MercoPress. South Atlantic News Agency

Former president Menem back on trial for the controversial sale of Palermo show land

Apparently the Palermo greens sale authorized by Menem was four times below the market price in 1991

Former Argentine president Carlos Menem and his former economy minister Domingo Cavallo were both formally indicted for embezzlement over the sale of the Rural Society property in the Buenos Aires high income Palermo neighborhood in 1991 at a price the court yesterday described as “vile.”

 The grounds are famous for its strategic location in Buenos Aires and ample space for exhibitions, probably the most famous is the annual Palermo agriculture Show, dating back over a century, which brings Argentina's best meat and milk cattle, horses, sheep and industries linked to the farming industry.

The judges had strong words in describing the events which led to the sale of the 14-hectare Rural Society property and accompanying building, for which the men are now formally prosecuted — Cavallo for the first time on these charges, and Menem again since an original acquittal in his favor was reversed. Two other former government officials, two former Rural Society executives and six former private banking officials were also prosecuted yesterday, on a range of charges relating to the sale.

“The gathered evidence indicates that all accused took part in a jointly planned operation to bypass Congress,” judges Horacio Cattani, Martín Irurzun and Eduardo Fara wrote in their declaration, describing the sale as “a warped criminal manoeuvre with the aim of stripping state assets.”

They added that the price at which the Menem administration sold the building, which had previously been public property, was “vile.”

According to testimonies previously made by officials from Argentina's National Mortgage Bank, the property sold at around four times less than the market value of the building in 1991 when there was dollar-peso parity: in other words, it was sold for 30 million dollars when its real value was estimated at 131 million.

The transaction had taken place on December 20, 1991, the day Menem announced Decree 2699, which fixed the price at 30 million. The deal was then sealed with a mortgage, setting repayment at 10 million payable immediately and the rest in monthly installments of 2 million.

That mortgage had been prepared in just 11 days by three officials of Banco Ciudad’s Real Estate sector — Juan M Insua, Raúl O. Angelini and Ricardo I Shapiro — , on the orders of then head of the Economy Ministry’s Real Estate Sales Commission, Gastón Figueroa Alcorta.

They were also prosecuted, but for lesser crimes relating to the embezzlement, as were Matías L Ordóñez, also formerly of the Real Estate Sales Commission; Eduardo De Zavalía and Juan A. Ravagnan, president and secretary of the Rural Society of Argentina at the time of the sale, respectively; and Jorge Frost, Daniel Ivakhoff and Carlos A Ratto, former advisors of the National Mortgage Bank.

The judges yesterday observed that in the file of the mortgage for the building transferred from public to private hands, other legal officials from Banco Ciudad had noted a minimum price of 60 million.

But, nevertheless, the sale never passed through Congress for approval, which in late 2012 led to the national administration of President Cristina Fernández attempting to re-appropriate the property by revoking Menem’s 1991 decree.

That move was blocked by the courts and the property remained in the hands of the Rural Society of Argentina, which sold 50 percent of the commercial concession of the building’s exhibition centre to businessman and Buenos Aires province dissident Peronist deputy Francisco de Narváez, from the then concessionaire, the firm Ogden.

De Narváez, seemingly one step ahead, sold his share of La Rural S.A. (Rural Society of Argentina) just before the CFK administration announced its plans to take back the property, to Fénix Entertainment, which almost immediately sold 25 percent of its share to IRSA group for 32 million dollars, the Noticias Argentinas agency reported.