Other sources have now appeared for the flight of capitals. Economists at the Fundaci�n de Investigaciones para el Desarrollo Econ�mico (FIDE) have established that foreign companies have extracted 12 billion dollars on the sly through the following tricks (they also are not mentioned in the ruling): * Each time a sum of dollars is invested in Argentina, it appears on the books as a "loan from Head Quarters" to the Argentinian branch, with the interests of the case. They thus conceal as "payment of interests" a good fraction of capital flight. Those interests appear, at the same time, as "expenditures", so that they keep for themselves the income tax. * When the Argentinian branch purchases commodities from the Home Office, these are sold at outrageous prices (in some cases, products whose international price is of $40 a kilogram were paid at --$ 1,850 a kilogram!!!!!!); this trick brings about the same consequence: dollars are extracted and taxes are evaded. * The Argentinian branch appears as if it were paying �royalties� to its own Home Office for brands and technologies used here. Summing up: dollars came here and left here through the most diverse channels, for the exclusive benefit of a few "friends" (at home and abroad}. This is the way our foreign debt was nurtured, leaving nothing to us. 1.3.- The banking procedures that built up the debt The sentence by Judge Ballestero mentions many instances of irregular (in fact, almost always criminal) manoeuvering. These manoeuvers were performed by people in charge of the Central Bank and the Ministry of Economy, with the end of acquiring a debt with no control whatsoever and hidden from the public. In the indorsements scandal authorities of the Banco de la Naci�n and the former National Bank for Development are also involved. A brief summary of these tricks includes some such as: 1.-� Many loans were approved by the Central Bank through _secret_ (!) acts. These are eleven in total. When the Judge asked for these acts to be presented, the authorities of the Bank refused to comply, and they are still refusing. 2.- �The Central Bank keeps no accounting record of foreign debt, and manages data only to statistic ends�, declared before the Judge the then President of the Bank, Dr. Adolfo Diz. With due respect, then, they were just keeping a grocer's notebook where each loan was written down... 3.- The Ministry of Economy didn't even record the debt for statistical ends. 4.- When same Dr. Diz was interrogated by the Judge where were some loans -which were undocumented at all, and didn't even have even a "statistical" record- registered, he answered -seriously although it sounds as a practical joke- that there existed "a black notebook�. 5.- The experts complained that the Central Bank as well as the Ministry of Economy, the Banco de la Naci�n and the former BANADE withheld information and obstaculized their research. These obstacles are still working. 6.- The President of the Central Bank Dr. Adolfo Diz granted many credits without due acceptancy from the Directory, and although the Organic Charter of the Bank imposes the obligation on the President to report to the Council afterwards in such cases, he never did. 7.- The Vice-President Christian Zimmermann acted in the same way, with the added burden that he didn't even report to the President Rodolfo Diz.. 8.- To the above described manoeuvers, it should be added that when Dr. Domingo Cavallo chaired the Central Bank (1981) he turned public the debt of private firms, and granted them a generous "exchange insurance". These measures blew up the public debt in 13 billion dollars. 9.- Neither the Directory of the Central Bank, nor the Ministry of Economy, performed a research on international economic and financial conditions, which would have certainly given the final result that it was not advisable to contract debt (particularly after 1979, which is precisely when more debt was contracted). 10.- The authorities at both official institutions paid a deaf ear to reports and criticisms generated by their own technical offices (Economic Statistic and Research Division, Foreign Sector Division). They displayed a "careless, unskilful and indifferent" behaviour at the dangerous increase in the debt. 11.- Increase in private and public foreign debt between 1976 and 1982 was "excessive, harmful and with absolutely no justification from the point of view of either economics, finance or administration" 12.- The debt was contracted under a military regime, without Parliamentary control as requested by the National Constitution. 13.- The negotiations with the IMF, which conditioned the debt, were never made public by the regime. 14.- By January 22, 198r, private companies had obtained foreign credit -with approval of the Central Bank- for 23 billion dollars: 26 out of the 70 largest debtors were banks and financial companies, that is companies that borrowed money in order to lend it back in Argentina (in pesos and at much higher interest rates: these funds were basically sent to the "financial bicycle"). 15.- Private agents (such as Narciso Ocampo and Juan Peralta Ramos [two of the most paradigmatic oligarchic families in Argentina, translator's comment]) carried out negotiations for credits in the name of the Central Bank. The reasons for this irregular procedure, and the eventual commissions paid to them for their "work" are still unknown. 