Fact Check: Argentina

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Kicillof in the Crosshairs of Corruption

Looks like Argentine Economy Minister Axel Kicillof has followed in the footsteps of his predecessor, current Vice President Amado Boudou who is under indictment for corruption.

On Tuesday, in an article titled “Kicillof faces complications with a denunciation linking him to an investment fund and a foreign bank” Infobae reported the following,

“Economy Minister Axel Kicillof could become the third head of this ministry to be prosecuted by the judiciary from Kirchnerist governments if an allegation of corruption for his alleged involvement in an investment fund and an international bank moves forward. This criminal complaint against the minister was filed by citizen Ricardo Juan Mussa.”

The complaint, which was filed by Peronist politician Ricardo Juan Mussa, alleges a number of offenses, including but not limited to: beach of duty by a public official, concealment, illicit enrichment, racketeering, money laundering, and fraud. Kicillof allegedly instructed the Central Bank to sell $200 million worth of bonds in an illegal manner, potentially benefiting his associate Diego Marynberg, and possibly himself.

The complaint also stated, in referring to Minister Kicillof and his deputy minister, that “it is public knowledge that they hold all the government’s power in their hands, not because they have been elected to do so, and they are allowed to do as they wish with the public coffers as if they were personal property.”

Mussa requests that a number of individuals—ranging from journalists at Clarin to former head of the Central Bank Juan Carlos Fabrega—be compelled to testify regarding this incident. Infobae notes that Fabrega’s testimony could be particularly interesting, given “Fabrega knows all about the operations for millionaire profits that some Kirchnerist businessmen received from Banco Nacion and also knows how the Central Bank has authorized discretionary rotation of profits abroad and bond sales like Mussa’s complaint points to.”

These corruption investigations seem to have become quite the trend in CFK’s administration. How long before Cristina herself is a target of such an investigation?



Yesterday, President Kirchner held a videoconference with Russian President Vladimir Putin, trumpeting the countries’ growing ties. The two leaders jointly announced the launch of a Spanish language version of Russian state-owned TV channel “Russia Today” in Argentina.

Radio Free Europe reported, “State-run satellite channel ‘Russia Today,’ a major platform for getting the Kremlin’s message to audiences abroad, has extended its reach with the inauguration of Spanish-language programming in Argentina. Russian President Vladimir Putin and Argentina’s President Cristina Kirchner launched RT’s Spanish-language programming in the South American nation with a televised linkup. In an address to the people of Argentina, Putin said he hoped the channel would bring the two countries closer together.”

The Radio Free Europe article, along with others that covered the development, mentioned that Russia, hit by US and European sanctions relating to its role in the crisis in Ukraine, has been looking to Argentina and other nations as a source for imports and geopolitical support. Argentina, which has been locked out of the capital markets for years and is increasingly being viewed as a problem child, has been seeking support from superpowers on the “fringe” such as Russia and China. Putin was also reported to have voiced his support for Argentina’s “objectives,” presumably referring to the issue with the holdouts.

“Russia Today” has been heavily criticized for broadcasting a skewed account of events that supports Putin and the Kremlin’s view. Additionally, Putin has been criticized for clamping down on freedom of the press in Russia, something Cristina has been – correctly – accused of herself. In fact, it is highly fitting that on the same day Kirchner welcomed the Putin-friendly “Russia Today” into Argentina, she intensified her crackdown on the free press in Argentina. Cristina’s crackdown on independent media and journalists has been noted by the Committee to Protect Journalists and Freedom House, among others.

While the Kremlin celebrates Russia’s growing influence over the Casa Rosada, reports are also emerging that YPF is in the process of signing a billion dollar agreement with Russian state-owned Gazprom.  We’ve reported before on overtures made by Russia and China to get their hands on Argentina’s rich natural resources.

Hey Cristina, mortgaging the Vaca Muerta field to Vladimir Putin and his Russian oligarchs would not be necessary if Argentina would simply end its default and come to an agreement with its creditors.  You’ve led Argentina into this mess; don’t make things worse by allowing Argentina to come under Putin’s thumb.



Digging Deeper into the Baez Money Trail


Yesterday, ATFA posted a map highlighting the flow of suspicious funds by shell companies and bank accounts linked to Argentine construction magnate Lazaro Baez.  The Wall Street Journal has written about the Baez network and his possible role in fueling the rise of President Kirchner’s wealth.

English Trail Pic

En Español 

Our map shows the flow of funds, based on public sources and news reports, making a journey from Argentina, through the Bahamas, to European accounts owned by entities in the Seychelles, back to Argentina and ultimately to Florida to be converted into real estate.

