News / Economy

Argentina Slams Judge in US Debt Default Case

A poster depicts U.S. District Court Judge Thomas Griesa, overseeing a case in which U.S. hedge funds are suing Argentina, as a vulture in Buenos Aires, Aug. 12, 2014.
A poster depicts U.S. District Court Judge Thomas Griesa, overseeing a case in which U.S. hedge funds are suing Argentina, as a vulture in Buenos Aires, Aug. 12, 2014.
Reuters

Argentina came out swinging on Wednesday against the U.S. judge overseeing its debt default case, in defiance of a threatened contempt order, and disappointed market hopes it might soon restart talks with the hedge funds suing the country.

A group of holdout investors have sued the South American country for full repayment on bonds that went into default in 2002. The funds rejected debt restructurings in 2005 and 2010, holding out for better terms.

U.S. Judge Thomas Griesa, overseeing Argentina's long-running battle with the funds, said in New York on Friday that he would issue a contempt order unless the government stopped claiming it had met its obligations and was not in default.

Far from backing off of those assertions, Cabinet Chief Jorge Capitanich said that Griesa had been paralyzed by his own lack of understanding of the case and that no new talks had been scheduled with the hedge funds.

"The proper conditions do not exist to negotiate," Capitanich said.

Money’s release requested

Holders of restructured bonds have asked Griesa to release money that Argentina had deposited in June, intended as a coupon payment.

Capitanich criticized the judge for not acting on those requests.

"His lack of decision clearly comes from not understanding the process, not understanding Argentina's status as a sovereign country, not understanding that his actions violate sovereign immunity," Capitanich said. That "transcends judicial concerns and enters the realm of international relations, which are managed by the executive branch of the U.S. government."

In 2012, Griesa ruled that Argentina could not repay holders of restructured debt without simultaneously paying hedge funds their court award of $1.33 billion plus interest.

Conflict over deposit

Argentina says it met its obligation to the holders of restructured bonds when it deposited $539 million into the account of intermediary Bank of New York Mellon in June. Griesa called the deposit illegal and ordered the money frozen.

As a result, Argentina effectively missed the coupon payment after a grace period ended July 30, pushing it into default on its restructured debt.

With no negotiations scheduled, the case was in limbo while international banks struggled to reach a deal to buy some of the Argentine debt held by hedge funds led by Elliott Management Corp. and Aurelius Capital Ltd.

"The judge cannot issue an order of contempt because he cannot enforce it against a sovereign country," Capitanich said. "He cannot embargo the funds because they do not belong to Argentina, but to the [restructured] bondholders. The judge cannot make any decision because he knows he would be effectively violating contracts," he added.

"The only thing he is doing, at the express instruction of the vultures, is to block the payment process after Argentina met its obligations," Capitanich said.

Argentina has long accused the judge of overstepping his bounds and being partial toward the funds, which bought Argentine bonds at steep discounts. President Cristina Fernandez characterizes them as “vultures” out to wreck her country's finances in their pursuit of huge profits.

Acceleration could complicate case

The case could get a lot messier should holders of Argentina's newly defaulted debt decide to declare principal and interest immediately due. The move, known as acceleration, could complicate efforts to put the country's debt woes to rest.

An acceleration on the restructured bonds would also deal a blow to the hedge funds in the case, who suddenly could have to share their claim with a much larger pool of investors.

The International Swaps and Derivatives Association (ISDA) Determinations Committee had a conference call scheduled for Wednesday to discuss the next step in settling the prices on what investors will receive for credit default swap contracts on Argentine debt, a side issue to the main dispute.

You May Like

Tired of Waiting, South Africans Demand Change ‘Now’

With chronic poverty and lack of basic services largely fueling recent xenophobic attacks, many in Rainbow Nation say it’s time for government to act More

Challenges Ahead for China's Development Plans in Pakistan

Planned $46 billion in energy and infrastructure investments in Pakistan are aimed at transforming the country into a regional hub for trade and investment More

'Forbidden City' Revisits Little Known Era of Asian-American Entertainment

Little-known chapter of entertainment history captured in 80s documentary is revisited in new digitally remastered format and book More

Featured Videos

Your JavaScript is turned off or you have an old version of Adobe's Flash Player. Get the latest Flash player.
Cinema That Crosses Borders Showcased at Tribeca Film Festivali
X
April 24, 2015 4:09 AM
Among the nearly 100 feature length films being shown at this year’s Tribeca Film Festival in New York City are more than 20 documentaries and features with international appeal, from a film about a Congolese businessman in China, to documentaries shot in Pakistan and diaspora communities in the U.S., to a poetic look at disaffected South African youth. VOA’s Carolyn Weaver has more.
Video

Video Cinema That Crosses Borders Showcased at Tribeca Film Festival

Among the nearly 100 feature length films being shown at this year’s Tribeca Film Festival in New York City are more than 20 documentaries and features with international appeal, from a film about a Congolese businessman in China, to documentaries shot in Pakistan and diaspora communities in the U.S., to a poetic look at disaffected South African youth. VOA’s Carolyn Weaver has more.
Video

