Fact Check: Argentina

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The Money Trail is Unraveling

The Argentine media appears to be accelerating its investigation this week of Kirchner-confidantes and co-conspirators Cristóbal López and Lázaro Báez, as well as identifying yet another hotel in the extensive “web of” corrupt Baez/Kirchner deals.

We have reported extensively here on the many ways in which both López, the “gambling czar,” and Báez, the number one recipient of public works contracts during the Kirchner governments and “who is an absolute invention of the Kirchners”, have profited obscenely from their close proximity to the Kirchner family, and that it has been a mutually beneficial relationship for all involved.

In fact, it was only three weeks ago that Judge Claudio Bonadio, who is investigating irregularities at President Kirchner’s family’s hotel company, Hotesur, successfully assembled the evidentiary building blocks of the massive corruption and money laundering scheme that binds the President to the Argentine tycoons.  In characteristically heavy-handed fashion, Kirchner’s political allies have assailed the judge and his motives, with Kirchner’s niece, Romina Mercado, president of Hotesur, petitioning the Court of Cassation to remove Judge Bonadio for having “lost his impartiality.”  A formal hearing will convene on April 6th.

Meanwhile, La Nacion published an extensive profile of Cristóbal López, entitled, By the heat of power: the expansion of Cristóbal López in energy and media.”

An interesting and fact-filled read, the lede of the piece asserts, “Cristóbal López, is along with Lázaro Báez, the entrepreneur who must surely be the most grateful for the ‘won decade’.  However, if their accumulated fortunes and acquired businesses are compared, it can be seen that Lázaro is barely a poor imitation of Cristóbal.”  It proceeds to tell an historical account of Cristóbal’s acquisition of a huge conglomerate that includes hotels, media companies that benefit from the Casa Rosada’s advertising largesse, millions in energy concessions, and vast gambling interests.  Choice excerpts follow:

“The incalculable mass of resources obtained by Lopez in the field of gambling accelerated his development in other activities.  Above all, in the energy sector, linked to his origins as a supplier of YPF.

“While oil is a far cry from slot machines, the pattern is always the same: the Kirchners made available to their friend complete areas of the State, for him to increase his wealth on the basis of decrees.

“Cristóbal condenses in his career a way of understanding business and the relationship of the public and private sectors, financing politics and enriching political leaders, which has impregnated the fabric of the last 12 years of public life in Argentina.”

Regarding his early foray into the energy sector, aided, like much of his business success, by Kirchner-provided insider-information:

“The Kirchners transferred to Cristóbal, a oilman, information that gave him invaluable advantages over his competitors.  In addition, he was paid $2 million to begin to organize the information, $195,000 a month to carry out audits and another $360,000 for data processing. The marriage had not yet discovered the concept of “energy sovereignty” which began to take hold in 2012, with the nationalization of YPF.

“At the time when Kirchner gave this privileged tool to Cristóbal, he was also forcing Repsol to yield 25% of YPF to another friend, the famous ‘expert in regulated markets’ Enrique Eskenazi, who put virtually no money in it at all.  Instead of throwing a tantrum, Lopez began to move his competitors out of the way. Oil M & S and Serma, his environmental remediation company, multiplied their contracts with YPF to infinity.  In May 2010, Richard Celli, president of the sectoral industrial association denounced favoritism and attributed it to ‘kirchnerista affinities’ between Eskenazi and Lopez.

“In 2011 Lopez hit a growth spurt when he bought the San Lorenzo refinery from Petrobras and a network of service stations.  These assets were paid for with unpaid taxes totaling $ 1.2 billion.  This is truly a formidable business for the friend of the President, as the AFIP offered him a 10-year plan to regularize his tax situation at an interest rate that was below that of inflation. Cristobal had access in this way to such privileged delights that ‘the national and popular project’ only reserves for a favored few: for example, to use the AFIP as a development bank.”

Regarding his greed and abuse:

“Lopez also used the State as a lever to enrich himself with the solvay soda industry, input for the glass industry and cleaning products.  Shortly after he bought Alkalis Patagonia, Customs banned the entry of this product through the port of Campana, the closest to the soap manufacturers.  Cristóbal ‘s competitors had to increase their prices because of the higher freight costs.  Then, Guillermo Moreno made life even more difficult for them with his special import licenses for statistical purposes.  The Kirchners gave their favorite entrepreneur a new hunting ground.”

