La Nacion: “Griesa upholds that BCRA assets are attachable”
Clarin: “Griesa: reserves are attachable”
El Cronista: “Griesa leaves a door open for attaching assets of the BCRA at the request of the vulture funds”
Ambito Financiero: “Griesa leaves open a case of the vulture funds against the BCRA”
Infobae: “For Griesa, the BCRA is not independent of the government and he leaves open the case in New York”
Clarin: “Debt and the vulture funds: a story with an announced ending”
OTHER NEWS ITEMS:
· El Cronista reports that the U.S. Assistant Secretary of Agriculture Michael Scuse met with Argentina’s Agriculture Minister Norberto Yauhar at the meeting of agricultural ministers of the Americas in Campana, Argentina, and that Scuse agreed to send a technical inspection team from USDA in November to Argentina as a “first step” toward possibly lifting U.S. restrictions on imports of Argentine beef.
· Clarin reports that a study by abeceb.com finds that, when all debt stock and liquid cash is coverted to pesos, the BCRA has more “paper” obligations (272.498 billion pesos) than total reserves (209.386 billion pesos).
· El Cronista reports that Brazilian industry leaders, mainly led by FIESP, are becoming more vocal in demanding negotiations advance on a Mercosur-EU free trade agreement with or without Argentina, whose own industry sector is opposed due to the impact it could have on Argentina’s national production.
· El Cronista reports that the new national CPI will be ready to be shown to the IMF in early October, but will not enter into effect in Argentina this year.
· A known FpV activist in La Matanza has been identified from scores of photographs as one of the attackers who threw stones at Sergio Massa’s motorcade over the weekend. He is shown holding a slingshot as Massa approached, and then launching stones from it.
TRENDING TOPICS/ARGENTINA on Twitter:
· No political topics are trending this morning.
La Nacion
Griesa upholds that BCRA assets are attachable
Thursday, September 26, 2013
By Martin Kanenguiser
New York Judge Thomas Griesa yesterday dismissed the request of the Central Bank to close a case in which the vulture funds are trying to demonstrate that that entity is acting on behalf of the government and that, therefore, its international reserves can be attached.
At a hearing in his courtroom, the veteran judge refused a petition from the law firm which represents the entity that Mercedes Marcó del Pont presides over, Sullivan & Cromwell LLP. So said official sources to LA NACION as well as others involved in this case promoted by the funds NML and Dart. "There is a legitimate claim by the plaintiffs that, for certain purposes, the Central Bank is an alter ego of the Republic,” Griesa said, according to the Bloomberg news agency.
At the hearing, the Central Bank’s lawyers - who made the request with the lawyers representing the government, the firm of Cleary, Gottlieb, Steen & Hamilton – perceived a "manifest hostility" by the judge towards Argentina.
In addition, the Central Bank announced he will appeal this measure, finding that the continuity of the case "makes no sense because it was already determined that international reserves are not attachable."
In 2005, Griesa upheld the attachment of US$105 million by understanding that the BCRA acted as an alter ego of the government (i.e., they are the same legal entity and it acts on behalf of the Executive Branch, only separated to avoid the practical effect of negative judicial sentences). The judge had considered that such direct link was demonstrated in the purchase of dollars at a value greater than the market to accumulate reserves and using them for the payment of liabilities and debts of the country, with the IMF, with the Paris Club (which was set in a decree, but that did not occur) and, from 2010, the multilateral banks and bondholders. In 2010, when the Government began to implement the "debt reduction fund," Griesa upheld the attachment, which, however, in 2011 was reversed by the Court of Appeals, starting with the emphatic position of the US Federal Reserve that central banks’ reserves are unattachable.
Starting with the removal of that injunction, the Central Bank could free up the attached reserves and only left a minimal amount to maintain certain essential operations. The money is distributed between the Bank of International Settlements in Basel (70%) and the Central Bank of France (30%), which will guarantee, a priori, immunity. As the vulture funds believe they cannot wage this same legal battle in other countries, however, they were opposed to the underlying case being closed.
The central argument of the litigants is that, insofar as the government uses the Argentine Central Bank reserves to pay off debt, this is putting those resources to commercial use and therefore are subject to attachment.
