Categories: Economic News

Hedge funds tell UK courts that Argentina manipulated economic data

(Reuters) – Four hedge funds that are suing Argentina over payments they say are owed on instruments linked to the country’s GDP told a London judge on Monday that the country had a “propensity” to manipulate data economic to save billions of dollars.

The funds, Palladian Partners LP, HBK Master Fund LP, Hirsh Group LLC and Virtual Emerald International Limited, filed a lawsuit in 2019, alleging that the South American republic owed them payments in euro-denominated securities linked to gross domestic product from Argentina in 2013.

As a trial began in London High Court, lawyers for the four funds said economic statistics were “subject to political direction” in Argentina under former president Cristina Fernández de Kirchner, who served from 2007 to in 2015. They ask for compensation of up to 643 damages. million euros ($635 million).

Lawyers representing Argentina told Judge Simon Picken that the funds’ allegations of a “gigantic conspiracy” to avoid repayment were incorrect and that Argentina has paid “almost $10 billion” to holders of its linked securities to GDP since they were first issued in 2005.

The four asset managers, which own about 48% of the euro-linked securities issued by Argentina in 2005 and 2010, say Argentina should have adjusted its core GDP after the republic ” rebase” its GDP to a different measure in 2014.

His lawyer, Susan Prevezer, said there was evidence that statistics were manipulated “for the purpose of depriving bondholders of payments” under Kirchner, and that the consumer price index numbers were altered “to save the republic approximately $2.5 billion in its inflation-linked bonds.” .

However, Argentina’s lawyer, Ben Valentin, told the court that the funds case that Argentina was motivated to find a reason not to pay “makes no sense … it was certainly not in the interest of the republic to pay its debts”.

“No rational government deliberately understates GDP,” Valentin said. “This would have serious and adverse consequences, among other things, for attracting foreign investment.”

The case is Palladian Partners, LP et al v. Republic of Argentina et al., FL-2019-000010.

For Palladian Partners and others: Susan Prevezer KC of Brick Court Chambers, Alex Barden of Fountain Court Chambers, James Shaerf of 39 Essex Chambers and Quinn Emanuel Urquhart & Sullivan UK LLP.

For Argentina: Ben Valentin KC, Tamara Oppenheimer KC, Samuel Ritchie and Francesca Ruddy of Fountain Court Chambers, and Sullivan & Cromwell LLP.

Our standards: the Thomson Reuters Trust Principles.


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