKHLUZLOOLQJQHVV
WRDGDSWDFFRUGLQJO\
5XVVHO):HLJOH\7KH$PHULFDQ:D\RI:DU$+LVWRU\RI8QLWHG6WDWHV0LOLWDU\6WUDWHJ\DQG3ROLF\
%ORRPLQJWRQ,1,QGLDQD8QLYHUVLW\3UHVV
&+$37(5&21&/86,21
7KHQDUUDWLYHWRWKLVWKHVLVFRQFOXGHVLQ%\WKHQXPHURXVWKUHDWVWR
WKH:HVWHUQ3RZHUVKDGDFWXDOL]HGDQGVRRQIRUHLJQSROLF\ZDVGLFWDWHGRQWKHEDVLVRI
ZDUWLPHXUJHQF\RIDQHQWLUHO\GLIIHUHQWEUHHGWKDQWKHVRUWIRXQGLQFRQIHUHQFHKDOOV
7KHVWRU\RIWKH$QJOR$PHULFDQUHODWLRQVKLSIURPRQZDUGLVDWDOHH[SHUWO\WROGLQ
FRXQWOHVVSODFHV
7KH6HFRQG/RQGRQ1DYDO&RQIHUHQFHRQWKHRWKHUKDQGLVSRRUO\FRYHUHGLQ
WKHOLWHUDWXUH)HZKLVWRULDQVRIHLWKHUWKHLQWHUZDU8QLWHG6WDWHV1DY\RULQWHUZDU86
IRUHLJQSROLF\DGGUHVVWKHFRQIHUHQFHDWDOO(YHQKLVWRULHVWKDWDUHGHYRWHGVROHO\WRWKH
QDYDODUPVFRQWUROWUHDWLHVVFDUFHO\PHQWLRQWKHILQDOPHHWLQJRIWKH3RZHUV7KHUHDVRQ
IRUWKHFRQIHUHQFH¶VQHDUDEVHQFHLQWKHKLVWRULRJUDSK\LVFOHDU%\IDLOLQJWRVHFXUHWKH
VLJQDWXUHRIWKH-DSDQHVHWKHWUHDW\ZDVHVVHQWLDOO\DIDLOXUHIURPWKHEHJLQQLQJ,WVWHUPV
ZHUHDJUHDWGHDOPRUHOLPLWHGWKDQLWVSUHGHFHVVRUVDQGWKH\ZHUHTXLFNO\UHQGHUHG
REVROHWHWKURXJKWKHLQYRFDWLRQRIYDULRXVHVFDODWRUFODXVHV$UPVFRQWURODWOHDVWDVLW
ZDVXQGHUVWRRGE\GHOHJDWHVWRWKH:DVKLQJWRQ&RQIHUHQFHDQGWKH/RQGRQ
&RQIHUHQFHZDVHIIHFWLYHO\HQGHGZKHQWKRVHWUHDWLHVH[SLUHGRQ-DQXDU\
+RZHYHUWKH6HFRQG/17VWLOOGHVHUYHVPXFKPRUHDWWHQWLRQWKDQLWKDVEHHQ
JLYHQE\KLVWRULDQV(YHQLIWKHWUHDW\LWVHOIZDVRIOLWWOHFRQVHTXHQFHLWZDVWKHUHVXOWRI
VHULRXVGHWHUPLQHGDQGH[KDXVWLYHGLSORPDF\7KH$QJOR$PHULFDQUHODWLRQVKLSZDV
JUHDWO\VWUHQJWKHQHGRYHUWKHFRXUVHRIQHJRWLDWLRQVDWDFULWLFDOMXQFWXUH7KHIUDQN
GLVFXVVLRQVRIVWUDWHJ\DQGWKHFRRUGLQDWLRQRIWDFWLFVDWWKHFRQIHUHQFHDQGLWV
VXUURXQGLQJWDONVLVHYLGHQFHRIDGHJUHHRIWUXVWH[FHHGLQJO\UDUHDPRQJQDWLRQV²
HVSHFLDOO\DWDWLPHRIVXFKXQFHUWDLQW\DQGGLVFRUG7KHFRQIHUHQFHSUHVHQWVDQ
LQWHUHVWLQJFDVHWRVWXGHQWVRILQWHUQDWLRQDOUHODWLRQV)ROORZHUVRIWKHUHDOLVWVFKRRORI
WKRXJKWZRXOGKDYHGLIILFXOW\HQRXJKZLWKWKHDUGHQWGHVLUHWRDGKHUHWRDUPVFRQWURO
IURPPLOLWDU\PHQDQGFLYLOLDQVDOLNHOHWDORQHWKHFORVHQHVVRIWKHUHODWLRQVKLSEHWZHHQ
$PHULFDDQG%ULWDLQGXULQJWKHVH\HDUV
7KHFRQIHUHQFHDOVRSURYLGHVDIDVFLQDWLQJFDVHVWXG\IRU$PHULFDQIRUHLJQSROLF\
LQWKHLQWHUZDU\HDUV7KHIRUHLJQSROLF\SURFHVVKDVEHHQHQGOHVVO\H[DPLQHGLQWKH
\HDUVGXULQJDQGHVSHFLDOO\IROORZLQJ:RUOG:DU7ZRE\KLVWRULDQVDQGSROLWLFDO
VFLHQWLVWVDOLNH%\WKDWWLPHWKHH[HFXWLYHEUDQFKRIWKH86*RYHUQPHQWKDGH[SDQGHG
JUHDWO\DQGWKHSURFHVVKDGFKDQJHGFRPSOHWHO\IURPWKHUHODWLYHO\LQWLPDWHDIIDLULWKDG
UHPDLQHGXQGHU5RRVHYHOW¶VILUVWWZRWHUPV ,QSDUWLFXODUWKHUHODWLRQVKLSEHWZHHQWKH
PLOLWDU\DQGFLYLOLDQEUDQFKHVRIJRYHUQPHQWZDVQRWUHJXODUL]HGLQSHDFHWLPHWRWKH
H[WHQWWKDWWKH\ZHUHGXULQJWKH&ROG:DU7KHUHZDVQR1DWLRQDO6HFXULW\&RXQFLORU
HYHQWKH-RLQW&KLHIVRI6WDII 7KHOLQHVRIFRPPXQLFDWLRQEHWZHHQWKHSROLF\PDNHUV
