First, a US hedge fund tried to seize Argentina’s boat, then its rockets—now it’s after a person

The hedge fund behind Argentina’s default stepped up its pressure on the recalcitrant nation yesterday by asking US courts to stop an Argentine lawyer from leaving the US, take away his passport, and force him to give a deposition.

NML Capital, a subsidiary of Paul Singer’s Elliott Capital Management, has been trying to force Argentina to pay back its defaulted debt, and has won $1.7 billion in court judgements in the process. NML’s main strategy has been to put itself first in line for repayment, legally blocking Argentina’s payments to its other creditors until it settles with the fund. But it has also attempted to get its money back directly, by seizing Argentina’s assets.

In 2012, NML briefly seized a naval training vessel visiting Ghana, and in 2013 the fund sued SpaceX to seize money Argentina has paid the company for satellite launches next year. The fund has sometimes been hamstrung by legal doctrines that prevent government assets from being seized in foreign countries.

But the fund’s latest gambit, trying to force Argentine attorney Cesar Guido Forcieri to submit to its questions, is part of a far more convoluted scheme: Given the United States’ status as a haven for illicit cash earned by corrupt officials, the company wants to seize Argentine money stashed there.

In April, NML won a ruling that allowed it to piggyback on the investigation of an embezzlement scandal connected to Argentina’s president, Cristina Kirchner. An Argentine prosecutor alleges that a builder hid money inappropriately drawn from public projects in a Nevada bank account. If the embezzlement charges are proven, that money belongs to the people of Argentina—and by NML’s reasoning, it thus belongs in NML’s coffers.

In this case, Forcieri is a close associate of Argentina’s vice president, Amado Boudou, and both have been indicted (paywall) in Argentina as part of an alleged scheme to take over the company that prints Argentina’s currency. NML won a subpoena to ask Forcieri about the money. Forcieri declined to respond, and somehow NML discovered his “imminent, permanent departure” from the US and wants a court to make him stay.

While the legal theory behind NML’s efforts to play cop for Argentina remains to be validated, the fund’s legal efforts serve a complementary purpose: By drawing attention to the scandals that tarnish the country’s government, it may undermine its support and prompt a change in leadership in the country’s 2015 elections—and those new leaders that might be willing to negotiate with the hold-out funds and put this whole sorry argument to bed.

home our picks popular latest obsessions search