Friday, November 16th 2012 - 01:52 UTC

Africa and Latin America Still Fight Vulture Funds

By Hector Timerman - Foreign Minister Héctor Timerman underlined Argentina’s struggle against paying ‘vulture funds’ in an article written for US newspaper Huffington Post about how Latin American and Africa are affected by these funds.

Timerman has targeted Paul Singer, and insists Argentina will not reward ‘loan sharks’

Timerman stated that Argentina is not willing to pay the ‘vulture funds’ and also requested the help of “good spirited nations” in order to continue to argue the issue and clamp down on the existence of ‘vulture funds’.

“Our message is clear: we will pay the overwhelming majority of debt holders, who have agreed to a debt swap that has contributed to Argentina's recovery that also pays a fair share of interest on those investments”.

“A world free of these scavengers will not only benefit Argentina, but also poorer countries in Africa and Latin America,” Timerman urged.

The article also published in Buenos Aires Pagina 12 follows:

Last week I was in Pretoria for a scheduled meeting on political and financial issues. I spent hours conversing with my colleague Maite Nkoana-Mashabane about the amazing transformation that her country is experiencing. As a teenager she had to walk 15 miles daily to fetch a bucket of fresh water. Those were the times when for the vast majority of South Africans drinking water at home was a luxury.

Mrs. Nkona-Mashabane was an activist during the apartheid and is overly familiar with the meaning of political struggle. During our conversation we shared our views on vulture funds, an issue affecting both Africa and Latin America. These investment ventures, marketed as “distressed debt funds,” purchase debt of countries on the brink of default for a fraction of the bonds' worth hoping to recoup the full value through legal challenges in foreign courts. Such strategies are frequently rewarded by bailout actions targeted at alleviating poverty and instability -- such as debt restructuring in African nations -- or debt restructuring in which most bond-holders, such as pensioners and small investors receive important “haircuts,” as happened in Greece earlier this year.

While vulture fund practices originated in South America, the method has increasingly been used to target Sub-Saharan countries. In the '90s vulture funds took flight and have, since then, landed on the Democratic Republic of Congo, Congo Brazzaville, Liberia, Zambia, Cameroon, and Ethiopia secretly acquiring debt at bargain prices. They then waited for debt relief policies from the World Bank, IMF and wealthy nation states to launch their attack presenting their titles before American and European courts and suing for the full value of the debt.

When it was clear that a lion's share of aid to Africa was falling into vulture funds' claws, some organizations managed to question the international financial system, illustrating the corruption, inconsistencies, and injustice it entails. Jubilee Debt Campaign in the UK and Jubilee USA Network are coordinating efforts to pressure their respective governments and the international financial institutions into taking action.

Knowing the audacious schemes that vulture funds have been using to take African money, my counterpart was eager to know more details about a new chapter of this saga, currently taking place in Ghana, where a judge has impounded Argentina's Libertad navy training frigate in the port of Tema, following the request of the vulture fund NML Capital. A piece of Argentina's national patrimony has been detained, in clear violation of international law, in yet another attempt to cash out on speculative debt purchased for pennies, in the wake of a default a decade ago.

The global economy allows debts to be traded like commodities. Vulture funds abuse the system, acquiring distressed debt in secondary markets to multiply profits at the expense of the poor and weak. As these activities are ethically repellent, well-prepared propaganda machinery keeps their lucrative business alive. For obvious reasons, vulture funds try to avoid the political debate about their practices. Until now legal technicalities and credit enforcement principles have prevailed over the alleviation of human suffering and global inequality, but since the financial bubble burst there is a growing opinion that unregulated speculation is not only unfair but also bad for business in general. Vulture funds' tactics are clearly disruptive to debt swap processes and prevent countries from recovery.

Benefiting from tax and jurisdiction loopholes, vulture funds create obscure societies or task forces to lobby for their interests in tribunals, legislative bodies and newspapers. It is necessary to expose the millionaires behind the vulture funds and make them responsible for every vulture fund action. The Argentine naval vessel that has been seized in Ghana by NML, a subsidiary of Elliott Associates, belongs to Paul Singer.

Paul Singer could be branded as the inventor of vulture funds; in 1996 he won a case against the Peruvian government for a 400% profit. After this success, Singer sued the Republic of Congo for$400 million dollars for a debt it acquired for 10 million and ended up with 127 million. Needless to say, this is money that should be going to build roads, schools and other poverty reduction programs. Worst, these nations are often on the receiving end of debt alleviation and international funding -- which then goes to line the pockets of said vulture funds.

