Fact Check: Argentina

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Argentina’s Economic Data Improves Upon Reports of Potential Settlement

Last week, the Financial Times reported on the declining gap between the value of Argentina’s peso to the U.S. dollar – the so-called “blue dollar” rate.  This summer, following Argentina’s decision to default on bonds after losing its appeal at the Supreme Court, the blue dollar rate reached an all-time high.  This currency gap has been closing in recent days.

But let’s take a look at what’s driving these mildly positive trends:  From last week’s news coverage of the economic situation in Argentina, it seems clear that the main driver is market expectations that Argentina will negotiate a settlement with its creditors once the RUFO clause expires.  The FT noted this very dynamic in its story.

We’ve written about the RUFO clause before, and we still maintain that it’s nothing more than a smokescreen concocted by Argentina’s lawyers at Cleary Gottlieb aimed at preventing any negotiation with creditors.

Nevertheless, if Argentina’s leaders are truly eyeing a settlement with creditors once RUFO expires, that’s a good thing.  Clearly, many investors and news commentators are taking reports of this possibility at face value and are expecting Argentina to come to the negotiating table at year’s end.  Chatter to this effect has picked up in recent weeks, accompanying the uptrend in Argentine economic indicators.

“Creditors who own bonds left over from Argentina’s default in 2001 are growing increasingly confident the government will negotiate once a clause that it says prevents a settlement expires next month.” – Bloomberg News, November 13
“Many investors expect the government to settle with the hedge funds early next year.” – Wall Street Journal, November 13

” … market players are optimistic that negotiations with Argentina’s so-called holdout creditors will resume in January, which could lead to a deal by March or April. That would enable Argentina to borrow on the international capital markets again, putting an end to its dollar drought and the need for an abrupt currency adjustment.” – Financial Times, November 13

 It’s absolutely clear that market expectations for a settlement are driving the recent positive trends in Argentina.  Moreover, the mild economic benefits that have accrued to Argentina in recent weeks based on growing expectations of a settlement pale in comparison to the benefits that Argentina could see if they actually came to the table and achieved a settlement in January.  As Claudio Loser of the Inter-American Dialogue has pointed out, these benefits include:

– 1% growth in GDP
– Up to $70 billion in lower interest costs
– Billions in savings for businesses
– Lower inflation
– No need for capital controls
– An improvement in real wages

 Clearly, markets are sending a strong signal to Argentina: Do the right, rational thing, negotiate a fair resolution, and reap the benefits of a normalized relationship with the rest of the developed world.

New Carlos Molinari Money Trail Player Card Featured in Clarin Today

Today, Fact Check Argentina released four new “Player Cards” as part of the “Follow the Money” campaign to expose money laundering within Argentina.  Check out our new set here in English and here in Spanish!

Our Follow the Money campaign has generated a huge following since we launched it last month.  We appreciate the great response from both our loyal readers and new members of the FactCheckArgentina community.  For our new members, there are several great ways to get involved today in our Follow the Money Campaign:

 – Sign up to receive our email alerts.
 – Keep sending us tips and information through our tip line
 – Follow us on Facebook and Twitter.  

Our Facebook and Twitter following have each doubled since the start of the Follow the Money campaign and we are receiving tons of new tips each day—keep them coming! Your information is valuable and we have used your tips to help source new Player Cards!

Congratulations to this week’s addition to our Player Card series:  Aerolíneas Argentinas, Carlos Molinari, the Báez-Kirchner Hotel Deals and Banco de la Nación Argentina.

This week, we would also like to give a special shout out to real estate magnate and Kirchner confidant Carlos Molinari.  Clarin reported on our new card set today, and included a great picture of our Molinari Player card. Molinari must be extremely busy, because he is involved in at least 25 construction corporations in both Argentina and Florida.   Check it all out here.

