Ambito Financiero
Corbeta Espora: vulture fund already has lawyers
Thursday, October 25, 2012
By Carlos Burgueño
The vulture fund NML Elliot last week hired a South African law firm to file in the courts of that country, perhaps with the same methods applied in Ghana, to also hold that ship, stranded Cape Town over a mechanical problem. The Argentine embassy in South Africa is already alerted to the situation, and preparing an immediate legal response should Paul Singer’s vulture fund block its movement.
From Buenos Aires the order was given to the representation led by Carlos Sersale di Cerisono who is ready, and the conditions about how to act rapidly on the first moves detected from the Elliot lawyers. In the Foreign Ministry they are optimistic, and say that with South Africa historically relations are more than good and there will be no surprises like there are now in Ghana with the Frigate Libertad, where Argentine only had a weak commercial representation. The embassy in South Africa would have an asset that was lacking in Accra: good contacts with the government of Jacob Zuma.
Different from what happened with the teaching vessel held in the port of Tema, the Esperoa was stranded in Cape Town for by a fortuitous situation. The corvette was part of a joint exercise with South Africa, Brazil and Uruguay in the Atlantic, where it broke down on October 10 and had to be towed to the port of Somonstown. Curiously, the exercise in which it had the accident is called Atlassur IX and is based on movements to combat piracy, in this case marine piracy. The repairs to the Espora will require no less than two months and for this they hired a German service company that is on its way to Cape Town.
Elliot already hired one of the most powerful law firms in South Africa and has begun to move on its presentation that will be revealed in a few days in the courts of Pretoria. There is equally with this vulture fund in South Africa a difference in favor of Argentina: it has already been buying bonds for years from South African companies in trouble then going to the courts of that country.
The information that is coming to Buenos Aires speaks also of various lost cases and others still open, but with likely similar outcomes, which would oblige Singer and his funds to join the lists of creditors of the troubled companies.
In Ghana the status of NML Capital was different by the pressures that it could exercise over Judge Richard Adjei Frimpong. The fund, headquartered in the Cayman Islands, got a ruling from a Ghana judge to detain the Libertad in a port close to Accra in demanding some US$370 million for unpaid Argentine debt declared in default in 2001 for some US$100 billion and which closed in 2010 with an acceptance of more than 94%.
According to the economist and president of Banco Ciudad of Buenos Aires, Federico Sturzenegger, the vulture funds only have some marginal ruling in their favor in all the world and rarely can get attachments of assets of countries and companies that they try to act on. Without mentioning Sturzenegger in his book, “Default of debt and lessons from a decade of crisis,” of some 35 cases known of this kind in the last 20 years, only 6 received a payment of 100%, 15 got nothing, 6 got less than a third of what was owed and the rest have no information about the agreement reached. For the economist, “the vulture funds have little capacity to harm a country that defaults.”
In fact, Argentina won against Elliot two weeks ago in an important case in Basel, Switzerland, where its Central Bank keeps almost all its reserves. A court in that city confirmed the diplomatic immunity of Argentina’s assets which definitively means that Elliot cannot get the liquid funds, as it is from Basel that Argentina makes its usual financial payments.
According to the latest data from Singer’s Elliot fund, last year its financial movements were more successful than the conservative numbers on Wall Street. Elliot Managment Corporation produced gains on an average of 14.6%, enormous compared to the percentages of yield on the developed markets. The New York Times in December of last year called him “one of the boldest hedge fund managers” of Wall Street, but said it is very difficult to get Singer to take on new clients. Someone that was lucky in that was the wife of Mitt Romney, Anne, that got Elliot to manage no less than US$1 million. The Argentine case is not the only one that Singer and his fund maintain in Africa. It’s at the point of knowing about a case in the courts of Congo-Brazzaville, on a default of US$32.6 million. The financier of the vulture fund bet on not entering an agreement for debt restructuring after a civil war. He sustains similar lawsuits open in Ivory Coast, Nicaragua and Turkmenistan.
Equally, Singer has a progressive side: he donated US$450,000 to a fund created by his son, Peter (a declared gay) in favor of marriage rights for homosexuals. He also gives money to the New York Food Bank for Poor Countries. Some of the countries to which the food goes are the same ones he is battling with to collect on all the debts bought by Elliot.
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