In this game political connections play an important role. Though Paul Singer has been the biggest donor to the Republican campaigns for many years, he leaves nothing to chance: when the polls reflected a political sea change during George W. Bush's presidency, he appointed Democrats to lead a task force created to lobby against Argentina.

The American Task Force Argentina (ATFA) has the mission to disqualify, intimidate and discredit my country's government, which has declared that it will not yield to vulture funds. To convey their message they conveniently forget to inform that the lobby is financed by a vulture fund. In the past, ATFA lobbyists walked the halls of Congress pretending to represent teachers that had invested in Argentine bonds. When the lie became unsustainable, they turned face: they now claim to lobby on behalf of American taxpayers. The crude truth is that NML is based in the Cayman Islands just to avoid paying taxes in the US.

After the 2001 default, in the midst of a crisis that threatened the very continuity of the Argentine nation, in 2005 and 2010 Argentina designed and carried out a complete swap of its debt which was accepted by more than 92% of Argentina's creditors.

Our message is clear: we will pay the overwhelming majority of debt holders, who have agreed to a debt swap that has contributed to Argentina's recovery, which also pays a fair share of interest on those investments. It is worth emphasizing that interests of restructured bonds were tied to the Argentine GDP performance, which after an average growth of 8% per year since 2003, resulted in a significant gain for bondholders who joined the swap.

However, we will not reward loan sharks who bought defaulted bonds for next to nothing and have refused a deal that would have represented a clear profit, asking much more, even several times the amount they spent.

If Argentina beats Paul Singer and others, the consequence may well be a world where vulture funds' actions against developing countries are history. A place free of these scavengers would benefit not only my country, but also other poor nations in Africa and Latin America. We encourage all good-spirited nations and organizations to help us get rid of them.

43 comments Feed

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1 Ayayay (#) Nov 16th, 2012 - 02:48 am Report abuse

•The Arg gov gave Argentine &Italian pensioners, who had enthusiastically bought Argentine 'treasuries' because of the (suspect) growth of the 'New World, a choice: 30 cents on the dollar of their life savings, or nothing.

•Timmerman talking interest is disengenuous because it's interest on a FRACTION of their nest eggs.

•And most of these grandpas an grandmas took it, because they didn't have the money or years left to fight. Singer offered them money for it
Only HE had the pockets and the time to fight a country.

•If the U.S.A had defaulted on treasuries

-telling retirees, families, the Chinese to take 30 cents on the dollar

-and then started bragging about how rich they were again in five years,
-how do you think ppl would feel?

End note: wtf does Timmerman have to do with apartheid?? hahahahahaha
2 Boovis (#) Nov 16th, 2012 - 03:40 am Report abuse
I can't find this article in the Huffington Post at all, maybe it's in the “funnies” section.
3 Ayayay (#) Nov 16th, 2012 - 04:20 am Report abuse
Tell it like it is, white rich old head of the IRS in a suit!!
4 Lord Ton (#) Nov 16th, 2012 - 05:11 am Report abuse
Calling your debtor a 'Vulture Fund' is an excuse not to pay what you owe then - even though you were happy enough to borrow in the first place ??
5 Stevie (#) Nov 16th, 2012 - 07:05 am Report abuse
I don't think anybody used their “life savings” to buy Arg bonds, that's just too dramatic. That said, a lot of people lost money on “plan Brady”.
Also, NML didn't buy any bonds at all, they bought the debts at reduced price.
Lets not defend the hedge fonds, they are no better.
6 Gordo1 (#) Nov 16th, 2012 - 07:09 am Report abuse
Well! He would say all this, wouldn't he?
7 toooldtodieyoung (#) Nov 16th, 2012 - 07:18 am Report abuse
“We encourage all good-spirited nations and organizations to help us get rid of them.”

Rough translation:-

We don't want to pay back the money we've borrowed so thieves of world unite!!!
8 HansNiesund (#) Nov 16th, 2012 - 08:23 am Report abuse
Look at the company he's placing Argentina in : “Democratic Republic of Congo, Congo Brazzaville, Liberia, Zambia, Cameroon, and Ethiopia”. How on earth did such a rich country end up here?
9 Boovis (#) Nov 16th, 2012 - 08:39 am Report abuse
The full article is on huff just go there and use the keyword “timer man” and search, it's the first article that appears.
10 Idlehands (#) Nov 16th, 2012 - 09:19 am Report abuse
Sounds like he knows he's going to lose so is making a desperate appeal for support from whoever will give it.