Molinari-EN-PSD   Molinari English


On November 7, Molinari was indicted for his connection to the K Money Trail scandal and, according to news reports, could be sentenced to 10 years in prison.  Molinari also has strong connections to other players in the Argentina Money Laundering scandal, including Lázaro Báez and Leonardo Fariña.

News reports state that Molinari paid for Fariña’s wedding to model Karina Jelinek— the two are now separated and Fariña is doing time for his dealings with Báez.

Molinari’s son, Matías, has taken over the family’s flagship Real Estate Investments SA and was a business partner with Federico Elaskar.  In Miami, the two ran SGI Ventures LLC, which is part of the money laundering ring.  Stay tuned for our next set of player cards—the name Federico Elaskar might just pop up again; our tip line contributors seem to have a lot to say about him.

Want to find out more about the state-run money pit that is Aerolíneas Argentinas? Or the incredibly profitable and fishy Báez-Kirchner Hotel Deals? Or what about Banco de la Nación Argentina that both “safeguards” Argentina’s people’s money while apparently enabling Argentina’s money laundering?  Check out the Follow the Money page.



Mossack Fonseca: Hiding In Its Shell

ATFA member NML Capital has escalated its fight in Nevada court to obtain information from more than 120 shell companies linked to alleged money launderer Lázaro Báez.  According to court findings, the Báez shell companies were set up with the assistance of the notorious Panamanian law firm Mossack Fonseca, an outfit known for its expertise in helping kleptocrats channel stolen funds to foreign tax havens.  To date, Mossack Fonseca has refused to cooperate with the court-issued subpoena ordering it to comply with NML’s discovery request into the activities of the Báez shell companies.  In response, NML is now seeking discovery from Mossack Fonseca itself, alleging that one of the shell companies is in fact Mossack’s “alter ego” in the United States.

Here is a link to NML’s filing in Nevada court.

FactCheckArgentina has previously reported on Mossack Fonseca, and the law firm has also earned a Money Trail Player Card for its shady dealings, including a client roster that has included global paragons like Muammar Gaddafi.

NML’s filing was in response to Mossack Fonseca’s refusal to comply with previous court orders mandating that it to produce documents detailing activities of the Báez shell companies.  Recently, a Federal District Court in Nevada displayed its unequivocal support of NML’s petition, stating that “NML made a substantial showing that Báez laundered money [through] the [Báez Entities] and that Mossack Fonseca controls the [Báez Entities]…”

The Court explained:

A company cannot purposefully avail itself of the law’s benefits by incorporating in this jurisdiction and then excuse itself from the court’s subpoena power by abusing the corporate form. This would allow a corporation to exploit the benefits created by the law without shouldering the concomitant burdens and responsibilities imposed by the law. By incorporating in the State of Nevada, the [Báez Entities] assented to this court’s power to impose a burden. . . on Nevada residents to testify. . . .Abuse of the corporate form cannot render this burden surplusage. . .

The Court also found that “[t]here is no doubt that the [Báez entities] are shell corporations…Similarly, there is no doubt that shell corporations are routinely formed to commit fraud.”

There’s no ambiguity here.  Shell companies are not set up by legitimate business interests, and the 120 Lazaro Báez shell companies that have been set up in Nevada with the help of Mossack Fonseca are completely within the bounds of investigation into stolen funds from Argentina’s people.  Mossack Fonseca can try to hide in its “shell,” but it continues to lose in court.  The truth is going to come out.  Where will it lead?

Forcieri Hides the Truth, Skips Town

Two months ago, ATFA member NML Capital subpoenaed an Argentine official named Guido Forcieri, who until very recently was the former Executive Director for Argentina, Bolivia, Chile, Paraguay, Peru and Uruguay at the World Bank. NML Capital’s subpoena sought information to assist in tracing assets of Argentina in an effort to satisfy NML’s $1.7 billion in judgments against the country.

