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ARGENTINA lashed out today at New York Judge Thomas Griesa’s ruling that it is in contempt of court for refusing to pay $1.5 billion (£920 million) to vulture hedge funds.
The Foreign Ministry in Buenos Aires said that Judge Griesa’s ruling “violates international law” and “has no practical effect other than to provide new elements helpful to the slanderous political and media campaign conducted by vulture funds against Argentina.”
It derided the district judge as holding “the sad record of being the first judge to declare a sovereign state in contempt for paying a debt, after failing in his attempt to block the restructuring of the foreign debt of Argentina.”
The judge had insisted that Buenos Aires pay the £920m to hedge funds led by billionaire speculator Paul Singer’s NML Capital if the majority of Argentina’s bondholders were paid interest on their bonds.
After Argentina defaulted on about $100bn (£61.5bn) of debt in 2001, the country negotiated a settlement with 90 per cent of its bondholders to repay a certain portion of the amount owed.
Mr Singer’s hedge funds refused to do so, demanding full repayment of their $1.5bn, and have sued to prevent Argentina from paying out only on the restructured bonds.
They relied on a growing hedge fund practice of holding what are effectively junk-value bonds until it is expedient to sue in US courts to demand payment at full value.
US corporate lawyer Robert Cohen had urged the judge to find Argentina in contempt and impose a $50,000 (£31,000) daily penalty.
Judge Griesa has played along with the charade, though even US Secretary of State John Kerry acknowledged that the request for a contempt-of-court finding was “completely absurd.”
Argentina’s ambassador to the US Cecilia Nahon had written to Mr Kerry, warning that, if her country was found to be in contempt of court it would represent “unlawful interference” in Argentina’s domestic affairs.
Judge Griesa’s shenanigans have left Bank of New York Mellon and Citigroup with millions of dollars on hold that Argentina had planned to pay in interest to holders of its renegotiated debt.
