MAP/World Atlas
by MIKE LASUSA
In 2001, Argentina defaulted on its national debt. More than 90% of lenders subsequently agreed to restructuring deals that allowed the country to exchange new bonds for the defaulted ones at a significant loss for the creditors. However, some investment firms labelled “vulture funds” by their critics – most of which are based in the Cayman Islands – bought up Argentine bonds at discount prices, hoping to use the US legal system to force the country to repay their full value.
One such firm, NML Capital, purchased a chunk of discounted Argentine debt for $48 million and has fought a six-year legal battle to force the nation to pay up. After a series of decisions in favor of the so-called “holdouts” (creditors who did not accept the restructuring deals, like the vulture funds) NML is now poised to collect more than $1 billion from the country.
NML’s parent company Elliot Management Corporation and its founder and CEO Paul Singer have successfully used the vulture fund strategy in the past. Referring to its implementation in Peru and the Democratic Republic of the Congo, investigative journalist Greg Palast wrote that Singer “waits for the United States and European taxpayers to forgive the poor nations’ debts, then waits at [sic] bit longer for offers of food aid, medicine and investment loans. Then Singer pounces, legally grabbing at every resource and all the money going to the desperate country.”
Singer has an estimated net worth of more than $1 billion and donates generously to conservative candidates and causes in the United States. He is also one of the major supporters of the lobbying group American Task Force Argentina. ATFA executive director Robert Raben told the Huffington Post in 2013 that the group’s mission is to “do whatever we can to get our government and media’s attention focused on what a bad actor Argentina is.”
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