Pismo skierowane do Ostrzeżenie SEC potencjalnych zadłużenia Bond Oszustwa
Wielokrotnie ostrzegał Papierów Wartościowych & Exchange Commission regarding the potential fraud surrounding their agreement to allowthe Government of Argentina to trade in US markets the latest Sovereign Debt Bond issues of 2005 as designed by former enomomy minister Roberto Lavagne under the Nestor Kirchner Administration. The sustainability of these Bonds has yet to be demonstrated.
Buenos Aires, 4th March 2008
Ms Shauna Steele,
Branch Chief, Regulatory Policy,
Office of International Affairs,
US Securities and Exchange Commission,
100 F Street NE,
Washington DC 20549-1004 / USA
Dear Ms. Steele,
Thank you very much for your kind message dated 4th February last, responding to our letter addressed to Mr Christopher Cox, SEC Chairman, dated 2nd January 2008 (copy enclosed as Exhibit “A” below), the contents of which we have carefully noted.
Whilst we appreciate your comments and recommendation that we refer our inquiry elsewhere, we must respectfully insist that the fact that Argentina’s Sovereign Debt Bond issues of 2005 (formalized by the Argentine Ministry of Economy under Minister Roberto Lavagna during President Nestor Kirchner´s Administration), approved by the SEC for trading in June 2005 are flawed from their very origin, would clearly seem to be a matter of concern to the SEC. The reasons why we say this were extensively explained in our letter 2nd January 2008, as indicated above.
On your website, www.sec.gov, you describe the SEC’s functions as those of being “The Investor’s Advocate”. Odpowiednio, may we point out the following based on your Mission Statement (highlights are ours):
Your Mission Statement says the SEC’s purpose is “to protect investors, maintain fair, orderly, and efficient markets, and facilitate capital formation. As the United States’ securities exchanges mature into global for-profit competitors”, you point out the greater need for “sound market regulation”. You also point out that “the world of investing is fascinating and complex, and it can be very fruitful, but unlike the banking world, where deposits are guaranteed by the federal government, stocks, bonds and other securities can lose value. There are no guarantees. That’s why investing is not a spectator sport. By far the best way for investors to protect the money they put into the securities markets is to do research and ask questions.8221;
You then emphasize the fact that “the laws and rules that govern the securities industry in the United States derive from a simple and straightforward concept: all investors, whether large institutions or private individuals, should have access to certain basic facts about an investment prior to buying it, and so long as they hold it. To achieve this, the SEC requires public companies to disclose meaningful financial and other information to the public. This provides a common pool of knowledge for all investors to use to judge for themselves whether to buy, sell, or hold a particular security. Only through the steady flow of timely, comprehensive, and accurate information can people make sound investment decisions. The result of this information flow is a far more active, efficient, and transparent capital market that facilitates the capital formation so important to our nation’s economy. To insure that this objective is always being met, the SEC continually works with all major market participants, including especially the investors in our securities markets, to listen to their concerns and to learn from their experience.8221;
If you would kindly take the time to read our letter 30th October, you will see that we indicate the reasons why the Argentine Sovereign Debt Bond Mega-Swap Operation has been traded based upon misleading information from the Argentine Ministry of Economy itself, which has so far been unable to properly demonstrate and substantiate the sustainability of these new debt bond issues. As you may surely imagine, we have, w rzeczywistości, referred our inquiry to the Argentine Government, however unfortunately the Kirchner Administration seldom reply to inquiries received from citizens which in one way or another question their Acts of Government.
We have also referred this matter the World Bank and the International Monetary Fund (MFW) who have also chosen not to reply. This is understandable – especially in the case of the IMF – as both institutions had a key interest in seeing the 2005 Argentine Sovereign Debt Bond Mega-Swap implemented since that served to mitigate their own accountability in Argentina’s financial meltdown of 2001 i 2002. The IMF is a specifically accountable party considering that, to a great extent, it was IMF-designed and backed economic and monetary policies during the nineties that led to the 2001 fiasco.