We thought it was important to share with our readers some of the source material that we’ve been digging up on all of this.  To that end, here’s a tour of the Baez money trail:

 – In his interview with Jorge Lanata and Nicolás Wiñazki, former Báez money launderer Federico Elaskar said that the money he flew out of the country subsequently traveled to shell companies in Belize, Panama, and the British Virgin Islands. While not mentioned explicitly by Elaskar, the role of Uruguay in facilitating the movement of illicit Argentine assets, including cases that implicate Báez, is well established.

 – Báez’s ties to the Bahamas, and in particular Macro Bank (the local subsidiary of Banco Macro, previously known as Sud Bank), are established via no less than three links. First, the money he allegedly moved to Liechtenstein, where it sat in the custody of the front company Trade24, arrived via Sud Bank. And two alleged Báez conspirators—Carlos Adrián Calvo López and Fabián Rossi—reportedly both worked in the Bahamas while also laundering for Báez.

 – Many Argentine-owned Bahamian banks have additional ties to Argentine corruption cases. One recent example is the alleged defrauding of Have Result Investments Ltd., a Hong Kong-based energy fund that in 2011 accused various Argentine partners of using a Sud Bank account to divert payments made for hydrocarbon concessions. In the 1990s, the Bahamian Federal Bank played a fundamental role in alleged corruption schemes by Raúl Moneta, a banker closely tied to the government of then-President Carlos Menem. Similar examples linking the Bahamas to Argentine corruption abound.

 – Several Nevada LLCs implicated in the Báez scandal have been used to stash real assets in Argentina and other South American countries. Three of the most prominent examples are Eyden Group LLC, which owned property in the Torres Renoir and the adjacent Terrazas del Yacht; Huston Management LLC, a stake of the Argentine investment firm Continental Urbana; and Jaguar Capital LLC, which is implicated in a pair of recent land deals in Uruguay with a firm linked via media accounts to Báez.

 – Báez’s banking at Lobard Odier and J. Safra Bank has been documented by Argentine and Swiss authorities, as well as in the Argentine media. Additional accounts linked to Báez and his confederates have been found at the Swiss banks AIG Private Bank, Pictet CIE, and Schroder & Co.

 – Moreover, at least seven of the Nevada firms highlighted in the Campagnoli Dictamen of May 2013 as playing a role in the Báez network also have subsidiaries in Switzerland. It is not implausible that these firms—which are based in Lugano, Switzerland, just a couple miles from Báez front company Helvetic Services Group—are also managing money in Swiss bank accounts.

 – Báez transferred $65 million from accounts in Switzerland to Argentina in 2012 and 2013 through the sale of Argentine sovereign bonds on the open market. Báez did so via Helvetic Services Group, the titular owner of the bonds, but the proceeds of the sale were subsequently deposited into an account of Austral Construcciones, the flagship company of the Báez empire. The primary brokerage that carried out the trades on Helvetic’s (and Báez’s) behalf was Buenos Aires-based Financial Net Sociedad de Bolsa.

 – Within weeks of executing the bond sales that allegedly helped Báez move $65 million of laundered money into Argentina, three executives at Financial Net began snapping up condos in Palm Beach County and Miami. They acquired at least 11 properties through Florida-registered LLCs that appear to have been created for the express purpose of acquiring the properties. None of the Financial Net executives had any prior presence in Florida; their trades on Báez’s behalf, and the proceeds derived from them, appear to have precipitated the condo purchases.

To listen to yesterday’s ATFA conference call with Chairman Robert Shapiro and Dennis Hranitsky, attorney for ATFA member NML, click here.


Bloomberg Editorial Board: Argentina Needs to Settle with Holdouts to Regain Access to Capital Markets

Yesterday’s editorial in Bloomberg View, “Argentina’s Contempt for Its Citizens,” provides an excellent overview of how the President Kirchner’s nonsensical economic policies combined with her decision to default on bonds has severely harmed the Argentina’s citizens. Experts have also warned of the consequences the Argentine people will experience as a result of the Argentine government’s refusal to settle its obligations with creditors.

Here are some key points Bloomberg’s editorial board makes:

 “Since the country was largely cut off from international capital markets following its default in July, the government of President Cristina Fernandez de Kirchner — never a paragon of orthodox policy making — has resorted to even more self-destructive coping measures. As the foreign currency reserves that Argentina needs to pay for imports have diminished, the government has issued new rules meant to keep dollars from leaving the country.

 “Yet such perverse interventions have not been helpful: Export levies on Argentinian beef, for instance, have failed to protect consumers from higher prices, but they have displaced it from global markets.”