Griesa, who actually waited several years after the default to start issuing rulings against the government, also ruled in favor of the vulture funds and 13 Argentine retail investors in the case of "pari passu", which was upheld by the Court of Appeals. Next Monday, the U.S. Supreme Court will take up that case.
The Seychelles, in the crosshairs
In addition, the litigants are still waiting for data that Banco Nacion and other entities must provide in the process of "discovery", in which Griesa enabled them to find assets to attach, both public (not diplomatic) as well as personal, if they are belonging to President Cristina Kirchner. The funds are trying to confirm if, as the court investigates it, the President has funds in the Seychelles Islands or not.
Clarin
Griesa: reserves are attachable
Thursday, September 26, 2013
New York Judge Thomas Griesa yesterday rejected a petition made by Argentina and upheld his position that the Central Bank is an “alter ego” of the state, which means that in the judgment of the magistrate, its funds are attachable.
“I believe that there is a very legitimate claim on the part of the plaintiffs that, for certain purposes, the BCRA is an alter ego of the Republic,” Griesa said during a hearing yesterday in New York.
The case arises from a claim from the funds NML Capital and EM Ltd., against the BCRA. The plaintiffs already have a ruling in the appeals court in their favor.
El Cronista
Griesa leaves a door open for attaching assets of the BCRA at the request of the vulture funds
The judge rejectes a recourse from the monetary entity to dismiss the known argument of NML and EM in which it is considered an “alter ego” of the government
Thursday, September 26, 2013
by EL CRONISTA Buenos Aires
The Central Bank yesterday lost a recourse to dismiss a claim by creditors seeking to hold it responsible for the debt in default. Judge Thomas Griesa refused a petition from the entity led by Mercedes Marcó del Pont for him to not consider a claim by two vulture funds, seeking to declare the monetary entity as an "alter ego" of the country. The monetary authority will appeal the measure in the coming days.
It is not the first time that the argument of alter ego has succeeded in Griesa’s court, which ruled in 2010 in favor of this line of argument. The ruling, however, did not survive in the Court of Appeals.
Listening to this, yesterday Griesa did not rule on the merits of the case presented by NML and EM, two vulture funds who already won lower court rulings against Argentina over the debt in default.
On this occasion, these two funds returned to get Greisa’s court to find that the funds that the Central Bank has deposited in the United States can be used to pay judgments.
In yesterday's hearing, Griesa turned a deaf ear to the request of the Central Bank to dismiss the new case, and said "there may be some accounts or some of the assets of the BCRA, which may legitimately be attached or executed to satisfy the debts of the lawsuit.”
"I believe that there is an argument that is more than legitimate put forward by the plaintiffs that, for certain purposes, the BCRA is an alter ego of the Republic," said Griesa.
The judge warned, however, that to conclude that Argentina and the Central Bank are legally the same "could actually have effects or implications that go far beyond what I would seek.”
Yesterday the Central Bank let it be known that it will appeal Griesa’s decision.
The decision is the latest in years of litigation on bonds among the creditors who had refused to participate in the debt swaps offered by Argentina in 2005 and 2010, over the default of more than US$100 billion after the 2001 crisis. The funds NML Capital, a unit of Paul Singer’s Elliott Management, and EM, controlled by investor Kenneth Dart, are demanding US$3.410 billion on bonds in default that they possess.
The U.S. Supreme Court will meet next Monday and could decide whether to take up an appeal of a decision by another court that requires Argentina to pay US$1.330 billion to these funds, as a result of two rulings of first and second instance ordering the attachment of payments that Argentina makes to the holders of restructured debt.
The Supreme Court added the case to the issues to consider in its next annual session, which starts in October. This inclusion implies the possibility that the Court will decide to hear the country’s appeal country of the lower court ruling, or will plainly reject to take up the matter.
A rejection may be momentary, as there are still chances that the Argentina will appeal the appellate ruling, which the Supreme Court could give greater attention to.
A third possibility is that the court of last resort will decide to postpone the analysis of the case for after the session that is about to begin.
Ambito Financiero
Griesa leaves open a case of the vulture funds against the BCRA
• It’s over the definition over whether the entity is an “alter ego” of the Argentine government
• It has no effect over the reserves.
