Fact Check: Argentina

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The Facts About Argentina’s Relationship with Iran

The Nisman Indictments Are a Validation of Years’ Long Concern about the Kirchner Government’s Close Ties to Iran

The Kirchner administration is reeling from detailed, formal accusations by Argentine prosecutor, Alberto Nisman, that President Cristina Fernández de Kirchner and her Foreign Minister, Héctor Timerman, engaged in a “criminal plan” to cover up an investigation into Iran’s involvement in Argentina’s most horrific terrorist attack in history, the July 18, 1994 car-bombing of a Jewish community center (the Argentine-Israeli Mutual Association, or AMIA) located in Buenos Aires, in which 85 people were killed.

The news reverberated around the world, provoking much outrage, if not too much surprise; the Argentine/Iran alliance has been a source of frequently expressed concern in Washington and elsewhere these last few years.  To many observers, this blog included, the news seemed further validation that Kirchner’s “corrupt populist administration…is on the road back to ruin.”

As terrorist efforts unfolding in France, Belgium and elsewhere were shaking the world, Argentina’s leadership was thrust into the limelight as negotiating with Iran in a secret deal that has left unresolved the terrorist attack on Argentina in 1994.

Nisman’s meticulously documented assertions were referenced within a 300-page summary of a just-concluded two-year investigation that he presented to a Buenos Aires court Wednesday, along with a plea for Judge Ariel Lijo to interrogate Kirchner and Timermanhimself a member of Argentina’s Jewish community“for being authors and accomplices of an aggravated cover-up and obstruction of justice regarding the Iranians accused of the AMIA terrorist attack.”

Distilling both crime and motive to one impactful sentence, Nisman declared, “The president and her foreign minister took the criminal decision to fabricate Iran’s innocence to sate Argentina’s commercial, political and geopolitical interests”.

Developments are being exhaustively reported by international and U.S. media, as well as La Nacion, Ambito Financiero, Clarin, Buenos Aires Herald, the Times of Israel, MercoPress, and El Cronista.

Although the full Nisman narrative has not yet been released – much of it is still classified as “secret,” according to Clarin – it will be buttressed by “scalding documentation,” detailing an investigation that “lasted two years and included following of spies of the Intelligence Secretariat (SI) compromised in this plot,” as well as wiretaps of the main suspects setting up “a criminal plan to take Iran out of the [AMIA] attack.”

The AMIA terrorist car-bombing was never solved, and Mr. Nisman’s investigation “reached a dead end some years ago after Iran refused to hand over a number of officials, including the former Iranian cultural attaché in Argentina, Mohsen Rabbani, who is suspected of masterminding the deadly 1994 attack.”

Nisman has tried for years to get Rabbani and other AMIA terror suspects extradited to face trial in Argentina.

In 2013, Argentina signed a “controversial agreement with Iran to set up a joint commission to investigate the blast.” This agreement, Nisman alleges, was “a direct result of the ‘oil for grains’ secret deal” that Kirchner sought.

The Guardian summarizes, “in that memorandum, Iran agreed to set up a truth commission on the bombing in return for Argentina closing down the judicial investigation and cancelling the Interpol warrants while the commission worked.”

“The agreement, which was roundly condemned by Jewish community leaders, was approved by Argentina’s Congress but foundered after Iran failed to confirm it, apparently because the Interpol warrants were not lifted in time.  It was finally declared unconstitutional by the federal appeals court.”

From its proposed inception, the joint “Truth Commission” has been a source of well-documented, well-argued outrage for providing diplomatic legitimacy to the terror-financing Iran.  As the Wall Street Journal aptly declared at the time, “to many Argentines, that seemed like letting the fox decide the fate of the chickens.”

Among the many Nisman bombshells is the charge that Kirchner conspired in a “sophisticated criminal plan” to “negotiate directly with Rabbani,” and that Rabbani, as Clarin reports, “was the chief negotiator of the pact and ‘backroom deals’ such as dropping the red alerts from Interpol against Iranians, which Timerman was supposed to make happen.”