You state that “The SEC oversees the key participants in the securities world, including securities exchanges, securities brokers and dealers, investment advisors, and mutual funds. Here the SEC is concerned primarily with promoting the disclosure of important market-related information, maintaining fair dealing, and protecting against fraud. Crucial to the SEC’s effectiveness in each of these areas is its enforcement authority. Each year the SEC brings hundreds of civil enforcement actions against individuals and companies for violation of the securities laws. Typical infractions include insider trading, accounting fraud, and providing false or misleading information about securities and the companies that issue them.8221; Argentina’s Sovereign Debt Bond issues of June 2005 are a ticking time bomb that will predictably turn into a massive Public Debt crisis, in the medium term. These Debt Bonds are unsustainable. Their foreseeable default will drag millions of investors into tens of billions of dollars of loss, simply because at some point either the present or some future Argentine Government will have no choice but to default on them. The SEC is surely aware of the fact that Argentina has a sad history of recent defaults that have caused gigantic economic and financial loss upon millions of private and institutional investors, both in Argentina as well as abroad.
“One of the major sources of information on which the SEC relies to bring enforcement action is investors themselves – another reason that educated and careful investors are so critical to the functioning of efficient markets.8221; “Though it is the primary overseer and regulator of the U.S. securities markets, the SEC works closely with many other institutions, including Congress, other federal departments and agencies, the self-regulatory organizations (g. the stock exchanges), state securities regulators, and various private sector organizations.8221; We would once again stress the importance of the information described in our letter 30th October, as we cannot understand why if the SEC have in their possession concrete information pointing towards potential fraud and misleading information having been supplied to you by a trading party (ja., the Argentine Ministry of Economics in June 2005), the SEC would then not take any measures to protect investors’ interests.
Whilst we will be sharing this information extensively with other financial and political authorities in the United States and elsewhere, as well as the specialized media, we thought that we would again contact you in order to attempt to impress upon you the importance of this matter and, Ponownie, seek your formal assistance in this respect.
We look forward to hearing from you as urgently as possible with deep interest, and would like to thank you in advance for your cooperation and assistance.
Adrian Salbuchi Alfredo De Bartolo
konsultant International, Writer & Researcher Argentine Businessman; US Citizen
(Buenos Aires) Resident in New York since 1975
—– Original Message —–
z: Steele, Shauna
Sent: Monday, Lutego 04, 2008 11:50 na
Subject: Response to letter to the US SEC regarding the Argentine Sovereign Debt Bond Mega-Swap Operation
Dear Messrs. Salbuchi and De Bartolo,
I am writing in response to your letter to Chairman Christopher Cox of the US Securities and Exchange Commission (SEC) regarding the Argentine Sovereign Debt Bond Mega-Swap Operation. This is to inform you that your letter may be misdirected. The SEC is charged with overseeing the US securities markets and protecting US investors. In that capacity, the SEC strives to ensure that there is proper disclosure regarding the securities sold in the US public markets, including sovereign bonds like those of Argentina. jednak, the SEC does not pass judgment on the merits of any public debt or other securities offering, and has no role in or authority over the decision to issue sovereign debt or to alter its terms. You may find that it is more fruitful to discuss these issues with the International Monetary Fund, Bank Światowy, or the Argentine Government.
Branch Chief, Regulatory Policy
Office of International Affairs
US Securities and Exchange Commission
100 F Street NE
Washington DC 20549-1004
Tel: 202 551-6680
Fax: 202 772-9280
Buenos Aires, 2nd January 2008
Panie. Christopher Cox,
Papierów wartościowych & Exchange Commission (SEC),
100, F Street,
Washington DC – USA
Ref: Argentine Sovereign Debt Bond Mega-Swap Operation Approved by the SEC in 2005
W czerwcu 2005, the Administration of Argentine president Néstor Kirchner implemented the largest Sovereign Debt Bond Mega-Swap Operation in our country’s history, in a structurally flawed attempt to resolve Argentina’s default as a consequence of the monetary and financial meltdown that took place in November and December 2001.