Funds like NML serve an economic purpose. If debtors had nothing to fear they would default willy nilly while hiding behind 'sovereignty' nonsense. It helps balance the power between lender and borrower.
11 Pirat-Hunter (#) Nov 16th, 2012 - 09:20 am Report abuse
“We encourage all good-spirited nations and organizations to help us get rid of them.” I can see a problem with this last statement, there aren't good-spirited people in the world. Let's read the comments posted to see if anything changed.
12 txiki (#) Nov 16th, 2012 - 09:34 am Report abuse
Well, latest news coming out of Argentina is that the Naval Corvette Espora, that is currently stranded in Cape Town with generator problems is still there because the Argentine Government owe MTU, the German company that maintain the corvettes of this class, around $500,000 dollars, and until this bill is paid and the estimated cost of the repair and spare parts for Espora are paid in advance - MTU are not going to do anything. You couldn't make this up, could you?

Maybe Christina doesn't want to pay the German Vultures?

13 Boovis (#) Nov 16th, 2012 - 09:41 am Report abuse
@12: post that to Timerman's post on the Huff post to prove that it's nothing to do with any moral stance but purely a case of Argentina doesn't pay it's debts, end of story.
14 txiki (#) Nov 16th, 2012 - 10:04 am Report abuse
@13 - Feel free to post it yourself - it's in the Argentine press today.
15 Brit Bob (#) Nov 16th, 2012 - 11:22 am Report abuse
Timmerman is just trying to get out of paying up. No you can't have your ship back!
16 ChrisR (#) Nov 16th, 2012 - 11:28 am Report abuse
5 Stevie

Had you have read the posts by Acchiappaladri, an Italian, trying to recover some of the money from AG for the Italian pensioners you would know that very many did put their ENTIRE life savings into these bonds.

They were to be the pension they did not otherwise have.

And if you defaulted on a loan would you think it wrong if the bailiffs came round and took what you had left?

Histrionics and calling such companies ‘vultures’ only moves the spotlight from those who should pay their debts. Everybody else has to.
17 St.John (#) Nov 16th, 2012 - 11:57 am Report abuse
@ 2 Boovis
18 Doggy Rap (#) Nov 16th, 2012 - 12:03 pm Report abuse
Great business opportunity:

Buy 100 000 ton of soy beans from Argentina on 30 days of credit. On the 30th day shout “vultures!” and save your money. Of course you won't get sued - the Argentine government would never support vultures. ::)
19 Pirate Love (#) Nov 16th, 2012 - 12:14 pm Report abuse
typical when issues(self-inflicted) are not going argentinas way they try and globalize it and drag other countries into ITS problems by pretending to have common ground, PATHETIC!
Having a loud voice does not mean you are voicing the truth.
20 Santa Fe (#) Nov 16th, 2012 - 12:52 pm Report abuse
just pay up, this is getting embarrassing for Argentina, one embarrassment after another.
21 Britninja (#) Nov 16th, 2012 - 01:30 pm Report abuse
Loving the picture. Hector looks more like Pob every day.
22 Conqueror (#) Nov 16th, 2012 - 02:21 pm Report abuse
I thought Timerman's article was very good. It only started to go downhill when he got to the second sentence.

