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Singer extends 'discovery' looking for Argentine assets in Chinese banks

While the Chinese banks can oppose the request, Singer's Elliott is confident that the US courts would ultimately allow its request to go through.

As it did in Nevada and California, a unit of billionaire Paul Singer's Elliott Management, which is Argentina's main holdout creditor, is extending its legal fight with the country to China. NML Capital served subpoenas this week to Bank of China (BOC) and Industrial and Commercial Bank of China (ICBC) in an effort to obtain information on 6.8bn dollars in financing for deals signed by the two countries in July.

 “We want to understand the mechanics of these credit facilities to establish whether assets to which Argentina has a legal title could surface in jurisdictions where we would be able to attach them,” a lawyer advising Elliott told IFR on Thursday.

The subpoenas are aimed at a 4.7bn facility provided by China Development Bank, ICBC and BOC to finance the construction of two hydroelectric dams in Patagonia and a 2.1bn loan from China Development Bank and ICBC to finance a freight railway project.

Both deals were signed by Argentine President Cristina Fernandez and her Chinese counterpart, Xi Jinping, during an official visit of a Chinese delegation to Buenos Aires last July.

Elliott hopes to be able to track the payment mechanisms and time legal actions in any relevant jurisdiction accordingly.

The hedge fund is also hoping to bring to light disclosures that Argentina may have made to its Chinese creditors with respect to its dispute with the holdouts, which in July pushed Argentina into its second default in 13 years.

“We think that Argentina may have provided some assurances to the lenders that they have plans to evade the pari passu injunction,” said the lawyer, referring to an injunction issued in 2012 by US district court Judge Thomas Griesa that prevents Argentina from paying holders of its restructured bonds unless it also makes holdouts whole.

The Chinese banks have about a month to provide the documents and have been asked to testify at the New York offices of law firms Dechert and Miller & Wrubel on October 8, according to subpoena documents.

While the banks can oppose the request, Elliott is confident that the US courts would ultimately allow its request to go through.

The subpoenas apply to any form of financing and currency swaps the banks may have arranged for Argentina or hundreds of Argentine government-related entities over the last four years.

The hedge fund has won a number of legal battles against the country, including obtaining a green light from the US Supreme Court to seek information ('discovery') about Argentina's non-US assets.

In separate proceedings, Elliott plans to subpoena international banks including Citigroup, HSBC and Standard Chartered to seize what it suspects are embezzled Argentine funds, a source at the hedge fund told IFR last week.

Earlier this month Elliott secured a victory when a court in the US state of Nevada granted the corporation discovery rights to 123 companies allegedly linked to the Santa Cruz public works tycoon Lazaro Baez, and believed to be closely linked to the Kirchner family.

US Magistrate Judge Cam Ferenbach granted access to information about companies that Baez allegedly controls in Nevada, which Elliott suspects were used to launder 65 million dollars of funds for the government. Both parties will have to meet to file a joint status report by September 12.

A similar request has been presented at a California court related to the Chevron-YPF deal to develop shale-oil deposits in Patagonia. Chevron in a California based corporation.