DQGWKHDUPHGIRUFHVZDVQRWDOZD\VRSHQLQWKHLQWHUZDUSHULRG7KHGLVFRQQHFWKDG
FDXVHGQXPHURXVSUREOHPVDWWKHDQGQDYDOFRQIHUHQFHVDQGDOLQJHULQJ
ELWWHUQHVVZLWKLQWKH1DY\7KHWZRKDOYHVRIJRYHUQPHQWZRUNHGFRQVLGHUDEO\EHWWHUDW
WKHFRQIHUHQFHKRZHYHUDQGWKHVLJQDWXUHRIWKHWUHDW\UHVXOWHGLQOLWWOHLIDQ\
KRVWLOLW\EHWZHHQWKH1DY\DQG6WDWH7KHWUDGLWLRQDOQDUUDWLYHRIGLVFRUGEHWZHHQWKH
FLYLOLDQDQGPLOLWDU\KDOYHVRIWKH86JRYHUQPHQWWKDWGRWVWKHKLVWRULRJUDSK\RIQDYDO
DUPVFRQWUROGRHVQRWKROGXSDWDOOIRUWKHFRQIHUHQFH
7KH([HFXWLYH2IILFHRIWKH3UHVLGHQWWKHSHUPDQHQWERG\RIVXSSRUWVWDIIWRWKH3UHVLGHQWZDVRQO\
FUHDWHGLQ%HIRUHWKLVWKH3UHVLGHQW¶VVWDIIZDVVPDOODQGWKHLUSRVLWLRQVZHUHODUJHO\LQIRUPDO
&UHDWHGE\WKH1DWLRQDO6HFXULW\$FWRI
0XFKRIWKHGLIIHUHQFHLQDWWLWXGHPXVWEHDWWULEXWHGWRFKDQJHVLQWKH861
8QGHUWKHOHDGHUVKLSRI&12:LOOLDP93UDWWDQGFRQWLQXLQJXQGHU:LOOLDP+
6WDQGOH\WKHWRSRIILFLDOVRIWKH861FDPHQRWRQO\WRDFFHSWDUPVOLPLWDWLRQEXWVRPH
HYHQVWDUWHGWRVHHLWDVEHQHILFLDOWRQDYDOVWUDWHJ\7KHRSLQLRQIURPERWKWKH&12¶V
RIILFHDQGWKH*HQHUDO%RDUGEHJDQWRFRQFOXGHWKDWWKHUDWLRVDQGWKHWRQQDJHFDSVZHUH
WKLQJVZRUWKPDLQWDLQLQJLISRVVLEOH7KLVFRQWUDVWVJUHDWO\WRWKHRXWUDJHH[SUHVVHGE\
861RIILFHUVLQWKHDIWHUPDWKRIWKH:DVKLQJWRQ&RQIHUHQFHDQGWRDOHVVHUH[WHQWWKH
DQJHUUHVXOWLQJIURPWKH/RQGRQ&RQIHUHQFH6WHSKHQ(3HO]KDVZULWWHQWKDWWKH861
KDGGLDOHGEDFNLWV³ELJQDY\´DPELWLRQVLQWKHPLGVDQGLWVELWWHUQHVVRYHUWKH
FRQWLQXHGGRPLQDQFHRIWKH51VLQFH³DIWHUWKHIDPLQHRIWKH+RRYHU\HDUVWKH\
UHPDLQHGVDWLVILHGZLWKWKHKRUVG¶RHXYUHVWKDW5RRVHYHOWSURYLGHG´ ,QGHHGLWLV
SRVVLEOHWKDWDIWHUWKHURXJKH[SHULHQFHRIWKHVDQGGXULQJWKHHFRQRPLFFRQVWUDLQWV
RIWKH*UHDW'HSUHVVLRQWKH1DY\ZDVFRJQL]DQWRIWKHUHDOLW\WKDWEXLOGLQJDWUHDW\IOHHW
ZDVSUREDEO\WKHEHVWWKH\FRXOGKRSHIRU
<HWWKLVLVDYHU\OLPLWHGDQGXQVDWLVIDFWRU\DQVZHU8QGRXEWHGO\LWLVSDUWO\WUXH
LIJRYHUQPHQWPRQH\KDGEHHQORRVHDQGWKHGRPHVWLFPRRGGLVSRVHGWRDEXLOGXSRI
DUPVLWLVTXLWHOLNHO\WKDWWKHDWWLWXGHRIWKHQDY\ZRXOGQRWKDYHEHHQWKHVDPH
1RQHWKHOHVVWKHUHLVFRPSHOOLQJHYLGHQFHWKDWPDQ\QDYDORIILFHUVRIWKHLQWHUZDUSHULRG
VDZWKHYDOXHRIOLPLWLQJDUPVEHORZWKHLUQDWLRQ¶VSRWHQWLDOFDSDFLW\DQGIL[LQJDUPVDWD
GHILQLWHOHYHOYLVjYLVSRWHQWLDOFRPSHWLWRUV5DWLRQDODFWRUVPD\VHHNH[WHUQDO
FRQVWUDLQWVRQWKHLUIUHHGRPRIDFWLRQLQFOXGLQJPHQLQXQLIRUP7KLVLVDQLPSRUWDQW
SRLQWJLYHQWKHSUHYDOHQWYLHZWKDWPLOLWDULHVWHQGWRSXVKIRUH[SDQVLRQWRWKHOLPLWRI
ZKDWWKHQDWLRQPD\SURYLGH7KLVYLHZLVDOVRSDUWLFXODUWRWKHLQWHUZDUDUPVFRQWURO
3HO]5DFHWR3HDUO+DUERU
HUD²WKHIDLOXUHDWWKH*HQHYD1DYDO&RQIHUHQFHLQZDVDWWULEXWHGWRWKHULJLGLW\RI
WKHPHQLQXQLIRUPE\ERWKFRQWHPSRUDULHVDQGE\PDQ\KLVWRULDQV7KHDFWLRQVDQG
VXJJHVWHGSROLFLHVRIWKH861WKURXJKRXWWKHFRQIHUHQFHDQGWKH\HDUVWKDW
ERRNHQGHGLWVXJJHVWVWKDWWKHDWWLWXGHRIQDYDORIILFHUVLQWKLVSHULRGZDVDJUHDWGHDO
PRUHFRPSOH[WKDQLVVRPHWLPHVDOORZHG