Extensive negotiations in major global financial and bonds markets, coupled with complex financial engineering were done throughout 2004 and the first half of 2005 by a team led by former economy minister Roberto Lavagna, with the ensuing Mega-Swap proposal being accepted and approved, amongst others by the SEC, that was also – albeit grudgingly – accepted by the majority of defaulted bond holders.
W tym czasie, the Undersigned together with other Argentine citizens strongly warned the SEC and other key players in international markets about the inherent perils implicit in that Debt Bond Mega-Swap, basically due to its potential inconsistencies and probable unsustainability in the medium- and long-terms. As Argentina’s economy grows at a fast pace – averaging almost 10% per annum over the past three years – the GDP-linked performance of the main new bond issues is becoming increasingly unsustainable. This will in all likelihood lead to new Sovereign Debt Defaults in years to come, with the prospect of yet another and even more devastating Debt Bond collapse looming on the horizon.
Accordingly and in defense of the interests of the Argentine People; of international and US investors; and of the international financial system, the Undersigned again very strongly recommend that a new approach towards resolving Argentina’s cronic structural public debt problem be designed and implemented. To that effect we request your support for the following measures and proposals:
Argentina’s Responsability – In recent years, one of the key issues on this matter has been the fact that accountability for continued payment has been placed almost exclusively on the Argentine State, which is considered as being solely responsible for resolving and paying all Sovereign Debt outlays to global investors. This has systematically led to a quarter century of refinancings, roll-overs, “Brady” Obligacji, and Bond Mega-Swaps, that have all generated increasingly severe economic and social hardship for the Argentine people, who has thus been forced to bear the brunt of these recurrent crises which, although they explode inside Argentina, they are in fact the result of actions and decisions taken in our country and in major international financial centers.
inwestorów zagranicznych’ Woes – At the other end of this very complex process, small and medium-sized investors in the United States, the European Union and the Far East have seen their savings dramatically diminish or evaporate alltogether, each time the Argentine Debt Bonds they invested in either become non-performing or their market values drop drastically.
Shared Accountability – There is, jednak, a third key player at the very center of this complex drama, which is the international financial community itself. szczególnie, the major global trading banks, their interwoven investment funds and risk rating societies, and multilateral agencies like the IMF – Międzynarodowy Fundusz Walutowy – which was supposed to oversee the entire process in a supervisory and audit role. These fundamental players have yet to be brought to the negotiating table and made financially accountable for their suspiciously recurrent and systematic “mistakes and lack of foresight”. Especially in the case of the major lending banks, we can define their behaviours as potential cases of Professional Malpractice, Errors & Omissions, lack of Corporate Transparency & Governance, and improper Disclosure of fundamental data and information to millions of small- and medium-sized client investors the world over, who unwittingly placed their trust in these reknown financial institutions.
Sovereign Debt Engineering – From time to time, this has even been noted in the major media – g., in an extensive Washington Post article written by Paul Blustein in 2003 (later extended into a full-length book “And the Money kept Rolling In (and Out): Wall Street, the IMF and the Bankrupting of Argentina”, Public Affairs/Perseus Books, Nowy Jork, 2005) – and elsewhere. jednak, all major participating Banks have consistently looked the other way when called upon to assume their share of responsibility for their implicit wrong-doing, and unprofessional practices and behaviour when engineering Argentina’s Sovereign Debt for years on end. W związku z tym, they are strongly backed by an array of directly or indirectly controlled organizations: rating societies, specialized media linked to the financial community, and the IMF itself. There can be no doubt that, structurally, they all have a common interest – often even sharing the same board members – in ensuring that debt fiascos such as Argentina’s are kicked back in the face of debtor States so they can be conveniently “refinanced forward” and snow-balled into ever growing – and unpayable – sums.
