Lima Battles Brookfield Again in Saga Judge Calls Near-‘Mockery’

(Bloomberg) -- Lima’s argument that it was ill-served by its lawyers, who lost the Peruvian capital’s legal fight against a Brookfield Asset Management subsidiary over a toll contract, was met with strong skepticism Thursday by a US federal judge.

Lima has been fighting Brookfield for years — with little success — on allegations that a Peruvian unit originally obtained a toll contract through bribery, before the business came under the asset manager’s control. The city’s latest tactic, laid out Thursday in federal district court in Washington, faces an uphill battle, based on the judge’s reaction. 

Lima, under right-wing Mayor Rafael Lopez Aliaga, is trying to overturn $200 million in arbitration losses. The city is considering asking the judge to rule that its former attorneys had a conflict of interest with Brookfield, and Thursday’s hearing was a review of the legal argument. 

The motion hasn’t officially been filed, and Judge Ana Reyes warned the city’s lawyers, Boies Schiller Flexner, that they could be sanctioned for potentially frivolous claims if they moved ahead without proper justification. 

“Your client has done itself absolutely no favors. I mean, it has no credibility. None,” said Reyes, who has already ruled that Lima must pay Brookfield. “I’m not sure I can say that they made a mockery out of this court and our laws, but if they haven’t they have come pretty close.” 

Martin de Luca, a partner at Boies Schiller who represents Lima, said the firm is confident in its arguments. “We intend to move forward with the motion as planned, and we are grateful that Judge Reyes is taking the motion seriously,” he said in an interview after the hearing. 

The tolls are a lightning rod in the Peruvian capital, where Lopez Aliaga, who goes by the nickname Porky after Porky the Pig, has made canceling the contract a top priority. He is also widely considered to be mulling to run for president in 2026 and ranks among the front-runners in early polls. 

At the heart of the issue are allegations that former Mayor Susana Villaran received bribes in exchange for the toll contract back in the early 2010s. Villaran has been charged and will start trial next week, but there’s no conviction or acquittal to settle the issue yet. She denies any wrongdoing. 

Reyes acknowledged that a potential conviction could have a bearing on the case in the US. 

Odebrecht Deal

The owner of the toll at the time was Brazilian conglomerate Odebrecht SA, which has acknowledged bribing scores of public officials around Latin America, but not in this particular case. Odebrecht would go on to sell a majority stake to Brookfield and remains a minority partner of the toll roads. 

Lopez Aliaga has turned Brookfield into an enemy in many of his political speeches, comparing it to the mafia over the alleged bribes. But when arguing those claims, Lima has lost repeatedly against Brookfield and its subsidiary Rutas de Lima, including in arbitration, in Reyes’ court and in a US appeals court. The $200 million in arbitration awards remains unpaid. 

“If I gave you truth serum, you would say it was obvious that they have no intention of paying, that they’re going to put up every roadblock they can possibly put up,” Reyes told Lima’s attorneys. 

Lopez Aliaga was in attendance at the court and posted on social media he was there to “present against the corrupt tolls that originated from a bribe.” 

Brookfield has also taken Peru to arbitration claiming $2.7 billion in damages over the city’s failure to pay, as well as Peruvian court decisions that have limited the company’s ability to collect tolls. 

Lopez Aliaga has repeatedly said he will not pay back Brookfield, including in an interview with Bloomberg earlier this year. Reyes said she is keenly aware of Lopez Aliaga’s appearances in the media saying he will not pay Brookfield back.

“I have probably zero faith that your client is acting in good faith,” Reyes said, “because I think the reason we’re all here right now is because your client wants to keep litigating this and refuses to pay.” 

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