$EHWWHUDQVZHUIRUWKH861¶VLQFUHDVLQJFRPPLWPHQWWRWKH:DVKLQJWRQV\VWHP
LQWKHVFDQEHIRXQGLQLWVHYROYLQJVWUDWHJ\:DU3ODQ2UDQJHFKDQJHG
FRQVLGHUDEO\IURPWKHVWRWKHV,QLWVRULJLQDOLWHUDWLRQWKHSODQFDOOHGIRUD
IOHHWRIRYHUZKHOPLQJIRUFHWRFURVVIURP+DZDLLWRWKH3KLOLSSLQHVDVIDVWDVSRVVLEOH
)URPWKH3KLOLSSLQHVWKHIOHHWZRXOGUHJURXSDQGUHIXHODQGVHHNDGHFLVLYHEDWWOHZLWK
WKH-DSDQHVHIOHHW7KHRULJLQDOSODQIROORZHG0DKDQ¶VWHQHWRI³VHDFRQWURO´ZKHUHE\
WKHGHVWUXFWLRQRIWKHIOHHWZRXOGHQDEOHWKH861WRFRQWUROVHDERUQHFRPPHUFHLQWKH
3DFLILFDQGGHIHDW-DSDQE\PHDQVRIEORFNDGH7KHVWUDWHJ\H[SODLQVWKH861¶V
LQVLVWHQFHRQEXLOGLQJWRWKHXQLWPD[LPXPLQHDFKFDWHJRU\LQRUGHUWRREWDLQWKH
JUHDWHVWFUXLVLQJUDGLXVDQGWRDFKLHYHWKHKLJKHVWGHJUHHRIJXQSRZHUDWWKHSRLQWRI
FRQWDFWZLWKWKH-DSDQHVHIOHHW,WDOVRH[SODLQVZK\WKH861VRPHWLPHVFKDIHGXQGHUWKH
UDWLRV²WKHPRVWLPSRUWDQWHOHPHQWWRWKHVWUDWHJ\ZDVWKHFDSLWDOIOHHWWKHFDWHJRU\LQ
ZKLFKWKH86VDFULILFHGWKHPRVWDW:DVKLQJWRQLQDQGWKHRQO\FDWHJRU\LQZKLFKLW
PDLQWDLQHGWKHPD[LPXPWKURXJKRXWWKHLQWHUZDUSHULRG
7HFKQRORJLFDODGYDQFHPHQWVDQGUHVXOWVIURPLQWHUZDU³IOHHWSUREOHPV´FKDQJHG
WKLVVRFDOOHG³WKURXJKWLFNHW´VWUDWHJ\WRDPXFKPRUHFDXWLRXVRQH7KHIOHHWZRXOG
VORZO\DSSURDFK-DSDQE\³OHDSIURJJLQJ´DFURVVWKH0LFURQHVLDQLVODQGVEHIRUH
HYHQWXDOO\WDNLQJEDFNWKH3KLOLSSLQHVDVDVWDJLQJJURXQGIRUDJHQHUDOEORFNDGHRIWKH
-DSDQHVH+RPH,VODQGV8QGHUWKLVVORZDSSURDFKWKH86ZRXOGXVHLWVPXFKODUJHU
VKLSEXLOGLQJFDSDFLW\WRHVWDEOLVKFRPSOHWHVXSHULRULW\RYHUWKH-DSDQHVHIOHHW²WLPHZDV
WKRXJKWWRIDYRUWKH86LQWKHSURVSHFWLYHZDU %\WKHWLPHRIWKHFRQIHUHQFHWKH
3KLOLSSLQHVZDVMXGJHGLQGHIHQVLEOHDQG6WDQGOH\RUGHUHGWKHHQGRIWKH³WKURXJKWLFNHW´
VWUDWHJ\:KLOHEDWWOHVKLSVZRXOGUHPDLQDFHQWUDOSDUWRIWKLVVWUDWHJ\:DU3ODQ2UDQJH
ZRXOGUHO\PXFKPRUHKHDYLO\RQFUXLVHUVFDUULHUVDQGVXSSO\VKLSVLQRUGHUWRHVWDEOLVK
³SDVVLYHVHDFRQWURO´RYHUORQJSHULRGVRIWLPH,QWKHVHDUHDVWKH861UHPDLQHG
XQGHUVWUHQJWKHYHQE\ILYH\HDUVLQWRWKH9LQVRQ$FWDQGRQH\HDULQWRWKH6HFRQG
9LQVRQ$FWWKH861KDGRQO\KDOIWKHQXPEHURIFUXLVHUVDIORDWWKDWWKH5R\DO1DY\
SRVVHVVHGGHVSLWHQRWLRQDOSDULW\ 7KHSXEOLFDGGUHVVHVDQGLQWHUGHSDUWPHQWDO
PHPRUDQGDDOOHPSKDVL]HGWKHQHHGWREXLOGXSWKHPHUFKDQWPDULQHIXHOWHQGHUVDQG
FUXLVHUIRUFHVWRDPXFKJUHDWHUGHJUHHWKDQWKHEDWWOHVKLSUHSODFHPHQWSURJUDPGXHWR
EHJLQLQ/LPLWDWLRQZDVWKXVORRNHGDWPRUHIDYRUDEO\E\WKH861LQWKHPLGWR
ODWHVWKDQLWKDGEHHQLQWKHSDVWDVLWZRXOGDOORZWKHPWLPHWREXLOGXSWRVWUHQJWK
LQQHJOHFWHGFDWHJRULHVDQGHQDEOHWKHLUPRUHFRPSOH[ZDUSODQVLQWKH3DFLILF
7KLVDOVRKHOSVWRH[SODLQWKH861¶VJHQHUDOO\IULHQGO\GLVSRVLWLRQWRZDUGVWKH
%ULWLVKGXULQJWKHFRQIHUHQFHDQGLWVLPPHGLDWHDIWHUPDWK$GPLUDO/HLJK
&KDLUPDQRIWKH*HQHUDO%RDUG&12V6WDQGOH\DQG/HDK\&RPPDQGHURIWKH$VLDWLF
)OHHW$GPLUDO<DUQHOODPRQJPDQ\RWKHUVDOODGYRFDWHGFRPLQJWRWHUPVZLWKWKH8.
