MercoPress. South Atlantic News Agency

Argentina in contempt of court over defaulted sovereign bonds

US Judge Thomas Griesa has frozen Argentine assets

Argentina and the country's social security agency ANSES are in contempt of court for their failure to provide documents in litigation by holders of its defaulted bonds, a US judge has ruled in New York.

US District Judge Thomas Griesa granted a contempt of court motion last week by bondholder Aurelius Capital Partners hedge fund, according to a transcript of a hearing in Manhattan federal court obtained over the weekend, reports Reuters.

Lawyers for Aurelius complained that they had not received documents the judge had ordered the agency, known as ANSES, to provide about transactions it made through a private brokerage.

Judge Griesa has previously rejected arguments that ANSES, which took control of pension assets in the United States, was separate from the government.

He has frozen part of those assets held in the United States as bondholders sought to seize Argentine government assets overseas. The country has been locked out of international debt markets since its 2002 sovereign default and bondholders have fought in court to recover assets they have already won in judgments.

“Serious questions have been raised about whether ANSES and/or the Republic moved assets out of the United States contrary to court orders,” the judge said, according to the transcript. He said he accepted that the bondholders would request information about any such transactions.

“The motion to hold the Republic of Argentina in contempt is granted. It is the finding of the court, which I have already made and I will affirm that the Republic has the power to see that ANSES provides the necessary” information, said the ruling.

A lawyer for Argentina, Carmine Boccuzzi, could not be reached for comment, but according to the transcript he told the court that the Economy Ministry had asked ANSES for the information ordered by the judge.

“ANSES, consistent with its view that it is not subject to the jurisdiction of this Court and otherwise has sovereign immunity protections as it were, said no” Boccuzzi said.

In recent months, Argentina's Treasury has been relying for financing on the state-run pensions’ administrator which is flush with cash after the government nationalized private pension fund assets in late 2008.

Argentina's debt load neared 146 billion US dollars by late 2008 and it faces some 28 billion in obligations due this year.

Reuters reported that the case is Aurelius Capital Partners LP v Republic of Argentina in US District Court for the Southern District of NY(Manhattan) No. 07-2715.