 There’s one easy way for Argentina to avert such a scenario: Settle with its holdout creditors and regain access to global capital markets. Instead, Argentina has continued to defy U.S. District Judge Thomas Griesa’s ruling that it can’t make payments on its restructured debt as long as it continues to refuse to pay holders of its defaulted debt. Fernandez has barnstormed the United Nations, attacking her antagonists — the minority of bondholders who have refused a restructuring of terms — as vulture-fund terrorists. (For good measure, when American Airlines cut some service to Argentina, she denounced the company as “jet-propelled vultures.”) She has also accused Argentinian businessmen, farmers and bankers of conspiring with “foreign help” to overthrow her government.”

 Count Bloomberg’s editorial board as being part of the consensus that Argentina should settle with its creditors.  Unfortunately, Cristina Kirchner has instead decided to default, and to blame creditors, a judge, private companies and the U.S. and German governments for her country’s worsening economic situation.  (For a quick compilation of just a few of the many assaults Cristina Kirchner has waged, check out our infographic).

It isn’t too late for Argentina to settle with holdout creditors.  We can only hope Axel Kicillof will use his upcoming trip to Washington, D.C. this week to sit down and discuss a settlement with the holdouts.



President Kirchner’s Black Helicopter Speech

It’s official. Argentine President Cristina Kirchner has lost her marbles. In a fiery speech given last night after Judge Griesa ruled Argentina in contempt, the President went on a lengthy tirade against everyone who was to blame for the country’s ills: the farmers, the businessmen, and the bankers.  She accused these forces of plotting to overthrow her and announced government investigations into those seeking to destabilize the economy. And those were just the local Argentinians who are to blame.

Cristina then refocused her attacks on those in North America who were to blame: the vultures, Judge Griesa (who she called “senile” and his declaration of contempt “foolish”), the acting US ambassador (and favored punching bag of the Kirchneristas) Kevin Sullivan, and finally, the US government.

“They are firing missiles on the Mid East, only God knows what is really happening there, but they won’t fire missiles on Argentina, they are sending financial and speculative attacks on Argentina, they seek to bring down our successful restructuring process and the benefits achieved by Argentine workers. Beware, they want force us to pay billions of dollars,” she stated.

Portraying herself as standing up against the forces of tyranny, Cristina declared, “Perhaps they will arrest me next time I go to New York, but let me be clear, I’m going to go anyway.”

Cristina ended her speech with a dramatic suggestion, “If something happens to me, look north. Not east” to the United States. The President seems to have forgotten that we aren’t living in the 1960s anymore – the US government may find her annoying, but this accusation is offensive and beyond preposterous.

The beginning of the fallout from Cristina’s speech could be seen earlier today when it was confirmed that Central Bank President Juan Carlos Fabrega had resigned. Cristina disparaged Fabrega in her speech last night, so his resignation was not a complete surprise. Nevertheless, the unsettling news sent the Merval Index plummeting more than 8%. As Business Insider put it, “The Only Voice of Reason in Argentina’s Government Just Quit.”  Fabrega, who was frequently at odds with both Cristina and Kicillof at various stages throughout his tenure, was in favor of negotiating a settlement with Argentina’s creditors. Now Cristina and Axel are left to do as they please with the economy which is a truly terrifying thought.

Fabrega’s replacement, the former head of the National Securities Commission Alejandro Vanoli, is another one of Cristina’s default deniers. In August, he stated “the market itself is saying there is no default,” and has lambasted both Judge Griesa and Special Master Pollack.  There is surely more bad news to come.

The only upside to Cristina’s antics is that the domestic and international press saw the speech for what it was: total and utter lunacy. We’ve included a few for our readers to get a sense for how ridiculous Cristina looks in all of the media coverage from the past 24 hours.

“Argentina President Claims US Plotting to Oust Her,”The Guardian

Argentine Businessmen Plot Government Overthrow, Fernandez Says,” -Bloomberg

“US Could Topple My Government, Kill Me: Argentina President Cristina Kirchner,” -Agence France-Presse

“Argentina Slams US judge after contempt decision”,  -Associated Press

The Guardian piece concluded with what we thought was an appropriate summary of the situation.

“The president’s mental wellbeing was previously questioned by Hillary Clinton in 2010. ‘Is she taking medication?’, Clinton asked in a diplomatic cable leaked to the press while she was US secretary of state. ‘How does stress affect her behavior toward advisers and/or her decision-making?’ the memo added.

We just hope Cristina isn’t reading the wires.



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