DQGHVWDEOLVKLQJDFORVHZRUNLQJUHODWLRQVKLSZLWKWKH51LQWKH3DFLILF7KLVVWRRGLQ
VWDUNFRQWUDVWWRWKHVZKHQWKHJHQHUDODWWLWXGHWRZDUGVWKH%ULWLVKDOWHUQDWHGIURP
LQGLIIHUHQWWRRXWULJKWKRVWLOHDQGZDVDOZD\VWLQJHGZLWKDKLQWRIELWWHUQHVV7KHFKDQJH
0LOOHU:DU3ODQ2UDQJH
0F.HUFKHU³*UHDW%ULWDLQ3UH(PLQHQW´
LQGHPHDQRUWRZDUGVWKH%ULWLVKLVDOVRLQGLFDWLYHRIWKHFKDQJHLQVWUDWHJ\:DU3ODQ
2UDQJHKLQJHGRQDJUDGXDODGYDQFHIURPDQHQRUPRXVSHULPHWHU6XFKDVWUDWHJ\ZRXOG
EHQHILWLPPHDVXUDEO\IURPDIULHQGO\SUHVHQFHRQWKHRSSRVLWHIODQN7KHFRQFHSWRIWKH
³GLVWDQWEORFNDGH´GHULYHGIURPWKLVVWUDWHJ\DQGZDVFULWLFDOO\UHOLDQWRQWKHFRRSHUDWLRQ
RIWKH5R\DO1DY\WRFRPSOHWHWKHUHTXLUHGHQFLUFOHPHQWRI-DSDQ7KHHYROXWLRQRI:DU
3ODQ2UDQJHLQWKHVKHOSHGVPRRWKWKHZD\IRUDIULHQGOLHUDQGPRUHFRRSHUDWLYH
UHODWLRQVKLSZLWKWKH%ULWLVKDWWKHFRQIHUHQFH
7KHWKHVLVRI$PHULFDQ³LVRODWLRQLVPÓLNHZLVHGRHVQRWKROGXSWRVFUXWLQ\LQ
WKLVSHULRG&HUWDLQO\&RQJUHVVDWWLPHVDFWHGLQDPDQQHUFRQVLVWHQWZLWKDQ
LQWHUSUHWDWLRQRILVRODWLRQLVPWKHIDLOXUHRIWKH:RUOG&RXUWDQGWKHSDVVDJHRIWKH
1HXWUDOLW\$FWVZHUHWZRSURPLQHQWH[DPSOHVRIWKHOHJLVODWXUHGLVWDQFLQJLWVHOIIURPWKH
DIIDLUVRIWKHZRUOGLQWKHPLGV<HWHYHQWKHVHFDVHVZHUHQRWFOHDUFXWH[DPSOHVRID
SUHYDOHQWGRJPDRILVRODWLRQLVPDPRQJ$PHULFDQSROLF\PDNHUV$PDMRULW\RI86
6HQDWRUVYRWHGIRU86DFFHVVLRQWRWKH:RUOG&RXUWDQGWKHSROLWLFVEHKLQG1HXWUDOLW\
ZHUHFRPSOH[DQGPXOWLIDFHWHG$WDQ\UDWHWKH86&RQJUHVVDQGLQSDUWLFXODUWKH
6HQDWHZDVYXOQHUDEOHWRFRKHVLYHDQGZHOORUJDQL]HGPLQRULWLHV7KH³KDUGFRUH´
LVRODWLRQLVWVZHUHFHUWDLQO\DPLQRULW\EXWDVZLWKWKHIDLOXUHRIWKHUDWLILFDWLRQRIWKH
9HUVDLOOHV7UHDW\ZKLFKLQDXJXUDWHGWKHVRFDOOHG³LVRODWLRQLVWHUD´WKH\FRXOGH[HUW
GLVSURSRUWLRQDWHLQIOXHQFHDVDUHVXOWRIFRQVWLWXWLRQDOGHVLJQ
7KHDJJUHJDWHRI$PHULFDQSROLFLHVLQWKHLQWHUZDUSHULRGDQGE\H[WHQVLRQWKH
PDMRULW\RI$PHULFDQSROLF\PDNHUVFDQPRUHSURSHUO\EHVDLGWREH³QRQ
LQWHUYHQWLRQLVW´7KHGLVWLQFWLRQPD\VHHPDILQHRQHRQWKHVXUIDFHEXWDWKRURXJK
DFFRXQWRI86IRUHLJQSROLF\LQWKHPLGVLOOXVWUDWHVWKHYHU\UHDOGLIIHUHQFHV
EHWZHHQLVRODWLRQLVPDQGQRQLQWHUYHQWLRQLVP3UHVLGHQW5RRVHYHOWVKRZHGDNHHQ
LQWHUHVWLQDUPVOLPLWDWLRQIURPWKHVWDUWMXVWDVKHKDGVKRZQKLPVHOIWREHDQHDUO\DOO\
WRWKH9LQVRQ7UDPPHOO$FW%RWKRIWKHVHSROLFLHV²WKHODWWHUGHVLJQHGWRVWUHQJWKHQWKH
$PHULFDQKDQGLQWKHIRUPHU²ZHUHLQWULQVLFDOO\LQWHUQDWLRQDOLVWLQWKHLULQWHQW
$PHULFD¶VLQYROYHPHQWLQWKHFUHDWLRQDQGSUHVHUYDWLRQRIWKH:DVKLQJWRQ6\VWHP
UHSUHVHQWHGSHUKDSVWKHQDWLRQ¶VELJJHVWFRPPLWPHQWWRWKHLQWHUQDWLRQDORUGHUEHWZHHQ
WKHZDUVDWOHDVWRQDVHFXULW\EDVLV,WV1DY\IXUWKHUPRUHZDVLWVRQO\WRRORIKDUG
SRZHUDQGLWZDVDIRUPLGDEOHRQH²HTXDODWOHDVWWKHRUHWLFDOO\WRWKHODUJHVWLQWKH
ZRUOG$EOXHZDWHUQDY\LVDXQLTXHWRRORIIRUHLJQSROLF\8QOLNHJURXQGIRUFHVLWV
SRWHQWLDOUHDFKLVJOREDO7KH5RRVHYHOWDGPLQLVWUDWLRQ¶VUHFRPPLWPHQWWREXLOGLQJD
WUHDW\QDY\²LQHVVHQFHDUHFRPPLWPHQWWRWKHSULQFLSOHRIPDLQWDLQLQJDQDY\³VHFRQG
