Singer Seeks Order to Keep Argentine Lawyer in U.S.
Billionaire hedge fund managerPaul Singer’s NML Capital Ltd. asked for an emergency court order to keep Argentine lawyer Cesar Guido Forcieri in the U.S. to answer questions about assets that might be tapped to pay off $1.7 billion in judgments against the South American nation.
Forcieri, 34, a former World Bank director, has so far ignored demands to produce documents and appear for questioning, NML’s lawyers claimed in court papers filed yesterday in federal court inWashington.
Forcieri has “imminent plans” to leave the country permanently on Nov. 8, the hedge fund said. NML asked a judge to force him to turn over his passport and stay in the U.S.
Greg Bruch, an attorney for Forcieri in Washington, called NML’s actions “extraordinarily aggressive” given the fact that Forcieri is simply going home after his work assignment at the World Bank expired last month.
“There is no basis to say he shouldn’t travel home,” Bruch said in a phone interview after filing court papers opposing the request. “He’s going home. It has nothing to do with getting a third-party deposition subpoena.”
NML has been locked in a court fight with Argentina’s government over its refusal to pay holders of its defaulted sovereign debt. Argentine officials have refused to pay court judgments in favor of defaulted bondholders and have vowed never to pay the hedge funds’ claims, calling the holders “vultures.”
NML’s Quest
NML’s decade-long quest to recoup its investments now has the fund scouting for Argentine assets around the world.
Forcieri is a close associate of Argentine Vice President Amado Boudou, according to NML’s filing. Boudou was indicted in June by an Argentine federal court on corruption charges related to his alleged involvement in acquiring a bankrupt printing company, Ciccone Calcografica SA, that later won contracts to print the nation’s currency.
Boudou was initially indicted with five other people. In September, an Argentine judge also indicted Forcieri for his role in helping to steer business to Ciccone.
Forcieri, who served as Boudou’s chief of staff while the vice president was minister of the economy, allegedly gave orders to deny credit to Argentina’s national mint, derailing its efforts to purchase its own printing equipment and become self-sufficient, NML said in its filing, which included translated excerpts from Forcieri’s indictment.
Fifth Amendment
Until last month, Forcieri served in Washington as a World Bank director for Argentina, Bolivia, Chile,Paraguay, Peru and Uruguay. He worked with Argentina’s Ministry of Economy and Public Finances as a G-20 finance deputy from May 2010 until March of this year, according to a profile on LinkedIn.
NML served Forcieri with the subpoena on Sept. 10, seeking documents regarding his relationship and communications with various individuals and entities involved in the alleged Ciccone scheme. Forcieri, who retained lawyers and didn’t provide a formal response to the subpoena, produced only one document, NML said.
The Argentine lawyer failed to appear for a deposition on Oct. 20. His lawyer said he intends to invoke the Fifth Amendment privilege against self-incrimination and therefore “it would be pointless” for him to appear, according to NML’s filing.
Disgorged Funds
If Argentine courts find Boudou guilty, the country may confiscate any profit, funds or property employed in the takeover scheme, NML’s lawyers said in the filing.
“Any disgorged funds or property would then become Argentine state property potentially available to satisfy NML’s nearly $3 billion in judgments and claims against Argentina,” NML said.
Forcieri complied with NML’s subpoena for documents, producing one regarding his submission to the Argentine court investigation, according to Bruch’s filing. Forcieri’s lawyers explained to NML that communications between him and Boudou took place through “workplace means” and the fund would have to obtain those records directly from the Argentine government or the World Bank.
NML later accepted a voluntary interview with Forcieri in lieu of a formal deposition and answered questions posed by an attorney and an investigator for the hedge fund at a meeting on Oct. 30 that lasted more than 2 1/2 hours, according to the filing.
Ample Information
“With NML’s consent and agreement, Mr. Forcieri has given NML more information than it could otherwise have obtained, and Mr. Forcieri should not be punished because NML is unhappy with what it learned,” Bruch said in the court filing.
In the phone interview, Bruch said Forcieri would probably invoke his right not to incriminate himself should the court force a formal deposition.
“NML is attempting to use its leverage on an unindemnified former civil servant in hopes that it will affect the conduct of a sovereign nation,” Bruch said in the filing.
Since 2001, NML has won judgments against Argentina in federal court in New York totaling more than $1.7 billion with interest, the company said in its filing. NML also holds claims against the country to recover an additional $1.2 billion, the hedge fund said.
Argentina’s record $95 billion default in 2001 roiled international markets and limited the government’s access to international credit.
70% Discount
Holders of about 92 percent of the repudiated debt agreed to take new bonds, at a discount of about 70 percent, in restructurings in 2005 and 2010. Some individual investors and hedge funds, including NML Capital, chose instead to sue for full payment in New York, the forum selected by Argentina in the original bond agreements.
NML is a unit of Singer’s Elliott Management Corp., which said Nov. 3 that it will pursue sanctions against Argentina for evading a U.S. court order to pay the company. U.S. District Judge Thomas Griesa found Argentina in contempt on Sept. 29 for disobeying orders barring payments on the nation’s overseas bonds until Elliott is paid.
The D.C. case is NML Capital Ltd. v. Argentina, 14-mc-01237, U.S. District Court, District of Columbia (Washington). The New York case is NML Capital Ltd. v. Republic of Argentina, 08-cv-06978, U.S. District Court, Southern District of New York (Manhattan).
To contact the reporter on this story: Sophia Pearson in federal court in Philadelphia atspearson3@bloomberg.net.
To contact the editors responsible for this story: Michael Hytha at mhytha@bloomberg.net David E. Rovella, Joe Schneider
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