Judge Rips Argentina's 'Half Truths' on Default
MANHATTAN (CN) - A federal judge had some stern words for Argentina on Friday, two days after it defaulted on its bond payments, accusing Argentinian officials of spreading "half-truths that do not comply with the law."
U.S. District Judge Thomas Griesa said in court that Argentina has an obligation to pay holdout American bondholders who won a judgment before him for $1.5 billion in 2002.
"I'm talking about factual misrepresentations, and that must stop," Griesa said.
Griesa ordered Argentina to pay $1.3 billion, including interest, to NML Capital and Aurelius Capital Management, a pair of hedge fund "holdouts" who refused to accept new bonds after the nation defaulted in 2001.
Argentina's officials said this week that the country was not technically in default because it tried to make a $539 million interest payment on the bonds by the June 30 deadline, but Griesa blocked it from doing so because it went against his order that the country pay holdout investors first.
"Unfortunately, during the past eight to 10 years ... the republic has treated the judgment as basically nonexistent," Griesa said before a packed courthouse in a high-rise courtroom in Lower Manhattan.
"To treat those judgment debts the way the republic did was lawless."
Jonathan Blackman, who represents Argentina, told Griesa that the country's officials "intend in good faith to pursue the dialogue."
He also asked the judge to assign a different federal monitor to replace Daniel Pollack, whom Griesa had appointed to help with negotiations. Blackman said that a press release Pollack's office has issued was "harmful and prejudicial" and caused "deep concern" in the cash-strapped nation.
Robert Cohen, who represents bondholders, asked Griesa to keep Pollack, saying that the press release in question "merely recorded the facts" and that "the world knows that [Argentina is] in default."
At issue is Pollack's use of the word "default" in a press release issued Wednesday, which said Argentina would "imminently" be in default.
Griesa was unmoved by Blackman's arguments, and ordered talks to continue.
"If the word 'default' was used, well, it hardly can be said to be inaccurate," Griesa said. "The important thing is that the objections remain and have to be dealt with.
"Let's cool down any ideas of mistrust," he added. "What can be trusted is facts. What can be trusted is proposals. What can be trusted is recommendations. This is not a personality contest."