WRQRQH´²VKRZVDFOHDUGHVLUHWRKRQHRQHRI$PHULFD¶VJUHDWHVWWRROVRIIRUHLJQSROLF\
,QSDUWWKLVGHVLUHFDQVWLOOEHVHHQWKURXJKWKHOHQVRILVRODWLRQLVP,QQXPHURXV
DGGUHVVHVDQGSDSHUVWKH1DY\'HSDUWPHQWSOHGWKHFDVHIRUDWUHDW\QDY\DVDPHDQVWR
³ZDJHQHXWUDOLW\´ ,IWKHQDWLRQUHPDLQHGZHDNLQWLPHVRIZDULWVLQWHUHVWVZRXOGEH
IUHHO\DVVDLOHGDQG$PHULFDZRXOGEHREOLJHGWRHQWHUWKHIUD\DVKDGKDSSHQHGLQ:RUOG
:DU2QH ,QGHHG5RRVHYHOWFRQWLQXHGWRLGHQWLI\WKHEDVLVRI$PHULFD¶VGHIHQVH
SROLF\DVKHPLVSKHULFVHFXULW\DQGWKHPDLQWHQDQFHRIQHXWUDOULJKWVXSXQWLO ,Q
/2&0DQXVFULSW'LYLVLRQ6WDQGOH\3DSHUV%R[7UDQVFULSWRI6WDQGOH\$GGUHVVDWWKDQQXDOGLQQHU
RIWKH3HQQV\OYDQLD6RFLHW\'HF
1$5*%R[1DY\'HSDUWPHQW0HPRRQ+RXVH-RLQW5HVROXWLRQ0D\³3UHVLGHQW
:RRGURZ:LOVRQHQGHDYRUHGPRVWHDUQHVWO\WRPDLQWDLQRXWQHXWUDOLW\IURPWRE\WKHXVHRI
GLSORPDF\DORQHHQWLUHO\GLYRUFHGIURPWKHLQIOXHQFHRIIRUFH,QDVDUHVXOWRIKLVH[SHULHQFHKH
EHFDPHFRQYLQFHGRIWKHQHFHVVLW\RIKDYLQJVXIILFLHQWIRUFHZLWKZKLFKWREDFNKLVGLSORPDF\LIRXU
QHXWUDOULJKWVZHUHWREHSUHVHUYHGZLWKRXWEHLQJGUDZQLQWRZDU´
5RVHQPDQ3XEOLF3DSHUV5RRVHYHOW5DGLR$GGUHVV³:H&KRRVH+XPDQ)UHHGRP´
0D\
WKLVVHQVHWKHQWKH5RRVHYHOWDGPLQLVWUDWLRQ¶VUHVROYHWREXLOGWRWUHDW\OLPLWVFDQEH
VHHQDVWKHUHHQWUHQFKPHQWRIWKH8QLWHG6WDWHVZLWKLQ³IRUWUHVV$PHULFD´
7KLVSRLQWRIYLHZLJQRUHVWKHDWWLWXGHRI$PHULFDQSROLF\PDNHUVDWWKH
FRQIHUHQFHDQGWKH\HDUVWKDWIROORZHG7KHGRJJHGGHWHUPLQDWLRQRIWKHGHOHJDWLRQDQG
WKHUHOHYDQWRIILFLDOVLQ:DVKLQJWRQWRSUHVHUYHVRPHVHPEODQFHRIDUPVFRQWUROLQWKH
IDFHRIPRXQWLQJGLIILFXOWLHVDQGHYHQDIWHUWKHZLWKGUDZDORI$PHULFD¶VSUHVXPHG
HQHP\GHPRQVWUDWHVWKH8QLWHG6WDWHV¶ZLOOLQJQHVVWRHQWHULQWRLQWHUQDWLRQDO
DJUHHPHQWV7KHWUHDW\LQLWVILQDOIRUPZDVOHVVDERXWFRQWUROOLQJRUOLPLWLQJDFWXDO
DUPDPHQWVDQGZDVPRUHDJHVWXUHRIIDLWKEHWZHHQQDWLRQV7KHQRWLILFDWLRQFODXVHZDV
HQYLVLRQHGDVWKHQHZEDFNERQHRIDUPVFRQWURODSURYLVLRQWKDWUHVWHGHQWLUHO\RQ
LQWHUQDWLRQDOWUXVWDQGIDLWKLQWKHGXUDELOLW\RIWKHOLEHUDORUGHU7KHEHKDYLRUDQGDWWLWXGH
RI$PHULFDQSROLF\PDNHUVGXULQJWKHFRQIHUHQFHLVVLPSO\QRWFRPSDWLEOHZLWKLQWKH
IUDPHZRUNRIDQLVRODWLRQLVWLQWHUSUHWDWLRQ
,QSDUWLFXODUWKHH[WUDRUGLQDU\GHYHORSPHQWRIWKH$QJOR$PHULFDQUHODWLRQVKLS
GXULQJWKHPLGGOH\HDUVRIWKHVLOOXVWUDWHVWKHDFFHSWDQFHRI86SROLF\PDNHUVRI
ZRUNLQJZLWKIRUHLJQQDWLRQVWRVROYHPXWXDOVHFXULW\SUREOHPVHYHQLIWKDWDFFHSWDQFH
ZDVVRPHWLPHVVORZDQGUHOXFWDQW$PHULFDQVZHUHQRWEOLQGWRWKHGDQJHUVWKDWZHUH
EXLOGLQJLQWKHZRUOGDQGPDQ\VDZWKH8.DVDQHFHVVDU\IULHQGLQWKHGD\VDKHDG%RWK
FLYLOLDQDQGPLOLWDU\SODQQHUVRSHUDWHGRQWKHDVVXPSWLRQWKDWWKH5R\DO1DY\ZRXOG
NHHSWKHLU$WODQWLFIODQNVHFXUHLQWKHHYHQWRID(XURSHDQZDU$VIDUDV-DSDQZHQW
$PHULFDQGLSORPDWVDQGRIILFHUVZRUNHGFORVHO\ZLWKWKHLU%ULWLVKFRXQWHUSDUWVILUVWWRWU\
DQGGHIXVHWKHWKUHDWLQWKH3DFLILFDQGWKHQWRFRQWDLQLW,WVHHPVFOHDUWKDWPRVW
$PHULFDQRIILFLDOVZRXOGKDYHSUHIHUUHGWRPDLQWDLQDSROLF\RIQRQLQWHUYHQWLRQLVP%XW
