Vulture Funds Successfully Nab Argentinean Assets in Nevada
US Ruling: Assets Embezzled, Culprits Unpunished by Argentina's Corrupt Judiciary
Belén Marty August 15, 2014 at 4:03 pm
Another page has turned in the conflict between Argentina and the nation's holdouts. On August 11, Judge Cam Ferenbach in Nevada agreed to NML Capital's request to seize 123 companies located in that state.
These enterprises belong to Kircherista Lázaro Báez. According to the judge's ruling, the state will now confiscate these assets, as part of the defaulted debt that Argentina has with some holdout creditors, popularly known as vulture funds.
NML Capital, a subsidiary of Elliott Management and owned by billionaire Paul Singer, filed a request in April with the US justice system. The intent was to perform an act of discovery, a judicial practice that allows the holdouts to seek potentially seizable assets. These are to pay off part of the US$1.7 billion debt that the South American country owes to a specific category of creditors.
In its judgement, the US court established that "there is no doubt that Báez embezzled Argentina's funds, and an embezzler or thief does not acquire a title to that which he steals."
The judge's decision connects with the corruption case that has shaken Argentina for several months, and which goes all the way up to President Christina Kirchner's administration. Ferenbach based his decision on the investigation led by Argentinean prosecutor José María Campagnoli, which indicated that Báez "laundered $65 million through 150 Nevada corporations."
Campagnoli took on the Báez case after television program Journalism for All (Periodismo para Todos) aired its own documentary called The Route of the K-Money. This show examined the links between a finance company, Báez, and the Kirchner family.
As the Ferenbach ruling explains, "In Argentina, an investigation called The Route of the K-Money [after the TV show] was launched on former President Nestor Kirchner, his wife and current President Cristina Fernández de Kirchner, her confidant Lázaro Báez, and the financial concerns linked to him. The three of them allegedly misappropriated millions of dollars of public infrastructure projects, and laundered the proceeds and other funds stolen through Panama and several international corporations."
Báez has yet to be convicted in Argentinean courts, but is under investigation for money laundering and accounting discrepancies.
However — and this is what has perked curiosity — when exactly Báez will be charged is unclear, and he remains a free man. Therefore, the US judge proceeded with the confiscation request, based on the close relationship between the entrepreneur and those with power over the Argentinean justice system. His assessment was that NML provided sufficient evidence for the embezzlement via these corporations.
Judge Ferenbach even went further and weighed in that "the Kirchner government retaliated and removed Campagnoli from office," referring to the impeachment that the prosecutor faced a few weeks ago. The Argentinean Justice Department removed Campagnoli, but have since reinstated him.
According to newspaper Cronista de Argentina, the Kirchnerista entrepreneur's spokesmen has denied that these companies belong to Báez. Ferenbach counters, however, that although the representative firm for the 123 companies filed papers in defense, these did not provide "sensible documentation" to prevent judgement.
On page 10 of the sentencing, the judge explains that "the person who resists a discovery bears the heavy burden of showing why the discovery should be denied" and that in this case "the 123 corporations failed to meet that burden."
Ferenbach also asks for a hearing between the 123 corporations and representatives of NML, to analyze binding legal issues with their financial status. In addition, he orders that they submit a joint document before the September 12.
Pressure Continues to Build at Home
Argentina is in selective default according to Standard and Poor's, after the Kirchner's administraton refused to pay the distressed-asset funds by June 30. The New York court ruled that the payment should be complete and would prevent transfers to other creditors until full settlement with the holdout funds.
Meanwhile, Argentina's legal representative with the Cleary law firm, was informed of the Nevada decision, but chose not to take action. The Ministry of Finance has also not issued any statement.
NML previously conducted a similar a confiscation strategy with the Republic of Congo, where it investigated a corruption case that muddied the reputation of the then-Congolese President Sassou-Nguesso.
After these allegations of corruption were published in 2008, the president agreed to pay $90 million that the country owed the NML fund, but not without first qualifying the holdouts as "gang thugs," "vultures," and "snakes in the ocean."
See the ruling here:
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