Argentine authorities investigating alleged tax and currency exchange fraud searched this week the factory of a U.S. investor who is among litigants seeking hundreds of millions over Argentina's 2001 default.
The federal tax agency, AFIP said more than 50 agents were searching Dart Sudamericana, a business owned by Kenneth Dart that makes foam drinking cups.
The statement noted that Dart is part of a hedge fund, EM Limited, seeking more than 700 million dollars on bonds that the government defaulted on in 2001.
Dart is not part of two other hedge funds -- NML Capital and Aurelius -- that separately are seeking another 1.3 billion dollars from Argentina as full payment on defaulted bonds.
The funds did not accept the fresh bonds exchange offered by Argentina in 2005 and 2010, to which adhered 93% of creditors. Last week these holdouts rejected another offer that would have given them just 25% of the value of the bonds.
Meanwhile in New York Citigroup Inc., whose Citibank unit is custodian for some holders of Argentine bonds, asked a US judge to make clear that it isn’t affected by his order barring payments to holders of restructured debt unless holders of defaulted bonds are also paid.
Citibank asked US District Judge Thomas Griesa in Manhattan for a ruling clarifying earlier decisions in a case against Argentina led by Elliott Management Corp.’s NML Capital.
Citibank, which said its Argentina branch is custodian for bonds issued under that country’s laws that are to be paid within Argentina, isn’t a party to the NML suit.
Griesa, who is overseeing litigation over Argentina’s defaulted debt, issued an order in November requiring the nation to pay NML and other holders of the defaulted bonds before paying investors who exchanged their bonds for new ones, at a sharp discount, in debt restructurings in 2005 and 2010.
Citibank said it is seeking clarification because Griesa’s rulings may expose it to “grave regulatory, civil and possible criminal risk for obeying a court order not recognized as valid in Argentina”.
The case is NML Capital Ltd. v. Republic of Argentina, 08-cv-06978, U.S. District Court, Southern District of New York (Manhattan).