“Every message from the President was communicated in detail to the fugitive Mohsen Rabbani, who was Iran’s Cultural Attache in Buenos Aires at the time of the attack.”

Nisman claimed further, “before the signing of the memorandum with Iran we found evidence that people from the [Argentine] intelligence services were passing information from the AMIA case to Iran.”

Additional serious charges include:

 – “Mrs. Kirchner had ordered Foreign Minister Hector Timerman and others to negotiate immunity for Iranian suspects in hopes this would reestablish trade ties and allow Argentina to import Iranian oil to ease a domestic energy crisis. The alleged plan didn’t come to fruition, however.”

 – Timerman orchestrated “secret deals with Tehran” to establish false trails and “alter the investigation to exonerate the Iranians from any responsibility.”

 – “‘The impunity of the Iranians was ordered by the president and instrumented by Timerman,’ Nisman said, with the goal of scoring closer geopolitical ties with Iran, trading oil and even selling weapons.”

 – “The president conducted secret negotiations with Iran through non-diplomatic channels in 2013, and offered to cover up the involvement of Iranian officials in return for oil to ease Argentina’s chronic energy deficit. Under the deal, the oil would be exchanged for Argentinian grain.”

 – “A deal in which Argentina, under the orders of Mrs. Kirchner, promised to absolve former Iranian officials accused of masterminding the attack…in exchange…Iran would send oil to Argentina to ease its crippling energy deficit.”

In an interview with La Nacion Thursday, Prosecutor Nisman made clear that, “Cristina Kirchner decided absolutely everything.  She is the one who gives the order to Foreign Minister Hector Timerman to wipe Iran clean of this problem.  She is the one who established the existence of a parallel diplomacy to handle these things, besides orchestrating the false track.”


Equally alarming, Clarin reports that President Kirchner has been aware of prosecutor Nisman’s investigation for at least the past month…and has done her level best to obstruct its progress, and thwart its main investigator, boldly attempting to “preventively decapitate the leadership of the SIDE, including the head of counterintelligence and then-Nisman advisor, Antonio Stiuso.”


The Guardian reports Nisman quoting prime terror suspect, Rabbani, in an intercepted 2013 telephone conversation with an Iranian confidante of Kirchner allies in Buenos Aires, “Iran was Argentina’s main buyer and now it’s buying almost nothing…That could change.  Here [in Iran] there are some sectors of the government who’ve told me they are willing to sell oil to Argentina…and also to buy weapons.”


An Argentine federal judge will now decide whether to hear the complaint and whether anyone should be summoned for questioning.  Given that this news was received like a “neutron bomb in the heart of power,” like “a blow with the highest political impact,” it’s certain to be an ongoing story that will be much examined.


Although she made a public appearance Thursday, President Kirchner did not speak to reporters, and has not yet commented on the allegations.  Foreign Minister Hector Timerman, particular focus of the allegations, read a statement dismissing Nisman as “despicable,” and his allegations a “media show,” while declaring that President Kirchner had made great strides “in the search and punishment of the perpetrators of the brutal attack.”


Despite these vigorous denials from the Kirchner government, Prosecutor Nisman offers compelling evidence that President Kirchner, working through an ad hoc team combining officials including Minister Hector Timerman with unofficial intermediaries, attempted to make a Faustian pact to exchange impunity for Iranian operatives involved in the horrific AMIA bombing, one of the world’s worst terrorist incidents, in exchange for access to oil and markets for Argentina’s agricultural products, and perhaps also weapons.  If the allegations are true, there might finally be some consequences leveled on this government, whose lawless behavior toward courts and judges is also reflected in its decision to align with outlaw states like Iran and Russia.

Closing in on the Kirchners: New evidence ties Lazaro Baez and Cristobal Lopez to corruption

More information was revealed this week by the Argentine press about the “K money trail,” widening the already striking picture of corruption that implicates the Kirchner family.  Evidence is mounting against two central figures in the story, who allegedly helped the Kirchner family launder money in exchange for lucrative business deals with the government.

