Sunday, August 3, 2014

Argentina accuses US of judicial malpractice for triggering needless default


http://www.telegraph.co.uk/finance/financialcrisis/11004486/Argentina-accuses-US-of-judicial-malpractice-for-triggering-needless-default.html

Argentina accuses US of judicial malpractice for triggering needless default
Country threatens to take US to The Hague after defaulting on its debts for the second time in 12 years


Ambrose Evans-Pritchard By Ambrose Evans-Pritchard
7:56PM BST 31 Jul 2014

Argentina has threatened to take the US to the International Court of Justice for judicial malpractice, accusing the country of gross incompetence for allowing two small hedge funds to push the Argentine state into default, regardless of the mayhem caused for other creditors and the damage to ordinary people.

The bitter attack came after a New York court prevented Argentina paying $539m to its creditors even though the Peronist government of Cristina Kirchner wants to do so, in the latest bizarre development in the country’s long struggle to regain access to global capital markets.

Judge Thomas Griesa said Argentina must first pay $1.5bn in arrears to “hold-out” investors who never accepted a restructuring deal following Argentina’s last default 12 years ago, even though many scooped up the bonds for a fraction of their face value during the crisis.

Standard & Poor’s immediately declared the country to be in “selective default” after a last-minute compromise collapsed and the deadline passed on Wednesday night. Fears of a chain reaction set off panic in Buenos Aires, where the Merval index of stocks fell 7pc and leading banks plunged 12pc. Other markets suffered, too, with America's Dow Jones Industrial Average down 1.6pc in late trading. All major European markets fell, too.

“To say that Argentina is in technical default is a ridiculous hoax,” said Jorge Capitanich, Argentina’s cabinet chief, accusing Judge Griesa of acting as an “agent” of speculative funds. “There’s been mala praxis here by the US justice system, for which all three branches of the government are responsible. Argentina has tried to negotiate in good faith,” he said.

Mr Capitanich said Argentina is considering calling for a debate at the United Nations and launching an appeal at the International Court of Justice in The Hague. “We can’t have a global financial system that lets a miniscule group of funds undermine the process of debt restructuring,” he said.

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