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

Lesotho Faces New Round of Violence, Political Crisis

Brutal killing of military officer has sent former leaders back into S. Africa where they're watching anxiously as regional officials head in to try to restore peace More

Video US Diplomat Expects Adoption of Bosnian Massacre Anniversary Resolution

Samantha Power says there's broad consensus about killings in Bosnia's war, but Russia calls resolution 'divisive,' backs UN countermeasure More

UN Report Exposes Widespread Boko Haram Atrocities

Damning report graphically details pattern of vicious, widespread atrocities committed by Islamist militants More

Featured Videos

Your JavaScript is turned off or you have an old version of Adobe's Flash Player. Get the latest Flash player.
Olympics Construction Scars Sacred Korean Mountaini
X
July 02, 2015 4:10 AM
Environmentalists in South Korea are protesting a Winter Olympics construction project to build a ski slope through a 500-year-old protected forest. Brian Padden reports that although there is strong national support for hosting the 2018 Pyeongchang Winter Olympics, there are growing public concerns over the costs and possible ecological damage at the revered mountain.
Video

Video Olympics Construction Scars Sacred Korean Mountain

Environmentalists in South Korea are protesting a Winter Olympics construction project to build a ski slope through a 500-year-old protected forest. Brian Padden reports that although there is strong national support for hosting the 2018 Pyeongchang Winter Olympics, there are growing public concerns over the costs and possible ecological damage at the revered mountain.
Video

Video Xenophobia Victims in South Africa Flee Violence, Then Return

Many Malawians fled South Africa early this year after xenophobic attacks on African immigrants. But many quickly found life was no better at home and have returned to South Africa – often illegally and without jobs, and facing the tough task of having to start over. Lameck Masina and Anita Powell file from Johannesburg.
Video

Video Family of American Marine Calls for Release From Iranian Prison

As the crowd of journalists covering the Iran talks swells, so too do the opportunities for media coverage.  Hoping to catch the attention of high-level diplomats, the family of American-Iranian marine Amir Hekmati is in Vienna, pleading for his release from an Iranian prison after nearly 4 years.  VOA’s Heather Murdock reports from Vienna.
Video

Video UK Holds Terror Drill as MPs Mull Tunisia Response

After pledging a tough response to last Friday’s terror attack in Tunisia, which came just days before the 10th anniversary of the bomb attacks on London’s transport network, British security services are shifting their focus to overseas counter-terror operations. VOA's Henry Ridgwell has more.
Video

Video Obama on Cuba: This is What Change Looks Like

President Barack Obama says the United States will soon reopen its embassy in Cuba for the first time since 1961, ending a half-century of isolation. VOA White House correspondent Luis Ramirez reports.
Video

Video Hate Groups Spread Influence Via Internet

Hate groups of various kinds are using the Internet for propaganda and recruitment, and a Jewish human rights organization that monitors these groups, the Simon Wiesenthal Center, says their influence is growing. The messages are different, but the calls to hatred or violence are similar. VOA's Mike O’Sullivan reports.
Video

Video US Silica Sand Mining Surge Worries Illinois Residents, Businesses

Increased domestic U.S. oil and gas production, thanks to advances known as “fracking,” has created a boom for other industries supporting that extraction. Demand for silica sand, used in fracking, could triple over the next five years. In the Midwest state of Illinois, people living near the mines are worried about how increased silica sand mining will affect their businesses and their health. VOA’s Kane Farabaugh has more in this first of a series of reports.
Video

Video Blind Somali Journalist Defies Odds in Mogadishu

Despite improving security in the last few years, Somalia remains one of the most dangerous countries to be a journalist – even more so for someone who cannot see. Abdulaziz Billow has the story of journalist Abdifatah Hassan Kalgacal, who has been reporting from the Somali capital for the last decade despite being blind.
Video

Video Texas Defies Same-Sex Marriage Ruling

Texas state officials have criticized the US Supreme Court decision giving same-sex couples the right to marry nationwide. The attorney general of Texas says last week's decision did not overrule constitutional "rights of religious liberty," and therefore officials performing wedding services can refuse to perform them for same-sex couples if it is against their religious beliefs. Zlatica Hoke reports on the controversy.
Video

Video Rabbi Hits Road to Heal Jewish-Muslim Relations in France

France is on high alert after last week's terrorist attack near the city Lyon, just six months after deadly Paris shootings. The attack have added new tensions to relations between French Jews and Muslims. France’s Jewish and Muslim communities also share a common heritage, though, and as far as one French rabbi is concerned, they are destined to be friends. From the Paris suburb of La Courneuve, Lisa Bryant reports about Rabbi Michel Serfaty and his friendship bus.
Video

Video Saudi Leaks Expose ‘Checkbook Diplomacy’ In Battle With Iran

Saudi Arabia’s willingness to wield its oil money on the global diplomatic stage appears to have been laid bare, after the website WikiLeaks published tens of thousands of leaked cables from Riyadh’s Ministry of Foreign Affairs. VOA's Henry Ridgwell reports.
Video

Video In Kenya, Police Said to Shoot First, Ask Questions Later

An organization that documents torture and extrajudicial killings says Kenyan police were responsible for 1,252 shooting deaths in five cities, including Nairobi, between 2009 and 2014, representing 67 percent of all gun deaths in the areas reviewed. Gabe Joselow has more from Nairobi.

VOA Blogs

World Currencies

EUR
USD
0.9009
JPY
USD
123.09
GBP
USD
0.6387
CAD
USD
1.2524
INR
USD
63.605

Rates may not be current.