Learning from his mentor:

“In his talks with Kirchner, Lopez always upheld the same doctrine: you must put aside money for retirement, because judges, sooner or later will turn against you. This is the teaching that the Kirchners learned from their Menemist elders.”

The impetus for his entry into the media world:

“When, at the beginning of 2009, the dispute with Grupo Clarín exploded, Cristóbal warned that his thesis was missing a section: they should also acquire media.”

“As from 2011 the friend of the President decided to protect his business with a ring of friendly media.  His most important acquisition was the Infobae group, founded by Daniel Hadad.  For this transfer he needed the complicity of Martin Sabbatella, the owner of the Afsca. The holding company sold to Lopez by Hadad had more radio and TV stations than those allowed by the media law.  And at the time the transaction was made, the deadlines for adjusting to the new law had expired. Meaning that Hadad should have regularized his situation before selling. But Lopez was able to keep the multimedia without the Government making any objection. What’s more, when he closed the deal, Hadad was assured that the AFIP would cease to investigate him.

“López also acquired a stake in Finansur, which still ranks as one of his possessions in the portals of the Indalo Group.  But the Central Bank has not yet approved this acquisition, so the bank remains in the hands of the Sanchez Córdoba family.  Just as well: his position as a financier could mean that Lopez’s situation before the U.S. Justice will become more complicated as some of his companies are under investigation for alleged money laundering.

And, an assessment for what is at stake for Cristóbal and the Kirchners:

“In the construction of Cristobal’s kingdom his personal conditions played a significant role.  From the first day Kirchner was enchanted by his discretion. He never had qualms about opening his wallet when needed. Nor any curiosity about the political destination of the money he was asked for.

“He learned his lesson early on, when he listened to Jorge Antonio, patron saint of all the ‘experts in regulated markets’: ‘Whoever wants to do business with the State must know that their main asset is their place at the table of power.’

“One governor who understands the heart of the Kirchner finances, explains, quietly, as follows: ‘Cristobal was consecrated as a family friend when Nestor died. He never objected to so much as a comma of what was required of him.

“This loyalty is what is at stake these days.  Now that Baez’s image is irredeemably charred, Lopez is playing a decisive role alongside the Kirchners: he is responsible for making sure that an entire business architecture does not come to an end in parallel with that of this unfortunate cycle.”

And, speaking of Lopez, La Nacion also reveals and deconstructs the existence of another shell company in the corrupt portfolio of Lazario Baez, in a piece entitled, Money laundering: another shell company deepens suspicions about Báez.”

As the old saying goes, “with friends like these…”

Fact Checking Coverage of the Citibank Agreement

On Friday, the pari passu co-plaintiffs and Citibank signed an agreement that was later approved by Judge Griesa.

Some news reports coming out of Argentina contain incorrect information about Friday’s agreement. Some of these inaccuracies may be just confusion. Others appear to be the result of misinformation by the Argentine government. Here are the facts about the deal:

 – The deal was reached as the result of negotiations between the pari passu plaintiffs and Citibank. Once the parties reached an agreement, they submitted the agreement to Judge Griesa, who approved it.

 – Judge Griesa’s approval of the agreement was in no way inconsistent with his denial of Citibank’s previous request for a stay, in which Citibank had asked for time to appeal the court’s March 12, 2015 Argentine law Exchange Bond ruling. As part of Friday’s agreement, Citibank agreed not to appeal the March 12 ruling and will not make any further stay requests of the court.

 – The co-plaintiffs agreed to give Citibank an opportunity to exit its custody business in Argentina and agreed to allow Citibank – and Citibank only – to process an Argentine law Exchange Bond  if Argentina chooses to violate the pari passu injunction on March 31.

 – The agreement does NOT stay the pari passu injunction.  Argentina is not permitted to make a payment on the Argentine law Exchange Bonds on March 31 unless it pays or settles with the co-plaintiffs.

 – If Argentina makes an illegal payment on March 31, parties other than Citibank that participate in processing the payment will also be in violation of the pari passu injunction.

