Argentine bondholder’s quest for justice


Does a true democratic leader steal from her people?

Cristina Kirchner, the president of Argentina, recently was in the United States to assume the role of rotating president of the U.N. Security Council. My president used this bully pulpit to criticize the United Kingdom over its claims to the Falkland Islands and to complain to U.N. Secretary General Ban Ki-moon about the U.S. government’s alleged spying activities in Latin America, which she likened to the East German Stasi.

As someone who lost his life savings after investing in Argentine bonds, I’m astounded by the hypocrisy of those who would stand before the world as leaders of a (supposed) great democracy where rule of law prevails, while in reality having stolen from its own people.

The government of Argentina encouraged citizens to invest in the country’s growth, which many of us did. And then once we had purchased sovereign bonds, it failed to honor its contractual payment obligations. It’s as if the U.S. government were encouraging a campaign for U.S. Savings Bonds, and then reneged on its payments when it came time for the bonds to mature. As this scenario unfolded in my country in 2005 (a time when the economy was getting back on its feet), I and others were in disbelief at the government’s classic bait and switch. They used our investments to pay off their friends and supporters while offering small investors (and U.S. holdout investors) a tiny fraction of what we had been guaranteed.

As we had little recourse in the Argentine courts, many of us took our case to New York, where we could hope for a fair judgment. This quest for justice has caused us no end of grief; indeed, today we are vilified in the papers allied with the government as traitors to Argentina.

Nevertheless, today, I’m heartened by last month’s decision by the Second Circuit Court of Appeals. This U.S. court, uncorrupted by cronyism or pressure from Argentina’s government and dedicated to upholding the rule of law, unequivocally affirmed the validity of the bond covenants issued in New York, under New York law. But the fight is not over. It remains to be seen whether my government will abide by the U.S. court’s orders to make us whole. So far, it does not look good.

The Argentine government has a tradition of openly defying New York law and has ignored hundreds of court judgments ordering them to pay. In fact, lawyers supporting Argentina compared the U.S. Second Circuit Appeals Court to “a court in Iran” and argued that the Argentine government would no sooner obey the U.S. court than the U.S. government would obey an Iranian court! This defiant posture was well noted by the Second Circuit in their strongly worded ruling.

No one should be swayed by the pretty words of the Argentine government about democracy, the rule of law and such. Those are the words of a government that says one thing, and does another. They laugh at America’s sense of justice and fairness and care not a whit for the common man.

The American court system is our last resort. I still have faith that justice can and shall be done.

Horacio Vázquez is an Argentine bondholder. He lives in Buenos Aires.

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