Nice of him to admit that “vulture” funds got started in South America. A case of sins coming back to bite you. What Timerman is actually complaining about is the loss of the “facility” whereby sovereign states could default on commercial creditors with impunity. The current situation is a very good one as it is doubtful if argieland ever intended to repay its debts in full. After all, with loads of money passing through your hands, the temptation must always be there to keep the money rather than repay a debt. When was the last time that argieland was any good at managing its economy? Typical immaturity. Got money - spend it!
23 Pirat-Hunter (#) Nov 16th, 2012 - 03:07 pm Report abuse
Enough said, the facts never will change just like the truth is always the same. No matter how often IMF and the vulture print lies the facts will always be that there is no accountability for the Argentine tax payers money IMF willingly gived away to corrupt Argentine leader for a share of the loot, I think IMF should cover the bill for the theft and learn to be more accountable with peoples money. Other then that we will never pay IMF theft. Nor will we let corporate steal Argentine wealth, we rather nationalize and kick all pirates and leaches out.
24 ProRG_American (#) Nov 16th, 2012 - 03:52 pm Report abuse
The minister was right on the mark here.
25 Conor J (#) Nov 16th, 2012 - 04:09 pm Report abuse
In what way?
Loan Shark: Would you like to borrow some Money?
Argentina: Yes please
Loan Shark: Will you be able to pay back the amount, plus interest on time?
Argentina: Absolutely! 100%
Loan Shark: Here you go then.
5 Years alter
Loan Shark: Pay day is here Argentina.
Argentina: Why should I pay you back? You're a loan shark after all!
Loan Shark: ? Fine then (Takes Libertard)
Loan Shark: Pay me back my money.
Argentina: WAAAAAAAAAH!!! Everyone is picking on me! Im right and everyone is wrong!!!!! WAAAAAAAH!!!!!
26 Ayayay (#) Nov 16th, 2012 - 04:45 pm Report abuse
@23 Nestor Kirchner paid the IMF in full. Even when they were letting him make payments. The IMF rescue fund is paid off.
27 Pirat-Hunter (#) Nov 16th, 2012 - 04:49 pm Report abuse
Facts never change while lies will take many forms and shapes.
Keep your eye on the ball people and you will never be lied to again. There might be millions of different english theories to theft but only one absolute truth.
28 Orbit (#) Nov 16th, 2012 - 05:33 pm Report abuse
@27 - you seem quite keen on Greg Palast ... how long do you think it would take his investigative team to find evidence of corruption and embezzlement across CFK's government. Minutes or hours ?
29 MistyThink (#) Nov 16th, 2012 - 06:27 pm Report abuse
22 briton

My personification list says Conqueror = briton

Everybody knows that your Economy intelligence is only ZERO !

Vulture Funds ( I am certain what they are ) are not got started in Latin America first !

You should say -- got money-spend it -- to first UK people who have 3 credit cards per head not singing out here.
30 British_Kirchnerist (#) Nov 16th, 2012 - 07:01 pm Report abuse
Great article by Timmerman =) If Cristina doesn't change the constitution or want to stand again he should be the next President, who's with me?
31 yankeeboy (#) Nov 16th, 2012 - 07:29 pm Report abuse
If Cristina doesn't change the constitution

You've never made a truer statement,

Dictatorship or Absolute Monarchy which do you prefer?

32 Conqueror (#) Nov 16th, 2012 - 07:33 pm Report abuse
@30 Excellent idea. With his capabilities, Timerman is more than capable of starting a nuclear war. Or, more accurately, making the nuclear annihilation of argieland a certainty. Timerman is, without doubt, an incompetent, idiotic prat. Very nearly down to your standard, B_K. Look, everybody, have you met the “leader” of the Slimy Necrophiliac Prats?
33 MistyThink (#) Nov 16th, 2012 - 07:47 pm Report abuse
The flapdoodles from all London written.....

free to write up until imminent removing this web site from Argentina internet.
34 isolda (#) Nov 16th, 2012 - 07:57 pm Report abuse
i am making lots of money under so many screen names.
35 Ayayay (#) Nov 16th, 2012 - 08:31 pm Report abuse
Timerman is clearly LAUDING the IMF for it's assistance on negotiating a restructuring for the 93%. Don't know if anyone caught that.
Jubilee looks to the IMF & WB kindnesses as an example to be followed by the holdouts:
36 joe_blog (#) Nov 16th, 2012 - 09:29 pm Report abuse
you sound like Isolde...poor old wimp!
37 briton (#) Nov 16th, 2012 - 09:31 pm Report abuse
sadly old girl CFK,,
you must pay ya debts,
sooner the better.
38 Joe Bloggs (#) Nov 16th, 2012 - 09:34 pm Report abuse
36 Enjoy it while it lasts idiot.
39 toooldtodieyoung (#) Nov 16th, 2012 - 09:57 pm Report abuse
30 British_Kirchnerist

Laughing boy Timerman as President? Please!!!

Just pay your debts
40 brits gobblers (#) Nov 16th, 2012 - 09:58 pm Report abuse
@ 37
gluggglugglglglg,,,,,translation: ,,,,,you are wrong!
41 Mrs Captain Poppy (#) Nov 16th, 2012 - 10:53 pm Report abuse
@ 38
where is my husband? ....screwing briton again?
42 KFC de Pollo (#) Nov 17th, 2012 - 02:49 am Report abuse
@30 you are not a good troll try harder
43 briton (#) Nov 17th, 2012 - 09:18 pm Report abuse
These bloggs are being ruined by stupid CFK paid indoctrinated gutter twits,

We suppose for the price of free speech, we have to put up with brain dead turds,
Ignore them ..

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