Here’s a copy of the agreement, signed by Citi and the plaintiffs.

Citibank was in a unique position, having been threatened by the Argentine government for signaling that it would not be a party to Argnetina’s lawlessness.  The agreement provides Citibank with a shield against Argentina’s threats while maintaining the integrity of the injunction.

Argentina’s creditors have proven that they can negotiate. It is now long-past time for Argentina to do the same by coming to the table to settle this decade-long dispute.

The K Money Trail: Nevada court blows the lid off Mossack Fonseca, and there is a lot more coming

The U.S. District Court in Nevada has just issued a ruling that is a victory for those seeking to uncover the details of embezzlement and money laundering schemes involving Argentine public funds. Those schemes are known around the world as “The K Money Trail.”

In a 27-page opinion, Judge Cam Ferenbach agreed with the allegations made by ATFA member NML Capital.  The Judge ruled that the world-renowned Panamanian shell company factory – a firm known as Mossack Fonseca – stonewalled the release of documentation that would expose how a web of Nevada shell companies were used to launder tens of millions of dollars in stolen public funds.   Those companies have been attributed to K businessmen Lázaro Báez and Cristóbal López, who are both business associates of the Kirchner family and recipients of valuable government concessions.  Judge Ferenbach also ruled that Mossack Fonseca and its Nevada affiliate are one and the same, and, therefore, that the Panamanian head-office is subject to a discovery order that enables plaintiffs and others to unearth details about how Mossack Fonseca masterminded the K Money Trail that was used to move and hide millions of dollars in public Argentine funds.

As our readers in Argentina know well, an Argentine prosecutor named José María Campagnoli revealed the path of the “K Money Trail,” until the Kirchner government launched a failed attempt to remove him. That’s how the Kirchner administration deals with judges or prosecutors who dare to shed light on shady actions.  But the now-public documents produced in the Nevada case corroborates  Campagnoli’s report.  That confirmation adds powerful credibility to the efforts of investigators in Argentina and jurisdictions around the world. Judge Ferenbach agrees that the evidence is strong, and the investigation must go deeper.

At the same time, new evidence just surfaced that Cristóbal López isn’t just a friend of the Kirchner family, but a client. Not only is López tied directly to the Kirchner family’s hotel businesses – which are under investigation by an Argentine court as part of a vast money laundering scheme, but two López-owned companies are renting several properties owned by a Kirchner family company, Las Sauces, in the same building in Buenos Aires where an infamous money laundering financial center, SGI “La Rosadita,” operated.   The invoicing that was obtained by La Nacion shows that López has paid the Kirchner family at least 2.8 million pesos in the last eight months alone through this arrangement.   The more that is revealed about López’s business ties to the Kirchner family, the more  it appears he is another Lázaro Báez.

López was linked directly to the Kirchners’ hotel companies through a strange financial arrangement. Guests at a López-owned inn – “El Retorno,” near the resort town of Bariloche – saw that when they paid their bills at check-out, the recipient of the funds would show up on their bank statements as “Alto Calafate,” which is the flagship Kirchner hotel hundreds of miles away in Santa Cruz.  That connection becoming public, Clarin reported, sent Cristina “into a fury.”

The lengthy ruling that Judge Ferenbach just issued was correctly characterized by La Nacion as “unusually strong.” The new trove of documents obtained from the discovery order issued in the Seychelles Islands strongly hints that Mossack Fonseca was not a passive actor in this affair, but its mastermind: the architect of the K Money Trail.  Judge Ferenbach’s latest ruling will open up many more avenues to more evidence, documents and testimony.

Did CFK hold a secret meeting in Morocco?

Fact Check Argentina has received unconfirmed reports that during a stopover in Morocco en route to her state visit to China in February, President Cristina Fernandez de Kirchner held a meeting with a businessman named Miloud Chaabi in Morocco.  The meeting, we understand, took place at the Royal Mansour Hotel, where the president was staying.

We can only speculate as to the reason for Cristina’s extended visit to Morocco, or who else she might have met with.  It’s well known that Cristina has visited Morocco multiple times and has used it as a place to stash Tango 1 when traveling to jurisdictions where she fears it could be seized by creditors.