La Nacion reported that K-businessman Lázaro Báez – the number one recipient of public works contracts during the Kirchner governments – listed a suspicious US$56.3 million in income in 2011 for his flagship company, Austral Construcciones, as the settlement for an alleged dispute with “J & J Holding NV” of the Caribbean island of Curacao, claiming that it derived from a failed partnership investment allegedly made by Austral in 2009 in Belize.  But some simple research by a reporter revealed that J & J Holding NV has not existed in Curacao since 1989; its registered address from that time “no longer exists” according to the public business registry in Curacao itself; and its last registered agent, Corporate Trust, also no longer exists.  Furthermore, Austral had no record of ever making the investment, and the nature of the alleged partnership is inconsistent and unclear.

What is clear is that the mysterious “award” of US$56.3 million allowed Austral to balance its books for 2011, establish a trust handled by K-money trail “bagman” Leonardo Fariña and obtain up to 314.8 million pesos in loans from the state-owned Banco Nacion.  (Fariña is now in jail over tax evasion charges after telling Argentine television in detail how he and Baez participated in a large-scale scheme to embezzle and launder millions of dollars in public funds on behalf of the Kirchner family.)  The other interesting fact is that the money from the non-existent J & J Holding was paid to Austral through a money trail that went from Curacao (a tax haven) to Belize (a tax haven) to a trust in Uruguay, then to Austral in Argentina.  Belize was a noteworthy stop on that money trail, because it is also the location of Teegan Inc., a Baez family shell company through which millions of suspicious euros passed on its way from Argentina to Switzerland.  Could Teegan be involved this maneuver by Baez?  Where did the 56.3 million dollars really come from?

Meanwhile, a very familiar face emerged in the resort town of Bariloche that implicated President Cristina Kirchner herself, through her hotel company HotesurAnother “K businessman”, Cristóbal López, has been reported on here for a while.  Lopez owns an inn in Bariloche called “El Retorno.”  Lopez has seen “exponential growth in his wealth” during the Kirchner era, mostly through running casinos licensed by the government, as well as media companies that receive government advertising money, highway concessions and public works contracts from the government.  Interestingly, Clarin and La Nacion report that guests at “El Retorno” who use their credit cards to settle their hotel or bar charges are noticing that their bank statements indicate that the company that collected the money from them was not “El Retorno,” but the Hotel Alto Calafate – an establishment 1423 kilometers away in El Calafate, Santa Cruz (a different province) and with an entirely different owner: the Kirchner family.  Indeed – when Lopez’s guests pay their bills with a credit card, they are paying the Kirchners directly.   The only tangible link between the two hotels is that they both contracted the same company to manage them: Idea SA, co-owned by Maximo Kirchner, the presidential son, and his friend Osvaldo “Bochi” Sanfelice.   But the management company is not collecting the funds from Lopez’s guests – it’s going directly to the President’s hotel’s bank account without any legal or contractual explanation.

Alto Calafate is under investigation in Argentina for being used by the Kirchner family and Lazaro Baez to launder millions of pesos of unknown origin, after it was revealed that Baez had rented thousands of hotel rooms there from the Kirchners that were never used.

No Indignity Too Small

Illustrating once again that no Argentine – least of all the roughly 13 million of them who are of child-bearing age – is immune from the degradations of an imploding economy, various media are reporting a sustained and total dearth of feminine hygiene products throughout the South American Republic.

This shortage, so clearly attributable to the Kirchner regime’s desperate and destructive import restrictions, has been preceded in Argentina by several other essential items once plentiful, but now in alarmingly short supply, among them, adult diapers, baby diapers, jobs, pensions, and mirth.

It has been a frequent, if joyless, task of this blog to document the increasing outrages wrought on the Argentine people by its government, most recently in evidence with President Kirchner’s efforts to cede both sovereignty and jobs to China.

These, like many of her flawed decisions before them, stem from Kirchner’s refusal to negotiate with her creditors, the massive default she subsequently chose, and the many new obstacles she erected for herself that now block access to both international capital markets and IMF funding.

