INSIGHT-Argentina's comments put US lawyers in awkward spot
By Alison Frankel
NEW YORK, June 19 (Reuters) - At a hearing Wednesday afternoon in Manhattan, Argentina's lawyer, Carmine Boccuzzi of Cleary Gottlieb Steen & Hamilton, informed U.S. District Judge Thomas Griesa that Argentine officials "will be in New York next week" in order to begin negotiations with the hedge funds whose bond litigation has forced the country to the brink of a sovereign debt crisis.
The very next morning, at a press briefing, Argentine Cabinet Chief Jorge Capitanich appeared to contradict Cleary's representations to Griesa: "There is no delegation prepared for a possible trip to the United States," he said, according to a Reuters report from Buenos Aires.
Capitanich is the third Argentine official this week whose public comments seem to be at odds with positions the country's lawyers have taken in U.S. courts. Earlier this month, Cleary partner Boccuzzi assured Judge Griesa that Argentina was not making contingency plans to restructure its debt in the event that the U.S. Supreme Court upheld Griesa's orders requiring the country to pay hedge fund holdouts about $1.5 billion at the same time that it makes coupon payments to exchange bondholders that participated in previous restructurings. Argentina also said in a brief to the Supreme Court that it would comply with U.S. court orders.
Yet hours after the Supreme Court declined on Monday to hear Argentina's appeal, Argentine President Cristina Fernandez de Kirchner delivered a speech vowing not to "submit to extortion" by the hedge funds. The following day, Economy Minister Axel Kicillof announced that Argentina is developing a process to pay exchange bondholders without paying the holdouts.
Argentina's lawyers have been careful to couch what they've said in court. At Wednesday's hearing, for example, Boccuzzi said he "had been informed" and that "Argentine authorities have told me" that officials planned to come to New York to negotiate. Boccuzzi also tried to persuade Judge Griesa that Argentine politicians are making political speeches, not legal representations. "Obviously, there is some strong language because (they are) dealing with quite a large problem and situation and trying to deal with it in a way that takes into account all the aspects here," he said.
It's true that Argentine officials have a different audience than their lawyers. It's also true that Argentina's debt crisis can't be definitively resolved in U.S. courts. Griesa's injunctions, which officially took effect Wednesday, bar Argentina from making a scheduled $900 million payment on June 30 to exchange bondholders through the U.S. banks specified in the contracts without also paying the hedge fund holdouts. Continuación...