At first, NML’s counsel was informed by Forcieri’s counsel that the information requested by subpoena may implicate Forceri’s Fifth Amendment privilege against self-incrimination. Forcieri subsequently agreed to a confidential interview with NML’s counsel, Dechert, in which he promised to be completely candid in his answers. Unfortunately, Forcieri appears to have been neither entirely truthful nor forthcoming in his responses to the questions. As a result, NML sought to prevent Forcieri from leaving the country until he complied with the subpoena. The judge denied this motion, but confirmed that NML is entitled to continue to seek Forcieri’s testimony.

Who is Forcieri?  Forcieri is widely known to be a close associate of both the Kirchners and of troubled Vice President Amado Boudou. Forcieri and Boudou were recently indicted by Argentine courts for their involvement in the illegal takeover of Ciccone Calcografica. (For more background, see: http://factcheckargentina.org/followthemoney/#ciccone-calcografica). In his indictment, Forcieri is alleged to have assisted Boudou in placing Ciccone under the control of his business partners, which constitutes an abuse of power as a public official.

A brief NML submitted to the court on November 4 detailed Forcieri’s relationship with Boudou and the Ciccone scandal,

“Forcieri is closely tied to Boudou, having been appointed by Boudou to positions of increasing prominence as Boudou rose through the ranks of Argentine government—including serving as Boudou’s chief of staff while Boudou was Minister of the Economy in Argentina. According to Forcieri’s indictment, he played a critical role in the elaborate Ciccone takeover scheme orchestrated by Boudou. The indictment asserts that Forcieri gave the orders to deny credit to Argentina’s national mint, derailing its year and a half long efforts to purchase its own printing equipment and become self-sufficient, thereby steering business to Ciccone.”

“…At the time the scheme was implemented, Boudou was the Minister of the Economy in Argentina and Forcieri was his chief of staff. According to the report accompanying Boudou’s indictment, Forcieri acted on Boudou’s behalf and attended meetings related to the Ciccone takeover. Forcieri has vigorously resisted efforts to provide testimony in Argentina regarding Boudou’s indictment— repeatedly seeking to delay providing a witness statement based on the claim that his presence was required in the United States to work on matters related to Argentina’s (non-existent) negotiations with creditors. His refusal to come to Argentina to give testimony resulted in threats of his arrest in Argentina. On September 5, 2014, an Argentine court indicted Forcieri for his role in Boudou’s takeover scheme.”

Should Argentine courts rule that Boudou illegally seized control of the Ciccone printing company, then the state is entitled to confiscate any profits, funds or other property involved in the scheme. Any funds or property would then be potentially available to help satisfy NML’s unpaid judgments and claims against Argentina.

Boudou is also under investigation for his possible involvement in other illegal schemes. Some media reports put the count of lawsuits arising out of Boudou’s conduct while serving in government at a grand total of 54. And many of the alleged incidents took place while Forcieri reported directly to Boudou.

One of these investigations charges Boudou—and Forcieri—with illicit enrichment from various corporate entities in which they each held a financial stake. Boudou and Forcieri are apparently partners in several companies that are under investigation and similar to the Ciccone case, are alleged to have profited from transactions involving businesses that they were responsible for regulating.

Yet another case involving Boudou alleges that he provided information to various trading firms in order to enable them to benefit from Argentina’s public debt swap in 2010. The firms then used that information to increase their stakes in holdings of defaulted debt on the cheap, before the public was aware of the new swap. Argentine investigators are working to determine whether Boudou profited from this insider trading himself.

So, what happened when Dechert interviewed Forcieri? We’ll let another NML brief explain…

“During our interview, Mr. Forcieri said he was totally unaware of the fact that Gramercy had acquired these ICSID claims (in advance the settlement) while he was the World Bank representative, and denied having any knowledge about this event before he was informed of the fact during the interview. He claimed to be unaware that Gramercy had acquired two of the ICSID claims, despite the fact that he said President Kirchner instructed him that one of his most important obligations as the Argentine World Bank representative was to settle Argentina’s cases before the World Bank so that the country could receive loans from the organization.