WKHFORVHERQGIRUJHGZLWKWKH8.DWWKHFRQIHUHQFHPDNHVLWHTXDOO\FOHDUWKDWWKH\ZHUH
ZLOOLQJWRH[SORUHDOWHUQDWLYHSROLFLHVDVFRQWLQJHQF\SODQVLQDQLQFUHDVLQJO\XQFHUWDLQ
ZRUOG7KHRYHUODSSLQJLQWHUHVWVRIWKHWZRQDWLRQVZHUHUHFRJQL]HGE\PDQ\$PHULFDQV
DQGWKH\VRXJKWDQLQWHUQDWLRQDODUUDQJHPHQWDFFRUGLQJO\
7KHUHZHUHFHUWDLQO\OLPLWVWRWKH$QJOR$PHULFDQUHODWLRQVKLS$PLQRUILVVXUH
RSHQHGLQWKHVXPPHUSUHOLPLQDULHVRIDQG$PHULFDQSROLF\PDNHUVFXWWKH%ULWLVK
DGULIWLQVHYHUDOGLSORPDWLFLQLWLDWLYHVLQWKHDIWHUPDWKRIWKHWUHDW\¶VFRPSOHWLRQ<HWWKH
OLPLWVLPSRVHGRQWKHUHODWLRQVKLSGROLWWOHWRGHWUDFWIURPWKHUHPDUNDEOHQDWXUHRIWKDW
UHODWLRQVKLSQRUGRWKH\SURYLGHDQ\HYLGHQFHIRUDQLVRODWLRQLVWLQWHUSUHWDWLRQ7KHUHDUH
DOZD\VOLPLWVRQDQ\LQWHUQDWLRQDOUHODWLRQVKLSGXHWRWKHFRPSOH[LW\DQGXQFHUWDLQW\RI
WKHLQWHUQDWLRQDOVFHQHDQGWKHSUHVVXUHRIGRPHVWLFSROLWLFV$PHULFDZDVQRWDORQHLQ
LPSRVLQJVWULFWOLPLWDWLRQVRQDUHODWLRQVKLSZLWKFOHDUPXWXDOEHQHILWV²WKH$QJOR
)UHQFKUHODWLRQVKLSZKLFKKDGREYLRXVDQGYLWDOSRWHQWLDOEHQHILWVIRUERWKSDUWLHVZDV
IUDXJKWZLWKFRQIOLFWDQGREVWUXFWLRQWKURXJKRXWWKHLQWHUZDUSHULRG3HUFHSWLRQVRI
VHFXULW\ULVNVDQGVWUDWHJLHVRIGHDOLQJZLWKWKHPDUHQDWXUDOO\LQFRQJUXRXVDPRQJVWDWHV
GXHWRDFRXQWOHVVKRVWRIIDFWRUVXQLTXHWRHDFKQDWLRQDOVLWXDWLRQ7KHOLPLWDWLRQV
LQVLVWHGRQE\$PHULFDQVDWYDULRXVWLPHVWKURXJKRXWWKHPLGVLUNHG%ULWLVK
SROLF\PDNHUVDQGSURPSWHGJUXPEOLQJVDERXW$PHULFDQLVRODWLRQLVP<HWWKHVLPSOH
WUXWKZDVWKDW%ULWLVKORQJWHUPVHFXULW\SODQVZHUHPXFKPRUHUHOLDQWRQ86FRRSHUDWLRQ
WKDQZDVWKHFDVHYLFHYHUVD$QJOR$PHULFDQFRRSHUDWLRQDWWKHFRQIHUHQFHZDVVWURQJ
HYHQGLIIHULQJVHFXULW\FRQFHUQVOLPLWHGLWVGHSWK
7KHVHFRQG/RQGRQ1DYDO&RQIHUHQFHLVQRWVRPXFKRYHUORRNHGLQWKHOLWHUDWXUH
DVLWLVGLVPLVVHG,WLVZLGHO\VHHQDVWKHZKLPSHUZLWKZKLFKQDYDODUPVFRQWUROGLHG
8QGRXEWHGO\DVDPHDQVWRPLOLWDU\EDVHGDUPVFRQWUROWKHFRQIHUHQFHIDLOHGLQLWVDLPV
<HWWKHFRQIHUHQFHZDVKHOGLQWKHPLGGOHRIDSLYRWDOFURVVURDGV7KHLQWHUQDWLRQDOVFHQH
ZDVLQIOX[DQGDQH[DPLQDWLRQRIWKHFRQIHUHQFHRIIHUVDIDVFLQDWLQJYLHZLQWRWKH
SROLFLHVDQGDLPVRIWKHZRUOG¶VSUHPLHUQDYDOSRZHUV,QSDUWLFXODUWKHFRQIHUHQFH
RIIHUVDQH[FHOOHQWRSSRUWXQLW\WRH[SORUHWKHIRUHLJQSROLF\RIWKH8QLWHG6WDWHVLQWKH
PLGVDQGWKHSURFHVVLQZKLFKLWZDVPDGH7KHFRPPLWPHQWWRQDYDODUPVFRQWURO
IURPERWKWKHFLYLOLDQDQGPLOLWDU\EUDQFKHVRIWKH86JRYHUQPHQWWKHHYROYLQJ
VWUDWHJLHVRIWKH8QLWHG6WDWHV1DY\DQGWKHFORVHQHVVRIWKH$QJOR$PHULFDQ
UHODWLRQVKLSDOOSRLQWWRDIRUHLJQSROLF\WKDWFDQQRWEHLQWHUSUHWHGWKURXJKWKHVLPSOLVWLF
OHQVRI³LVRODWLRQLVP´7KHFRQIHUHQFHRIIHUVFRPSHOOLQJHYLGHQFHRILQWHUZDU
$PHULFD¶VHIIRUWVWRSUHVHUYHWKHLQWHUQDWLRQDOV\VWHPLQZKLFKLWKDGEHFRPHVXFKD
SLYRWDODFWRU
%,%/,2*5$3+<
3ULPDU\6RXUFHV
8QSXEOLVKHG
1DWLRQDO$UFKLYHVDQG5HFRUGV$GPLQLVWUDWLRQ,DQG,,:DVKLQJWRQ'&DQG&ROOHJH
3DUN0'
5HFRUG*URXS
5HFRUGVRIWKH2IILFHRIWKH&KLHIRI1DYDO2SHUDWLRQV
5HFRUG*URXS