Corporate Governance in the US – w 2004, then New York State Attorney General Mr Elliot Spitzer energically went after major players in the US insurance and reinsurance broking industry that were allegedly not abiding by full Transparency & Disclosure norms when doing business and receiving remuneration. niewątpliwie, Mr Spitzer’s initiative was largely politically motivated by the Democratic Party – Panie. Spitzer has since moved on to become Governor of the State of New York – jednak, it did show that on matters referring to Corporate Governance, when there is a will there is a way. w 2005 i 2006, major US insurance & reinsurance brokers and companies paid out literally hundreds of millions of dollars in penalties and fines to the Govrnment and, Dodatkowo, even more hundreds of millions of dollars were reimbursed to clients themselves around the world who were allegedly over-charged by those brokers for their services.
banków’ Accountability – If this could be achieved – albeit through the use of political clout and party leverage – to help begin to clean up the domestic insurance industry in the US, how much more could be done to help clean up the Banking & Bond Trading market in the US and globally, if a Spitzer-style investigation (Panie. Spitzer took his fight against major insurance brokers as a veritable Crusade) were to be launched now on major US and foreign banks operating in the US, and their closely aligned rating societies. This would automatically spill over to the necessary deep scrutiny regarding the leading role played by multilateral agencies as the IMF.
May we point out that the major banks involved in Argentina’s debt catastrophe are the very same banks that have been repeatedly fined by the US, European and Japanese authorities over the past decade for such professional malpractices as exerting insufficient controls over money laundering operations; providing incorrect, insufficient or misleading information to potential investor clients; and of having been privy to increasing the negative impact of such criminal bankruptcies as Enron, WorldCom, Global Crossing, Arthur Andersen and others.
We particularly stress the shared responsbilitiy of major banks involved in artificially orchestrating Argentina’s sovereign debt over the past thirty years, because we know that they, z kolei, have the additional resources available to pay their share in Argentina’s on-going Sovereign Debt problem by filing claims on their own insurance/reinsurance programs that cover such key risks as: (a) Professional Malpractice Liability, (B) Errors & Omissions Liability, i (c) Directors’ & Oficerowie’ Liabilities. These insurance coverages are normally placed with top-rated insurers and reinsurers in international markets.
Growing Concern and Awareness amongst the Argentine Public – The contents of this letter voice the views of a sizeable part of Argentine public opinion, which is concerned over the – still unresolved – situation of our Public Debt sector which, in the medium- or long- terms, will no doubt trigger new bouts of Public Debt Crises, defaults, and financial & banking meltdowns like the ones we lived through during the eighties and nineties which at the end of 2001 culminated in the worst crisis in Argentina’s modern history. We seek your support and assistance to address all these issues in a professional manner because there is still time to mitigate, if not neutralize, a sizeable part of these impending systemic crises which will not only bring renewed hardship to the Argentine people, but will would also lead to huge financial losses for small and medium-sized investors abroad, and growing international distrust towards those entities running and supervising the US and international financial system, at a time when there are growing signs of instability.
“Dług Odious”: the Illegal Origins of the Bulk of Argentina’s Sovereign Debt – May we also stress that the bulk of Argentina’s Sovereign Debt can be construed to be potentially illegal in accordance with the legislation of various jurisdictions, including that of the United States, because it can be clearly and directly traced back to illegitimate, fraudulent and illegal measures taken by the Military and Civilian Règime which usurped power over the Argentine State from 24th March 1976 to 10th December 1983, forcibly removing the constitutional government then in power, in full and flagrant breach of the Constitution of the Argentine Republic.
During that period, the international financial community knew about the illegitimacy of that Règime and were thus at all times fully aware that the loans they made could later be construed and classifed as “Odious Długów” under US, UK and European law and, most definitely, under Argentine Law once democracy was again reinstated in our land (which occurred in 1983).
The private banks loaned tens of billions of dollars to that repressive and genocidal Règime which systematically perpetrated the worst Human Rights violations against our Citizens and was responsible for the persecution, injury and death of tens of thousands of Argentine and foreign citizens then living on our soil. The fact that the international banking communitity helped finance such criminal acts no doubt warrants further accountability on the part of its bank members.
The Military-Civilian Règime never even properly registered huge tranches of those loans in official government registries in the Central Bank, the Economy Ministry and various State companies and agencies. Much less could they show that those loans were in anyway applied to benefit the Public Well-being and Common Good of the Argentine population. Quite the contrary.