But Forcieri’s dancing around the truth didn’t stop there.

Mr. Forcieri stated during the October 30 Interview that he had not followed Argentina’s 2010 sovereign debt exchange and knew little about it because Hernan Lorenzino, who was the Secretary of Finance, and not Boudou, oversaw the exchange. This also struck NML as incredibly implausible, given that the 2010 debt exchange was arguably the most significant matter overseen by the Argentine Ministry of the Economy at that time, and that Lorenzino reported directly to Boudou—for whom Mr. Forcieri served as chief of staff at the Ministry of the Economy while the 2010 debt exchange was going on.”

Strange, isn’t it? Or should we say convenient?

Forcieri also founded three businesses—called Petro de la Costa, Action Media, and Rock Argentina—with another longtime accomplice of Boudou’s, Juan Carlos Lopez. These have been identified by Argentine investigators and journalists as likely channels for money laundering by or for Boudou. When asked about these entities in the interview with NML’s counsel, Forcieri provided information that was blatantly inconsistent with media reports regarding his monetary interest in the companies.

When NML’s counsel determined that Forcieri had not been truthful in the interview and had therefore not fulfilled his obligations under the subpoena, it called Forcieri’s counsel and demanded a second meeting. Forcieri’s counsel stated that Forcieri would neither provide any additional information to NML, nor correct or clarify any of the responses he had given during the interview.

Forcieri’s counsel submitted an email to Dechert stating that, “A public proceeding to compel Mr. Forcieri’s deposition on the eve of his return to Argentina, particularly where he has already submitted to a voluntary interview and would assert his Fifth Amendment privilege in a deposition, serves no purpose but to cause him embarrassment and annoyance.” [Emphasis added.]

Forcieri’s insistence on pleading the Fifth raises the question: What is Forcieri hiding? What information does he have that would be self-incriminating?

Forcieri has reportedly skipped town, but he faces another barrage of investigations in Argentina. We don’t know whether Forcieri will return to the United States to face questions from NML, but we do know that Argentina’s creditors will continue to seek assets to enforce their lawful judgments, and that this search will continue to turn up information about Boudou and Forcieri’s alleged misdeeds.

ATFA Introduces New Money Trail Player Cards

Today, FactCheckArgentina.org ‘s “Follow the Money” campaign announced 4 new player cards.  Be sure to log onto factcheckargentina.org/followthemoney/ to download yours right away!

We’ve had a great response from our readers on the first set released last week, and ATFA’s new release is meant to continue the momentum around exposing corruption in Argentina.

This latest edition of player cards provides even more color on the Lazaro Báez network with our new Leonardo Fariña card:

Farina-EN-PSD   Farina Back

First, a special thank you to ATFA’s fans who inspired the Fariña card by making suggestions to our tip-line.  Please keep the tips coming! 

Leonardo Fariña is a real character with colorful stats, so he’s a great addition to any set of Player Cards!  A former employee of Báez, Fariña granted an interview about the Báez money-laundering network to crime-fighting journalist Jorge Lanata, which aired in April of 2013.  While working for Báez, Fariña secured hundreds of millions of dollars in financing for Báez from Banco de la Nación Argentina, the state-owned bank.

Fariña was indicted for aggravated tax evasion and money laundering in 2014.  But be sure to check out the great picture of his Ferrari!

Besides Fariña, check out the other cards in this new set, including:

 – The Ciconne Take-over, a great overview of Vice-Presidet Boudou’s takeover of this printing company that specializes in official documents.
 – Southern Securities, a New York based shell company linked to multiple Argentine corruption scandals.
 – Miguel Zacarías, ephedrine runner and close friend of President Kirchner

We hope you enjoy this edition of ATFA’s Money Trail Player Cards.  We have many more to come, and we hope that you’ll keep sending us your tips and great ideas too!






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