*HQHUDO5HFRUGVRIWKH'HSDUWPHQWRI6WDWH
5HFRUG*URXS
*HQHUDO5HFRUGRIWKH'HSDUWPHQWRIWKH1DY\
3ULYDWH3DSHUV
/LEUDU\RI&RQJUHVV0DQXVFULSW'LYLVLRQ:DVKLQJWRQ'&
&KLHI'HOHJDWHWRWKH/RQGRQ1DYDO&RQIHUHQFH1RUPDQ+'DYLV
&KLHIRI1DYDO2SHUDWLRQV:LOOLDP+6WDQGOH\
6HFUHWDU\RI6WDWH&RUGHOO+XOO
3XEOLVKHG6RXUFHV
'RFXPHQWVRQ%ULWLVK)RUHLJQ3ROLF\6HFRQG6HULHV9RO;,,,HG:10HGOLFRWWHWDO
/RQGRQ+HU0DMHVW\¶V6WDWLRQDU\2IILFH
)RUHLJQ5HODWLRQVRIWKH8QLWHG6WDWHV:DVKLQJWRQ*RYHUQPHQW3ULQWLQJ2IILFH
0RIIDW-D\3LHUUHSRQW7KH0RIIDW3DSHUV6HOHFWLRQVIURPWKH'LSORPDWLF-RXUQDOVRI
-D\3LHUUHSRQW0RIIDWHG1DQF\+DUYLVRQ+RRNHU&DPEULGJH0$
+DUYDUG8QLYHUVLW\3UHVV
1L[RQ(GJDU%HG)UDQNOLQ'5RRVHYHOWDQG)RUHLJQ$IIDLUV9ROV,,,,&DPEULGJH
0$+DUYDUG8QLYHUVLW\3UHVV
5RRVHYHOW)UDQNOLQ'7KH3XEOLF3DSHUVDQG$GGUHVVHVRI)UDQNOLQ'5RRVHYHOW9RO
,,,HG6DPXHO,5RVHQPDQ1HZ<RUN5DQGRP+RXVH
6LPSVRQ0LFKDHOHG1DY\5HFRUGV6RFLHW\3XEOLFDWLRQVYRO$QJOR$PHULFDQ
1DYDO5HODWLRQV/RQGRQ$VKJDWH3XEOLVKLQJ
6HFRQGDU\6RXUFHV
8QSXEOLVKHG
0DXUHU-RKQ+DQG&KULVWRSKHU0%HOOHGV$WWKH&URVVURDGVEHWZHHQ3HDFHDQG
:DU1DYDO5LYDOULHVDQG$UPV&RQWUROEHWZHHQWKH:RUOG:DUV7KH/RQGRQ
&RQIHUHQFHRI$QQDSROLV0'1DYDO,QVWLWXWH3UHVV
3XEOLVKHG
$GOHU6HOLJ7KH8QFHUWDLQ*LDQW$PHULFDQ)RUHLJQ3ROLF\%HWZHHQWKH
:DUV1HZ<RUN&ROOLHU0DF0LOODQ/WG
%DHU*HRUJH2QH+XQGUHG<HDUVRI6HD3RZHU7KH861DY\6WDQIRUG
6WDQIRUG8QLYHUVLW\3UHVV
%HOO&KULVWRSKHU07KH5R\DO1DY\6HDSRZHUDQG6WUDWHJ\%HWZHHQWKH:DUV
6WDQIRUG6WDQIRUG8QLYHUVLW\3UHVV
%ORFK&KDUOHV³*UHDW%ULWDLQ*HUPDQ5HDUPDPHQWDQGWKH1DYDO$JUHHPHQWRI´
(XURSHDQ'LSORPDF\%HWZHHQ7ZR:DUVHG+DQV:*DW]NH
&KLFDJR4XDGUDQJOH%RRNV
%RUJ'RURWK\7KH8QLWHG6WDWHVDQGWKH)DU(DVWHUQ&ULVLVRI%RVWRQ
+DUYDUG8QLYHUVLW\3UHVV
%UDXPRHOOHU%HDU)³7KH0\WKRI$PHULFDQ,VRODWLRQLVP´)RUHLJQ3ROLF\$QDO\VLV
&RRN-DPHV)&DUO9LQVRQ3DWULDUFKRIWKH$UPHG)RUFHV0DFRQ*$0HUFHU
8QLYHUVLW\3UHVV
'DOOHN5REHUW)UDQNOLQ'5RRVHYHOWDQG$PHULFDQ)RUHLJQ3ROLF\2[IRUG
2[IRUG8QLYHUVLW\3UHVV
'REVRQ$ODQ386:DUWLPH$LGWR%ULWDLQ1HZ<RUN6W0DUWLQ¶V3UHVV
)HONHU&UDLJ&7HVWLQJ$PHULFDQ6HD3RZHU861DY\6WUDWHJLF([HUFLVHV
&ROOHJH6WDWLRQ7H[DV$08QLYHUVLW\3UHVV
*HOOPDQ,UZLQ*RRG1HLJKERU'LSORPDF\8QLWHG6WDWHV3ROLFLHVLQ/DWLQ$PHULFD
%DOWLPRUH-RKQV+RSNLQV8QLYHUVLW\3UHVV
*ROGPDQ(PLO\6XQNHQ7UHDWLHV1DYDO$UPV&RQWURO%HWZHHQWKH:DUV3HQQV\OYDQLD
7KH3HQQV\OYDQLD6WDWH8QLYHUVLW\3UHVV
*ROGVWHLQ(ULNDQG-RKQ0DXUHU7KH:DVKLQJWRQ&RQIHUHQFH1DYDO5LYDOU\
(DVW$VLDQ6WDELOLW\DQGWKH5RDGWR3HDUO+DUERU,OIRUG)UDQN&DVV&R/WG
+DOO&KULVWRSKHU%ULWDLQ$PHULFDDQG$UPV&RQWURO1HZ<RUN6W0DUWLQ¶V
3UHVV
+DUULV%UD\WRQ7KH$JHRIWKH%DWWOHVKLS0DGLVRQ8QLYHUVLW\RI:LVFRQVLQ
3UHVV
+RQH7KRPDV&³7KH(YROXWLRQRIWKH86)OHHW´)'5DQGWKH861DY\
HG(GZDUG-0DUROGD1HZ<RUN6W0DUWLQ¶V3UHVV
+RXJK5LFKDUG'HDWKRIWKH%DWWOHVKLS7KH7UDJLF&ORVHRIWKH(UDRI6HD3RZHU
0LFKLJDQ0DF0LOODQ3XEOLVKHUV
