Friday 26 December 2014

New York judge criticises Argentina

Published 22/08/2014 | 07:26

President Cristina Fernandez accused the judge of being contemptuous of Argentina's sovereignty
President Cristina Fernandez accused the judge of being contemptuous of Argentina's sovereignty

Argentina's plan to evade court orders by failing to make required payments to US bondholders is illegal, a judge in New York said.

But US district judge Thomas Griesa stopped short of finding the South American nation in contempt of court.

He called Argentina's actions toward US bondholders "lawless", but rejected requests by lawyers for US hedge funds to make a contempt finding, saying he wanted everyone to concentrate on an eventual settlement.

"That is the path that should be taken," he said. "In my judgment, it does not add anything to the scales of settlement to make a finding of contempt."

At an August 8 hearing, the Judge had threatened Argentina with contempt, saying the nation's leaders were making "false and misleading" statements as they ignored obligations to pay the hedge funds.

Since then, Argentina's public statements have grown more defiant.

President Cristina Fernandez this week announced plans to make interest payments to other bondholders through her nation's central bank, rather than US banks that are subject to Judge Griesa's orders.

"It is illegal, and the court directs that it cannot be carried out," the Judge said.

Last night Ms Fernandez's office accused the judge of being contemptuous of Argentina's sovereignty in his attack on the president's plan to have her country's politicians adopt legislation setting up the alternate repayment system.

She h as repeatedly decried the judge's ruling that Argentina must repay US hedge funds that hold some of the Argentine bonds that were defaulted on after the country' 2001 economic collapse.

The funds led by New York billionaire Paul Singer's NML Capital bought the bonds on the cheap after the default and are now demanding payment.

Argentina's leaders call the funds "vultures" because they refused to participate in swaps in 2005 and 2010 in which over 90% of Argentina's bondholders agreed to accept lesser-valued bonds.

"Far from delivering justice and bringing equal conditions among the parties, the judge only looks to favour the vulture funds," Argentina's statement said.

Argentina lawyer Jonathan Blackman has told the judge the country is left with few options because any deal it reaches with US bondholders owed about 1.5 billion US dollars (£900 million) would obligate it to pay over 20 billion US dollars (£12 billion) to other bondholders.

Lawyer Robert Cohen on behalf of the US bondholders said a finding of contempt would send a stern message to senior Argentine officials as well as to any financial institutions that might want to help Argentina avoid its obligations to US bondholders.

Press Association

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