Fact Check: Argentina

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Speaking Truth to Power

Demagogues and the free press are like oil and water.

And so for readers of Fact Check Argentina, it should come as no surprise that new reports point to growing incidents of government harassment of journalists and news organizations critical of the Kirchner administration.

The Associated Press reported on a new study issued this week by the highly respected Inter-American Press Association which found that “freedom of expression and the press have sharply deteriorated in the Americas over the last six months due to an increase in censorship and physical attacks on journalists.” The IAPA’s troubling report  released at its 70th annual assembly in Santiago, Chile, documents how press freedoms are deteriorating across Latin America and, specifically, warns that the climate for journalists in Argentina “continues to be adverse.” In fact, IAPA cites Argentina, Cuba, Ecuador, El Salvador and Venezuela as the worst offenders, and notes that with respect to Argentina there is evidence of increased attacks against those who criticize the government of Cristina Kirchner.

Consider these statistics for the region as a whole:  In just six months 11 journalists critical of corrupt regimes, or exposing the activities of drug cartels, were murdered. According to IAPA these attacks were “carried out by organized crime, drug traffic hit men and police-style groups on the orders of several governments of the region.”

For years now, the Argentine government has been notorious for tightening the noose on opposition media, including any and all who probed too persistently into suspected illegal activities and incidences of official corruption.  After attempting an expropriation of the factory (La Papel Prensa) which produced all of the nation’s newspaper stock, the government set its sites on discrediting and dismantling the leading opposition media:  La Nacion and Groupo Clarin. Its attempts to destroy the opposition media drew international rebuke from organizations such as Freedom House in Washington, D.C., who consistently denounced attempts to silence voices critical of the government.

But despite the “adverse” environment, a growing chorus of Argentine journalists have stepped forward in recent months to speak truth to power. Despite the threat of reprisal, media organizations across Argentina are taking the risk to expose official corruption and the abuse of power.  And that’s a good thing.

It’s Almost Halloween, But No Mask can Hide the Kirchner/Báez Relationship

As the corruption allegations pile up against Lázaro Báez, Cristina appears to have instructed her deputies to play down her associations with the construction magnate. Unfortunately for Cristina, their intimate business relations are not easy to mask.

During a radio interview in Buenos Aires this past week, the head of the Argentine Federal Administration of Public Revenue (AFIP), Ricardo Echegaray, vehemently insisted that “Cristina Fernandez and Lázaro Báez are not partners.” However, Echegaray did admit that the two have “business links” but that this “does not mean they are partners or associates.” Did everyone get that?

A piece in Clarin titled, “The dealings of the Kirchners with Lazaro that Echegaray omitted,” stated that “as partners they shared contracts, trusts and purchases of properties and public land. Sales of homes, trusts, vacation rentals, management of these shared lands, and the transfer of public land are just some of the many business links between the Kirchners and Lazaro Baez.”

In addition, Báez has received millions in public work contracts from both Nestor and Cristina. According to La Nacion, Baez, a former banker, created his company, Austral Construcciones, just days before Nestor Kirchner took over as President of Argentina in May 2003. Since 2004, the province of Santa Cruz has been one of the provinces that benefited the most in terms of funding for public works. Over the years, Baez received 70% of the bids for these public works projects.

Just today it was reported that the 123 shell companies affiliated with Báez in Nevada have refused to provide information to the court regarding their accounts. A federal judge ruled in August that these companies must present details, such as who owns the companies and who is authorized to give instructions to these businesses. The attorney for the companies has stated that they do not have this documentation.  One-hundred twenty-three companies represented by a lawyer that doesn’t know who owns or runs the companies? Doesn’t seem strange at all.

In an interesting but not surprising twist, tax chief Echagaray also admitted that his own office, AFIP, had investigated various Báez companies for falsifying bills and other documents. Echegaray stated that it has been determined that at least one of Baez’s companies, Calvento SA, “has no commercial activity, and is considered by his body a “false invoice mil.” The investigation is ongoing.

 

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?

 

RUSSIA MOVES IN ON THE VACA MUERTA

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.

 

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