Argentina charged U.S. District Judge Thomas Griesa with “excessive judicial harassment” on Monday after he found the sovereign nation in contempt of court for its refusal to follow his orders in a years-long battle over defaulted debt and overseas hedge funds.
Griesa previously ruled that the country, which went into default in 2001, could not pay off the 93 percent of its bondholders who had agreed to to lessen the country’s debt burden, without first paying a group of U.S. “vulture fund” creditors that are seeking to profit from Argentina’s debts by demanding the full value of its defaulted bonds.
“This new attempt of judicial aggression against Argentina is an act of desperation on behalf of the vulture fund,” said Argentine Foreign Minister Héctor Timerman. “They know that the impunity of their actions at the international level has its days numbered.”
In a federal courthouse in Manhattan, Griesa said that Argentina “has been and is now taking steps in an attempt to evade critical parts of” the U.S. court order. “There’s a very concrete proposal that would clearly violate the injunction.”
Eric LeCompte, executive director of the religious financial reform organization Jubilee USA, said last Friday, “A contempt ruling probably won’t help resolve the situation. The case continues to highlight how ineffective U.S. courts are at resolving debt disputes.”
Griesa himself made a similar statement at a similar hearing in August, saying a contempt judgment “does not add to the scales of settlement.” But Monday’s finding comes after Argentina’s attempt to avoid paying back the predatory New York hedge funds where Griesa’s office is based.
Griesa also previously ruled that banks handling Argentina’s bond payments, such as the country’s trustee Bank of New York Mellon, could not pass its money along to other exchange bondholders without first paying the U.S. hedge funds. That decision led to Argentina’s second default in 13 years in July after Griesa blocked Bank of New York Mellon from processing a $539 million payment from the country.
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