Thursday, September 26, 2013
by: Carlos Burgueño
Thomas Griesa yesterday showed that he is willing to toe a hardline against Argentina whenever he has the chance. He made that clear yesterday when he sided with the possibility of eventual future attachments against the reserves of the Central Bank of the Argentine Republic (BCRA), while the country already has a ruling in its favor safeguarding the "immunity" of these assets in the Court of Appeals of New York. The trial judge ruled yesterday in favor of holding open a case from n 2005 by the vulture fund NML Elliot of Paul Singer, who sought to be able to attach the Central Bank’s reserves deposited in the United States, considering that the entity that Mercedes Marcó del Pont directs represents an "alter ego" of the Argentine government. With this, the Argentine Central Bank funds could be attached to be able to collect on the US$1.33 billion claim that the fund and several other creditors have been demanding since that year from Argentina in the case to be resolved now by the Supreme Court. As the country already had a favorable ruling in the Court of Appeals ruling, in which any possibility to attach funds from the Central Bank was rejected, the case opened in 2008 only aims to decide if the BCRA is or is not effectively the "alter ego" of the Executive Branch, an abstract situation that would only serve as a contribution to American jurisprudence, but won't have any real effect on Argentine reserves. This is so because any decision from Griesa to the contrary, and endorsing potential attachments, is forbidden by a superior appeals court ruling, whereupon the resolution of the "alter ego" chapter would be a more academic than executable.
However, Griesa refused to close the case, in a hearing that judge opened with a presentation from the BCRA where it asked to end this chapter. Griesa called Argentina’s attorneys as well as those from the vulture funds Elliott to determine whether in his opinion the case will remain open and that, in any case, it must be the Appeals court which decides the issue. With this, Griesa left open one more option for Paul Singer’s firm to continue battling it out in court, in a position which in the Argentina would define as "muddying the waters", according to the view of official sources of the government of Cristina de Kirchner.
The country has the guarantee that the reserves are indeed protected, because there is a ruling from July 2011, when Amado Boudou was Economy Minister, where the appeals court (the same one that last month ruled against Argentina) ruled that the money from the Central Bank deposited in the Federal Reserve is protected by the laws of monetary immunity of the United States. Earlier, in his court, Griesa had ruled to the contrary, attaching about US$150 million from Argentina, saying that that money belonged to the Executive and, therefore, was attachable. The appeals court rejected that proposal and in 2011 ruled that "beyond the independence or otherwise of the central banks, which governs the matter is the law of sovereign immunity of international reserves and that all international reserves that central banks have deposited at the Fed to carry out typical operations of a central bank, are immune". In that ruling, the appeals court also referred to the BCRA as "more independent of the Argentine government than the Fed is of the United States or the Bank of England is of the British government.”
A fact of that ruling, until today the only thing that has turned out positive for the country in the whole legal saga against the vulture funds, is that it was the only time so far that the U.S. government of Barack Obama and the Federal Reserve of Ben Bernanke acted as "amicus curiae" of the country. Obviously, both interventions aimed at protecting the business of keeping money from the reserves of the central banks of the world at the Fed, since upholding Griesa’s ruling (in his first decision in which he showed that he had no sympathy for Argentina) would have provoked a real stampede of dollars from developing countries. The Court of Appeals recalled that the criterion of "immunity" for the reserves of central banks has been in force in the U.S. financial system since 1970.
The vulture fund Elliot raised questions similar to this before in the Swiss, Belgian and French courts, trying to attach funds from the Central Bank in those markets. In all cases, it received negative rulings that definitively closed those cases. Griesa just decided yesterday to keep the case open, even for an abstract issue.
Infobae
For Griesa, the BCRA is not independent of the government and he leaves open the case in New York
The judge argues that in some cases the Central Bank has acted as the “alter ego” of the government. In 2011, an attachment on US$100 million in reserves was lifted. BCRA sources confirmed to InfoBAE that in the coming days it will appeal the decision.
Thursday, September 26, 2013
by: Leandro Gabin
Judge Thomas Griesa again showed that he is still willing to put a spoke in the wheel. At a hearing in New York, the judge dismissed a petition from the law firm that advises the Central Bank, Sullivan & Cromwell LLP, on a case that - it thought - was closed: whether the Central Bank is the alter ego of the national state and therefore creditors can request an attachment on its funds.
On this occasion, Griesa left the door open. He rejected the petition from the Central Bank to close the case of alter ego (due to a ruling of the Court of Appeals, which in 2011 had lifted an attachment on US$100 million in reserves). "I think there is a very legitimate claim by the plaintiffs here. For certain purposes, the BCRA is the alter ego of the Republic" Griesa said, according to the Bloomberg news agency, during the hearing.