While this visit was described by the Argentine government as a “technical stopover,” the timestamps from tweets from President Kirchner’s own Twitter account lasted about 26 hours, and her tweets indicated that there was some preparation put into this visit.

This brings us back to Miloud Chaabi.  Who is he, and why would Cristina have met with him? According to press reports and publicly available documents, Chaabi is reportedly one of Morocco’s wealthiest citizens.  He owns Banque Populaire, which is the umbrella banking group for a number of financial entities including Chaabi Bank, which has branches in Europe, the Middle East and Africa.  Chaabi’s banking group held up to US$28 billion in assets as of 2012, and Chaabi personally has a fortune estimated by some at US$1.3 billion.  Until recently, he served in the Moroccan Parliament.

Morocco is also a destination for other members of the Kirchner family. Fact Check has been told by sources in Morocco that Social Development Minister Alicia Kirchner visited Morocco for several days in January, shortly before the President’s own arrival there.  Minister Kirchner reportedly stayed at the Argentine ambassador’s residence while she was there.

We wonder about the significance of Morocco given Cristina’s frequent travel there, and how it might fit into the future plans for the President and her family.  We invite our Fact Check readers to send us tips and further verification about Cristina’s meeting with Miloud Chaabi in Morocco.


Marynberg Gets Served

This morning, Clarin reported that ATFA member NML Capital subpoenaed Diego Marynberg last month under an order granted by the U.S. Court for the Southern District of New York.

This blog has  followed Axel Kicillof’s confidant Diego Marynberg’s long career of suspicious dealings in Argentina, in Russia and Venezuela, and his money trail through the United States and Uruguay – where Kicillof has a vacation home.  And, last month, we shared the news that he had put his luxurious Manhattan apartment up for sale, with a 17th floor view overlooking Central Park, for US$30 million.

The ties between Marynberg and Kicillof are quite pronounced.  We have reported on a criminal complaint filed against Kicillof in Argentina, accusing him of being part of a secret US$200 million BCRA bond operation favoring Marynberg – only days before Kicillof decided to take Argentina into default last year.  The complaint, which names Kicillof and Marynberg, contains criminal charges of insider trading, money laundering, breach of public duty and conspiracy.  That secret deal involving a UBS Bank and Marynberg’s Latam Securities, allegedly pushed by Kicillof’s Economy Ministry, was reportedly so explosive inside the government of Cristina Fernandez de Kirchner that it led to a confrontation between Kicillof and then-BCRA President Juan Fabrega, ending in Fabrega’s spectacular ouster.

On February 2, NML Capital issued a series of subpoenas to: Kicillof’s friend Diego Marynberg; Latam Securities (in the states of New York and Delaware); former UBS executive and current Latam trader Jorge Pepa; and a range of U.S.-based associates and entities who may have been involved in the alleged insider BCRA bond transaction last year with Kicillof and his aides.  And, according to Clarin, Marynberg and the others subpoenaed must appear to testify between March 19 and 21.

The subpoena requests that each of those who received the subpoena provide all records, documents and information they have – stored, on paper or electronic –that in any way relate to a number of individuals and entities which may have played a role in the secret bond operation, including (among others):

 – Axel Kicillof, the Economy minister
– Emanuel Alvarez Agis, Kicillof’s deputy minister
– Pablo Lopez, Kicillof’s Finance Secretary
– Augusto Costa, Kicillof’s Commerce Secretary
– Paula Español, Kicillof’s Foreign Trade Secretary
– Juan Carlos Fabrega, the former BCRA President
– Alejandro Vanoli, the former CNV president and currently heading the BCRA
– UBS Bank, an alleged key player in the secret bond deal
– Goldman Sachs Execution & Clearing L.P
– Mercantil Financial Services Ltd.
– Credit Suisse
– Nomura Bank
– Arcadia Advisors
– Adar Capital Partners
– Geo Equity Opportunities I Ltd.
– BGC Partners

Marynberg, Latam, Pepa and their associates have been requested to provide sworn deposition testimony, and must hand over – under U.S. court order – every record they have related to 29 Argentine officials and institutions and local and international financial firms. For the benefit of our readers and for crime-fighting reporters, we have uploaded copies of the subpoenas issued last month.


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