Business Irish

Saturday 25 November 2017

Hedge fund boss suing State has a colourful history

AIB bondholder in secret videotape controversy

Nick Webb

Nick Webb

THE Wall Street hedge fund boss suing the State over plans to impose 'haircuts' on certain AIB bondholders has been involved in a series of controversies, including the broadcast of a leaked videotape showing him in secret discussions with Ecuador's economic minister as the South American state considered defaulting on its bonds.

Carlos Abadi, whose Abadi & Company investment group was locked in legal battle with the State in the Four Courts last week, was a central figure in a controversy that captivated the small South American country of Ecuador just over three years ago.

Television station Teleamazonas broadcast part of a videotape showing Abadi and one of his colleagues at a secret meeting with Ecuador's economics minister Ricardo Patino and key officials.

The tape appears to show a discussion relating to how Ecuador could make money on credit-default swaps if it threatened "to scare the market" by considering default on an upcoming bond payment.

"This was a game with the market," opposition congressman Luis Almeida told Bloomberg after the controversy erupted.

"We're talking about one of the biggest scandals in the history of Ecuador."

Economics minister Ricardo Patino resigned two months later. Abadi later confirmed that he had attended the meeting but denied any impropriety.

"Nothing ever came of the Ecuador story in either Ecuador or the US. Nobody in either country was charged with anything," Abadi's lawyer Richard Smolev told the Sunday Independent last week.

The Ecuador videotape incident was not the only time that Mr Abadi had found himself deep in controversy.

In 1995, he was one of four Wall Street traders indicted by a Manhattan district attorney on allegations that they had defrauded a number of banks, including one that employed Abadi.

Last week, his lawyer told this newspaper: "You found stories about the indictment but nothing about the resolution. All charges alleging that Carlos defrauded any bank were dismissed."

Along with two other traders, Abadi was also charged with transferring $6m to offshore corporations without declaring the income for tax. The investment banker was convicted of improper tax reporting.

"According to our computer records, he (Abadi) pleaded guilty to offering a false Instrument for filing in the first degree and was sentenced to a fine," the Manhattan District Attorney's Office said.

Abadi made a fortune when rescuing trashed Wall Street money manager Refco.

The Argentinian financier is also close to economist Nouriel Roubini -- nicked named 'Dr Doom' for his accurate predictions that the global economy was about to crash.

Abadi sits on the advisory board of Mr Roubini's economic think-tank and the advisory firm RGE.

Last month, his firm Abadi & Company, and another US fund, Aurelius Capital, launched proceedings to prevent the Government's plans to amend the terms of AIB's subordinated debt. The taxpayer currently owns 92 per cent of AIB.

The proposals "would appear to interfere with fundamental property rights of creditors", Abadi said in a statement. However, he offered to take part in constructive discussions with the Government.

Finance Minister Michael Noonan described the case as "unfounded".

The case continues in June.

Sunday Indo Business

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