Sources from the Central Bank confirmed to InfoBAE that it will appeal Griesa’s resolution in the coming days before the same Appeals court which had lifted the attachment. That same court, on July 5, 2011, ruled in favor of the Central Bank in a case that had been started by two vulture funds, EM and NML, and was intended to attach the Argentine Central Bank’s reserves. Moreover, the vulture funds had wanted to take the case to the U.S. Supreme Court and the highest court last year dismissed the case, leaving the appeals ruling as the final word.
This all dates back to late 2005, when the Central Bank funds were attached and frozen. In 2010, Griesa sided with the attachment of the US$100 million that the Central Bank had deposited at the New York Federal Reserve.
The surprise inside the Central Bank and in the government is not small. The official view was that this story of alter ego had already been scrapped by the appellate ruling at the time. Moreover, they say that the appeals court had already decided on the underlying issue.
They recall that ruling had said that "beyond the independence or not of central banks, what applies is the law of sovereign immunity on international reserves and that all the reserves that the central banks have deposited at the Fed to carry out the operations that are typical of any central bank - defined as the paradigmatic transactions of any central bank - are immune.”
Moreover, in the government they believed that with the Appeals court (and the refusal to take the case at the Supreme Court), they had already generated jurisprudence so that the vulture funds could not continue thinking of aiming at the Central. That was all based on having already made attempts on the funds in Switzerland, Belgium and France, all of which were rejected.
Practically, that Griesa has dismissed closing the case does not bring any immediate risks. Some lawyers believe that this only fell upon the discussion of the Central Banks independence, something that would not have an impact on a potential new petition for attachment.
It is clear that Griesa continues to point his cannons against Argentina. The litigation with the holdouts persists, as he also has the case against the Central Bank open and a lawsuit by Repsol against the government for the expropriation of YPF and the supposed scamming of investors.
Clarin
Debt and the vulture funds: a story with an announced ending
Thursday, September 26, 2013
by César Deymonnaz, Former Assistant Secretary of Financial Services for the Nation
After announcing on multiple occasions that it would not pay one dollar to the "vultures", finally necessity has the face of a heretic (at least for the government) and reality is being imposed upon the fantasy.
Any more or less well-advised politician would know that the last thing that should happen is that the government should carry Argentina into a new default after a swap that was "so successful" as it has been saying for many years.
Confidence in our country has been dwindling in the last five or six years in the hands of measures completely against legal security, as was seen in the theft of funds of retirees, of Aerolineas Argentina, of YPF and up to Ciccone and the countless forms of state intervention in the markets of currency, goods and capital.
So, a new default on a refinanced debt (which also, apart from the real need to refinance the liabilities of the state, really was in form - and ultimately in content - an appropriation of other people’s money), would have represented a deepening of that feeling that exists in the civilized world that the Argentines are incorrigible.
The economic experiment called a "model" which began to be implemented not so secretly ten years ago and deepened in the last four or five, was the beginning of a New Era for Argentines, with a horizon of hope in a more egalitarian economy, with less poverty and a present and protective state.
The beginning of a New Era which, among other things, meant rejecting the global trends in favor of inefficiencies and taking refuge in our capabilities reflected in indicators measured to fit, seems to be coming to an end without reaching with its goal.
Finally the potential opening of the swap can serve as an example of a recognition that there are laws in other places and that Argentina cannot be isolated completely from the world forever.
The measure is certainly late and if it had been taken voluntarily and earlier, it could have been used as a window of negotiation with positive effects against lawyers and creditors.
Today, everything seems very difficult to implement and not so advantageous for many institutional creditors.
Meanwhile, there are also many other signs that Argentina is on the path to the crossroads of a strong adjustment that must be made sooner or later, pushed on mainly by rising inflation and the delayed exchange rate.
The later it comes, the greater the adjustment and it should not be expected to correct the course being so late in coming.
It should have been learned by now that there are things that are better done than simply postponed and entrusted to God. If not, the question will be: who should pay for the broken dishes once they are done being broken?
The workers, the savers, retirees, investors, or all of them together?
Perhaps we should take advantage of this experience of the swap and head towards the future.
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