All of which is to say, this shortage itself isn’t setting any precedents, unpleasant though it must be.

What Is novel is the government response to it.

Yes, it is patently dishonest.

Yes, it ignores obvious realities.

And, Yes, it dodges and weaves, and shifts blame elsewhere.  So, in just about every metric, It Is a standard Argentine Government response to self-inflicted misery.  (If you are having trouble recalling the Kirchner Default Response Structure, please click here…or here)

No, where the blame-shifting here differs from the canards of the past is in its lack of “message discipline”; the Argentine government is seemingly so eager to divorce itself from this hardship (even bureaucratic functionaries are liable to have wives, moms, sisters, girlfriends, daughters, aunts, female friends, female co-workers…), that its response was schizophrenic, blaming not one conspiracy, but two…

First, according to AP, Argentine Cabinet chief, Jorge Capitanich “said there were no special restrictions on importing tampons, which he called ‘sensitive products,’ and blamed the shortage on a commercial ‘strategy’ by importers.”

AP had no trouble rebutting this claim, finding no less an authority to do so than the head of the Chamber of Importers, Miguel Ponce, who laid the blame squarely on the Argentine government’s regulations, saying, “authorities have been particularly slow to issue import permits for several products… some companies have had trouble getting access to foreign currency.”

Then, Commerce Secretary Augusto Costa attributed the shortage to a surge in demand caused by “irresponsible media reports”…“there was a sort of tampons run,” Costa said in a Radio Del Plata interview late yesterday.  “It was induced by media operations.”  He, too, denied that import controls were to blame…

But the facts were numerous, and, as they so often do, proved impervious to even the most impassioned rhetoric.

Bloomberg detailed a few of those salient fact-nuggets:

  – “The government restricts imports, requiring authorization from regulators to bring in goods, in an effort to curb the decline in international reserves, which have fallen 40 percent since their high in 2011.”

  – “In recent months, Argentina has tightened its already strict control on foreign currencies in an attempt to curb inflation and capital flight. The government hopes that by restricting currency exchanges it will protect reserves at home needed to pay off its debts. That has often made it hard for importers to get the funds they need to buy products abroad.”

  – “The restrictions on imports, combined with high inflation in South America’s second-largest economy, have led to periodic shortages of pharmaceutical products in recent years, such as latex gloves and needles.”

Like AP, Bloomberg also referenced import authority, Miguel Ponce, citing the bombshell that he earlier dropped on Radio Mitre… “the central bank owes importers about $5.5 billion for authorized purchases…there was a total restriction of foreign exchange” from Dec. 20 to Jan. 5, “which explains shortages in some products, including tampons.”

In its close, the reliably serious Bloomberg reported:

“In recent days, Twitter has exploded with jokes and complaints about the shortage. Some said Argentina was becoming more like Cuba and Venezuela, where hygiene products frequently are hard to find.”



Turns out, it CAN get worse…

With the news today that “McDonald’s Bonds Walloped in Argentina,” Bloomberg reinforced what might henceforth be dubbed, “the Kirchner/Kicillof Principle of Self-Perpetuating Economic Destruction”:  when you voluntarily plunge your country’s economy into chaos – then actively spurn all reasonable attempts to rescue it – you shouldn’t be surprised when it coughs up misery after misery.

The Argentine people know this principle well…it is the enduring legacy of the Kirchner/Kicillof years, never more starkly on display than during these last five months, after the duo spurned its creditors and sacrificed its citizens to the degradations of voluntary default.

So, today’s news that Arcos Dorados Holdings Inc. (ARCO), the world’s largest franchisee of McDonald’s Corporation restaurants has “seen its benchmark debt tumble since Dec. 9, when Moody’s Investors Service cut the Buenos Aires-based company’s ratings for the first time as currencies from Venezuela to Brazil depreciated” isn’t shocking.

But it’s certainly not good news.  In fact, the 3 percent drop in the bonds is more “than twice the average in Argentina and emerging markets.”