This clearly points to strong bases substantiating a case for declaring that original so-called debt and its subsequent re-financing, roll-overs and bond swaps as “Dług Odious”. The Règime`s debt-generating strategies allied with the international banking community are described in a law-suit filed in 1982 by Argentine Citizen Alejandro Olmos (regretably deceased in April 2000) which lists at least 477 criminal acts perpetrated by the authorities then occupying the Economy Ministry, the Argentine Central Bank and other entities, in connivance with various local players in the private sector (prawników, accountants, international bank branches, corporations and others).
Many of these loans breached basic contractual norms and international jurisprudence by, na przykład, unilaterally increasing interest rates (by the Creditor banks) without securing proper agreement from the Debtor (Argentyńska państwa), as former Argentine Ambassador Miguel Angel Espeche Gil has clearly demonstrated.
The Need to Investigate – Successive democratic governments in Argentina starting in December 1983 do tej pory, seem to have been successfully coerced, pressed – even forced – NOT to investigate the illegal origins of this alleged sovereign debt. Irresistable pressure and leverage from such key players as the US Treasury Department, the International Monetary Fund and other institutions were brought to bear in order to ensure that local governments – from Alfonsin to Kirchner – would systematically implement policies that run against the National Interest of the Argentine Republic by not investigating the illegal origin of that Debt. Krótko mówiąc, the bulk of Argentina’s Public Debt can de construed to be:
nielegalnych, because it was negotiated by a Military and Civilian Regime that usurped power by force, breaching Argentina’s Constitution;
Fraudulent, because there is no clear, solid and consistent proof as to where those funds actually went and what they were used for, i
Immoral, because it was to a great extent based on Usury, because interest levels were increased abruptly, unilaterally and excessively, and included capitalization of interests (anatocism) which is illegal not only under Argentine Law, but also under the laws of major industrialized countries, aside from the fact that Usury had been systematically condemned as immoral by key human rights organizations and most religious institutions, notably the Catholic Church.
Submission to US Courts – In the Manhattan Federal District Court (500 Pearle Street), Argentina was accused by so-called Hedge Funds of having defaulted on its Sovereign Debt. The Honorable Judge Thomas Griessa threw this claim out, thus giving Nestor Kirchner’s Administration the green light to go ahead with the above-mentoned 2005 Sovereign Debt Bond Mega-Swap. On 14th November 2004, a group of Argentine Citizens delivered Judge Griesa’s Court full documentation supporting what is summarize herein. ja., a file containing full details of Law Suit 14467 filed by Alejandro Olmos in 1982 mentioned above, a CD containing details of a watershed sentence given by Argentine Federal Judge Jorge Ballesteros in July 2000 confirming that criminal acts were in fact perpetrated by government officers during the Military-Civilian Règime even though by then they had become time-barred, and lastly recommending that Argentina’s Congress fully investigate the legitimacy of the alleged Sovereign Debt (as is required by Constitutional Mandate). This was submitted in order to assist Judge Griessa’s court to have a better idea on this very complex matter. Although no reply has so far been received, nor any actions were apparently taken, we consider that these are but a handful of the key elements that need to be properly addressed by US Courts and the SEC, między innymi.
Human Rights Violations – w końcu, we would stress that the perverse, aggregated and mounting effects of Argentina’s continuous and unresolved Sovereign Debt continues to have a negative and destructive impact on Argentine society as a whole. This has in the past caused, today continues to cause, and in the future will continue causing untold hardship, poverty, illness and death for thousands of anonymous Argentine citizens. May we strongly stress that all democratic countries have a basic duty to preserve the Human Rights of all peoples, irrespective of sectorial interests and political objectives of major banking, finansowy, economic and political power structures. Hence, the urgent need to address and invesigate this matter from a financial point of view within the scope proposed herein.
We would be most grateful if we could have the opportunity of maintaining a meeting with a senior SEC officer in order to discuss and describe these and other relevant matters in greater depth.
Adrian Salbuchi Alfredo De Bartolo
konsultant International, Writer & Researcher Argentine Businessman; US Citizen
(Buenos Aires) Resident in New York since 1975