MercoPress. South Atlantic News Agency

Holdouts open new front in dispute with Argentina: officials dramatic increase in their personal wealth

The most senior figure named in the report is Guillermo Moreno who was the powerful commerce secretary first for Nestor and then Cristina until 2013

US holders of defaulted Argentine bonds have stepped up their campaign for full repayment of their loans by detailing how 14 senior Argentine officials experienced “dramatic and often unexplained increases” in their personal wealth during service in the Kirchner administrations.

 In an attempt to embarrass authorities in Buenos Aires the American Task Force Argentina (ATFA), a lobby group representing the interests of bondholders who rejected a 2005 and 2010 debt restructuring offer, used filings with anti-corruption authorities to compile a report detailing how service in the administration of Nestor Kirchner and that of his widow and successor Cristina has become a path to fortune for many of their officials.

The move is the latest round of a dispute now in its 14th year which dates back to Argentina’s default in 2001, the largest in the country's history. The group said its findings unveiled this week undermine claims by President Cristina Fernandez that in refusing to accept US court rulings in favor of the so-called holdouts her government was defending the Argentine people.

“This government claims it has resisted the rule of law both in the US and in international institutions in order to protect the interests of the Argentine people. This demonstrates that that is a lie. In fact they have aggrandized their own wealth while the economic conditions of the people have deteriorated,” said Robert J Shapiro, co-chair of the ATFA.

The holdouts refused the 2005 and 2010 offer which implied a face-value loss of 65 cents on the dollar and are demanding full value for their bonds, most of which they bought for pennies on the dollar after default.

Court-ordered negotiations in the US - where the bonds were issued - have made little headway with both sides accusing the other of bad faith. President Cristina Fernandez has dismissed the holdouts as “vultures” and has made defiance of their demands a central tenant of her administration’s policy.

She has refused to negotiate with them even after they forced her into another default last year, a victory for the holdouts that further complicated Argentina’s path back to capital markets shut to it since 2001. The lack of access to foreign financing has aggravated a recession in South America’s second largest economy caused by the drop in commodity prices and a deteriorating fiscal stance.

The most senior figure named in the report is Guillermo Moreno who was the powerful commerce secretary first for Nestor and then Cristina until 2013. His wealth increased 27-fold during his public service, partly because a company he owned became a major supplier of hardware to the government after he entered it.

Another close Kirchner associate to come under the spotlight is security secretary Sergio Berni whose wealth increased 4,000 per cent during just five years of public service. Also cited is the current health minister Juan Luis Manzur who has seen his wealth mushroom from 2.5 million pesos when he became minister in 2009 to 12 million (€1.25 million) today.

“Clearly they have created an immunity for themselves from the economic conditions that they have created by choosing to default again last year. The question is Argentina’s leaders clearly don’t want to live with the mess they have created but what about the people of Argentina who have to live with this mess?” said Nancy Soderberg, ATFA’s other co-chair, blaming Argentina for the lack of talks.

The report did not cite President Cristina Fernandez own spectacular increase in wealth, the subject to several investigations in Argentina, or that of her vice-president Amado Boudou, who is facing trial after being formally indicted over his role in a corruption scandal.

Responding to the report Argentina’s economy minister Axel Kicillof accused the holdouts of “mafia-like behavior” and Cristina Fernandez said on Wednesday that any accusation or slander from the 'vulture funds' must be interpreted as 'a medal, an honor, because it means we're not following the vultures interests but those of Argentina'.