,UL\H$NLUD7KH2ULJLQVRIWKH6HFRQG:RUOG:DULQ$VLDDQGWKH3DFLILF+DUORZ
/RQJPDQ3XEOLVKLQJ
-RKQVRQ&KDOPHUV7KH6RUURZVRI(PSLUH0LOLWDULVP6HFUHF\DQGWKH(QGRIWKH
5HSXEOLF1HZ<RUN0HWURSROLWDQ%RRNV
-RKQVRQ3DXO³7KH0\WKRI$PHULFDQ,VRODWLRQLVP´)RUHLJQ$IIDLUV
.HQQHG\*UHJ³'HSUHVVLRQDQG6HFXULW\$VSHFWV,QIOXHQFLQJWKH8QLWHG6WDWHV1DY\
GXULQJWKH+RRYHU$GPLQLVWUDWLRQ´'LSORPDF\DQG6WDWHFUDIW
.LPEDOO:DUUHQ)RUJHGLQ:DU5RRVHYHOW&KXUFKLOODQGWKH6HFRQG:RUOG:DU1HZ
<RUN:LOOLDP0RUURZDQG&RPSDQ\,QF
.LPEDOO:DUUHQ7KH-XJJOHU)UDQNOLQ5RRVHYHOWDV:DUWLPH6WDWHVPDQ3ULQFHWRQ
3ULQFHWRQ8QLYHUVLW\3UHVV
.RLVWLQHQ3DXO$&3ODQQLQJ:DU3XUVXLQJ3HDFH7KH3ROLWLFDO(FRQRP\RI
$PHULFDQ:DUIDUH±/DZUHQFH8QLYHUVLW\3UHVVRI.DQVDV
.XHKQ-RKQ7$JHQWVRI,QQRYDWLRQ7KH*HQHUDO%RDUGDQGWKH'HVLJQRIWKH)OHHW
WKDW'HIHDWHGWKH-DSDQHVH1DY\$QQDSROLV1DYDO,QVWLWXWH3UHVV
.XHKQ-RKQ7³7KH861DY\*HQHUDO%RDUGDQG1DYDO$UPV/LPLWDWLRQ´
7KH-RXUQDORI0LOLWDU\+LVWRU\
/DQJHU:LOOLDP/DQG6(YHUHWW*OHDVRQ7KH&KDOOHQJHWR,VRODWLRQ1HZ
<RUN+DUSHUDQG5RZ
/H3RUH+HUEHUW7KH3ROLWLFVDQG)DLOXUHRI1DYDO'LVDUPDPHQW7KH
3KDQWRP3HDFH1HZ<RUN7KH(GZLQ0HOOHQ3UHVV/WG
/HXFKWHQEXUJ:LOOLDP(7KH3HULOVRI3URVSHULW\6HFRQG(GLWLRQ&KLFDJR
8QLYHUVLW\RI&KLFDJR3UHVV
/HYLQH5REHUW+7KH3ROLWLFVRI$PHULFDQ1DYDO5HDUPDPHQW1HZ<RUN
*DUODQG3XEOLVKLQJ,QF
0HDUVKHLPHU-RKQ-7KH7UDJHG\RI*UHDW3RZHU3ROLWLFV1HZ<RUN::1RUWRQ
DQG&R
0F%ULGH:LOOLDP07HFKQRORJLFDO&KDQJHDQGWKH8QLWHG6WDWHV1DY\
%DOWLPRUH-RKQV+RSNLQV8QLYHUVLW\3UHVV
0F.HUFKHU%-&³µ2XU0RVW'DQJHURXV(QHP\¶*UHDW%ULWDLQ3UH(PLQHQWLQWKH
V´7KH,QWHUQDWLRQDO+LVWRU\5HYLHZ
0LOODUG7KRPDV)³7KH$%&VRIWKH+D\'RFWULQH´7KH:HHNO\5HYLHZRIWKH)DU(DVW
0LOOHU(GZDUG6:DU3ODQ2UDQJH7KH866WUDWHJ\WR'HIHDW-DSDQ
$QQDSROLV1DYDO3UHVV,QVWLWXWH
2¶&RQQHOO5REHUW/6DFUHG9HVVHOV7KH&XOWRIWKH%DWWOHVKLSDQGWKH5LVHRIWKH86
1DY\%RXOGHU:HVWYLHZ3UHVV,QF
2¶&RQQRU5D\PRQG*3HULORXV(TXLOLEULXP7KH8QLWHG6WDWHV1DY\DQGWKH/RQGRQ
1DYDO&RQIHUHQFHRI/DZUHQFH8QLYHUVLW\RI.DQVDV3UHVV
3HO]6WHSKHQ(5DFHWR3HDUO+DUERU7KH)DLOXUHRIWKH6HFRQG/RQGRQ&RQIHUHQFH
DQGWKH2QVHWRI:RUOG:DU,,&DPEULGJH0DVV+DUYDUG8QLYHUVLW\3UHVV
5H\QROGV'DYLG7KH&UHDWLRQRIWKH$QJOR$PHULFDQ$OOLDQFH/RQGRQ
(XURSD3XEOLFDWLRQV/WG
5RVHQ3KLOLS7³7KH7UHDW\1DY\´,Q3HDFHDQG:DU,QWHUSUHWDWLRQVRI
$PHULFDQ1DYDO+LVWRU\HG.HQQHWK-+DJDQ:HVWSRUW&7
*UHHQZRRG3UHVV
6FDPPHOO&ODLUH0³7KH5R\DO1DY\DQGWKH6WUDWHJLF2ULJLQVRIWKH$QJOR*HUPDQ
1DYDO$JUHHPHQWRI´LQ-RXUQDORI6WUDWHJLF6WXGLHV
:DWW'RQDOG&DPHURQ6XFFHHGLQJ-RKQ%XOO$PHULFDLQ%ULWDLQ¶V3ODFH
&DPEULGJH&DPEULGJH8QLYHUVLW\3UHVV
:HLJOH\5XVVHO)7KH$PHULFDQ:D\RI:DU$+LVWRU\RI8QLWHG6WDWHV0LOLWDU\
6WUDWHJ\DQG3ROLF\%ORRPLQJWRQ,1,QGLDQD8QLYHUVLW\3UHVV
:LOVRQ6DQGUD7KH0DQFKXULDQ&ULVLVDQG-DSDQHVH6RFLHW\/RQGRQ
5RXWOHGJH
:LOW]-(³7KH1\H&RPPLWWHH5HYLVLWHG´7KH+LVWRULDQ±

Download Report

THE UNITED STATES AND ARMS CONTROL

Paperzz.com

Your Paperzz