The irony here is that until recently, Arcos Dorados – which operates more than 2,086 restaurants across Latin America – had actually benefitted from Argentina’s depressed economy and the onerous foreign-exchange rules instituted by Kirchner and Kicillof.  That’s because about 75 percent of Arcos Dorados’s sales were rooted in foreign markets, enabling the company to take advantage of lower borrowing costs.

Pity for Arcos Dorados, and cash-strapped consumers all over the region, but that “advantage is now dwindling as the region’s currencies suffer the longest losing streak since 2001.”  Everyone gets a little taste of Argentina…

Bloomberg goes on to document that Arcos Dorados’s 3rd quarter profits last year (as reported on November 4th) fell 99 percent, “in part because weakening currencies resulted in lower revenue when translated into dollars.”  Those currencies have been on the decline for six straight months, “falling about 13 percent against the dollar since the end of June.”

Significantly, even after Moody’s lowered Arcos Dorados’s rating one level to Ba3, (three steps below investment grade), Arcos Dorados remains Argentina’s highest-rated company, after Petrobras Argentina SA, a unit of Brazil’s state-controlled oil producer.

“Arcos Dorados’s $474 million of bonds due 2023 yield 7.05 percent, less than the 8 percent average for Argentine companies and below government borrowing costs of 9.3 percent.”

Frequent visitors to this blog may recall our September post (“Like Russia, Argentina is So Bad it Almost Can’t Get Any Worse”), the headline of which was extracted from the article within, and was a direct quote from Jim Grant, of Grant’s Interest Rate Observer.

It brings us no pleasure to report that Mr. Grant’s prediction was premature.  Argentina could get worse, and it certainly has.

With consumption, exports, wages, and the peso all wallowing at what seemed the bottom of a drastic downswing, and with inflation, labor unrest, and general misery at what seemed an unsustainable peak, who could have foreseen the boundless nature of the Kicillof Economy?

New FCA Player Cards: Public Works Project Schemers

In following the Lázaro Báez Money Trails, it is evident that the construction mogul won many of the Argentine government’s public works projects, and gained significant capital from them.  This week’s set of Money Trail Player Cards focuses on the individuals that had a hand in deciding which company—or person—won the bids to develop public works projects.  Some of those individuals, and this week’s Money Trail Player Card series, include:

Exequiel Omar Espinosa, Former President of State-Owned Energy Firm Enarsa

Ricardo Jaime, Former Minister of Transportation

Fulvio Madaro, Former President of ENARGAS

Claudio Uberti, Former Head of the Órgano de Control de Concesiones Viales (OCCOVI)

Néstor Ulloa, Former President of Nación Fideicomisos

Perhaps most notorious of this group is Ricardo Jaime, Argentina’s former Minister of Transportation.  Thus far, Jaime stands accused in over 30 criminal cases, the majority of which stem from corruption charges.

According to public records, Jaime seemed to live on a salary of less than 10,000 pesos—or US $800—per month.  This is miraculous, seeing as how he lived in one of Buenos Aires’ most expensive neighborhoods, and owned a vacation home, a yacht and a private jet.  He must have gotten a steal…or something like that…

Jaime-EN-PSD    Espinosa-EN-PSD

Next up to bat is Exequiel Omar Espinosa, the former president of the state-owned energy firm Enarsa. Espinosa is linked to multiple cases of mismanagement and alleged bribery.  For one, Espinosa, along with a few Argentine officials, was stopped for assisting in an alleged scheme to funnel $800,000 from Venezuela into Argentina to fund Cristina Kirchner’s presidential campaign.

Espinosa was also investigated for overpaying for gasoil during his tenure at Enarsa, which created millions of dollars in losses and might have been part of a kickback scheme.

Speaking of kickback scheme, we also created player cards for individuals involved the scheme dubbed the Skansa Pipeline Scandal, and one for another individual that was involved in the Suitcase-Gate Scandal.

To find out more information about the individuals who make up this week’s series of Money Trail Player Cards, visit our website.

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