Video UN Confronts Threat of Young Radicals

The radicalization and recruitment of young people into Islamist extremist groups has become a growing challenge for governments worldwide. On Thursday, the U.N. Security Council heard from experts on the issue, which has become a potent threat to international peace and security. VOA’s Margaret Besheer reports.
Video

Video Growing Numbers of Turks Discover Armenian Ancestry

In a climate of improved tolerance, growing numbers of people in Turkey are discovering their grandmothers were Armenian. Hundreds of thousands of Armenians escaped the mass deportations and slaughter of the early 1900's by forced conversion to Islam. Or, Armenian children were taken in by Turkish families and assimilated. Now their stories are increasingly being heard. Dorian Jones reports from Istanbul that the revelations are viewed as an important step.
Video

Video Migrants Trek Through Western Balkans to Reach EU

Migrants from Africa and other places are finding different routes into the European Union in search of a better life. The Associated Press followed one clandestine group to document their trek through the western Balkans to Hungary. Zlatica Hoke reports that the migrants started using that route about four years ago. Since then, it has become the second-most popular path into Western Europe, after the option of sailing from North Africa to Italy.
Video

Video TIME Magazine Honors Activists, Pioneers Seen as Influential

TIME Magazine has released its list of celebrities, leaders and activists, whom it deems the world’s “most influential” in 2015. VOA's Ramon Taylor reports from New York.
Video

Video US Businesses See Cuba as New Frontier

The Obama administration's opening toward Cuba is giving U.S. companies hope they'll be able to do business in Cuba despite the continuation of the U.S. economic embargo against the communist nation. Some American companies have been able to export some products to Cuba, but the recent lifting of Cuba's terrorism designation could relax other restrictions. As VOA's Daniela Schrier reports, corporate heavy hitters are lining up to head across the Florida Straits - though experts urge caution.
Video

Video Kenya Launches Police Recruitment Drive After Terror Attacks

Kenya launched a major police recruitment drive this week as part of a large-scale effort to boost security following a recent spate of terror attacks. VOA’s Gabe Joselow reports that allegations of corruption in the process are raising old concerns about the integrity of Kenya’s security forces.
Video

Video Japan, China in Race for Asia High-Speed Rail Projects

A lucrative competition is underway in Asia for billions of dollars in high-speed rail projects. Cambodia, India, Indonesia, Malaysia Thailand and Vietnam are among the countries planning to move onto the fast track. They are negotiating with Japan and the upstart Chinese who are locked in a duel to revolutionize transportation across Asia. VOA Correspondent Steve Herman in Bangkok has details.
Video

Video Scientists: Mosquitoes Attracted By Our Genes

Some people always seem to get bitten by mosquitoes more than others. Now, scientists have proved that is really the case - and they say it’s all because of genes. It’s hoped the research might lead to new preventative treatments for diseases like malaria, as Henry Ridgwell reports from London.
Video

Video Bible Museum Coming to Washington DC

Washington is the center of American political power and also home to some of the nation’s most visited museums. A new one that will showcase the Bible has skeptics questioning the motives of its conservative Christian funders. VOA religion correspondent Jerome Socolovsky reports.
Video

Video Armenia and Politics of Word 'Genocide'

A century ago this April, hundreds of thousands of Armenians of the Turkish Ottoman empire were deported and massacred, and their culture erased from their traditional lands. While broadly accepted by the U.N. and at least 20 countries as “genocide”, the United States and Turkey have resisted using that word to describe the atrocities that stretched from 1915 to 1923. But Armenians have never forgotten.
Video

Video Afghan First Lady Pledges No Roll Back on Women's Rights

Afghan First Lady Rula Ghani, named one of Time's 100 Most Influential, says women should take part in talks with Taliban. VOA's Rokhsar Azamee has more from Kabul.
Video

Video Keeping Washington Airspace Safe Is Tall Order

Being the home of all three branches of the U.S. federal government makes Washington, D.C. the prime target for those who want to make their messages and ideas heard. Unfortunately, many of them choose to deliver them in unorthodox ways, including from the air, as a recent incident clearly showed involving a gyrocopter landing on the Capitol’s West Lawn. VOA's George Putic has more.
Video

Video New Brain Mapping Techniques Could Ease Chronic Pain

From Boulder, Colorado, Shelley Schlender reports that new methods for mapping pain in the brain are providing validation for chronic pain and might someday guide better treatment.
Video

Video Hope, Prayer Enter Fight Against S. Africa Xenophobia

South Africa has been swept by disturbing attacks on foreign nationals. Some blame the attacks on a legacy of colonialism, while others say the economy is to blame. Whatever the cause, ordinary South Africans - and South African residents from around the world - say they're praying for the siege of violence to end. Anita Powell reports from Johannesburg.

VOA Blogs

World Currencies

EUR
USD
0.9238
JPY
USD
119.51
GBP
USD
0.6614
CAD
USD
1.2119
INR
USD
63.562

Rates may not be current.