16.- The Central Bank paid higher expenses, commissions and fees than usual, with no explanation. 17.- Contracts for foreign loans agreed upon and signed in Buenos Aires were made in English. 18.-The Swiss Bank Union exerted influence, in exchange for some loans, in order to have the Argentinian state purchase the "Italo Argentina Light and Power Company", owned by the very Minister of Economy Dr. Mart�nez de Hoz, in partnership with the said bank. The ruling does not mention the additional burden that the company was bought at a price sevenfold the real one (it had been appraised in 49 million dollars by the constitutional government in 1975, and in 1976, with Mart�nez de Hoz already Minister, the state purchased it in 340 million). [Addenda by the translator: the Alemann brothers (Juan and Roberto), also members of the economic teams of Mart�nez de Hoz and the military regime, and influent economists even since and also before (Mart�nez de Hoz, by the way, made his first public office experience after the gloomy and bloody 1955 "Revoluci�n Libertadora"), are also in direct vinculation with the Swiss Bank Union] 19.- The Central Bank exempted the National Development Bank (BANADE) and the City Bank of Buenos Aires (Banco Municipal) from the obligation to request full legal presentations in exchange for indorsements awarded to companies that later on failed to honor them, thus overloading the State with an additional burden. 1.4.- The swindling indorsements Whoever (person or firm) wants to obtain the indorsement of a bank to use it as a guarantee for a loan with another bank must comply with very stringent technical regulations: solvency must be proved, a patrimony must be shown, superavits in the balances are requested, utilities that can pay for the loan, rentability of the project for which the loan is to be contracted, etc. An additional guarantee is usually requested (a mortgage, generally) by the bank that gives the loan. But during the age under investigation (1976 to 1983) the Banco de la Naci�n, the Banco Ciudad de Buenos Aires, and the National Development Bank (BANADE) granted 240 indorsements, with direct and express approval from the Ministery of Economy and the Central Bank, without any of these requirements. Many of these were not honored by the receivers of the indorsement, and the State had to pay in their stead. The Ministery of Economy, furthermore, did not prosecute the swindlers in order to recover the money that Argentina had had to pay for their financial miscarriage (no juridic action has been engaged against them in all these years). The state didn't resort to the so called "right to excusion", according to which the indorser can request from the judge that the goods of the debtor be auctioned first and, if they are not enough to pay for the debt, only then the indorser is summoned to answer for it. If the names of the swindling companies are taken into account, the situation of the Mart�nez de Hoz team becomes still more serious. They are not humble, small or medium sized firms. We are speaking, without a single exception, of companies of the largest size: Acindar S.A. (personal property of the Martinez de Hoz family, chaired by Gral. L�pez Aufranc, a member of the previous military dictatorship of 1966-1973, Acindar contracted loans in order to buy its competitors Tamet and Hierromat out of the Argentinian steel market), Autopistas Urbanas S.A.- AUSA (a crooked agreement between Spanish capitals and the military in charge of the City of Buenos Aires that commited another swindle by building a horrible and roguish freeway across Buenos Aires), Covimet S.A. (another freeway building scheme), Parques Interama S.A. (a soon bankrupted, American capitalists-owned, thematic park in a ridiculous location), Aluar S.A. (monopoly of Argentinian aluminium), Papel Prensa S.A. (jointly owned by the newspapers _Clar�n_ and _La Naci�n_, this company monopolized production of paper for newspapers in Argentina),� Induclor S.A. (chemical industry with tax exemptions), etc. Indorsements were awarded for a sum total of 6.5 billion dollars. The defaulted ones summed up 1.405 billion. 1.5 billion of the sum total of 6.5 were awarded to a single group: Celulosa Alto Paran�, Celulosa Puerto Piray y Papel del Tucum�n. 1.5.- The main culprits Eight people are mentioned by the sentence as the main culprits of this swindle (there is no other way to call this) against Argentina. Firstly and foremost. Dr. Jos� Alfredo Mart�nez de Hoz. He is immediately followed by the other three Ministers of Economy of the Military Process, Drs. Lorenzo Sigaut, Roberto T. Alemann and Jorge Wehbe. [Dr. Alemann had already demonstrated his abilities during a short term in power under the wing of hydrophobic right-wing military in the early 60s, when he concocted what he called a "preventive devaluation" in order to have himself and friends collect an enormous amount of dollars through, er, "regulated speculation" should we call it? Dr. Wehbe had been the last Minister of the previous military regime, an expert in cover-ups evidently, note by the translator] Judge Ballestero points out that the same degree of responsibility, is shared by the consecutive four Presidents of the Central Bank of same period, Drs. Adolfo Diz,� Egidio Iannella, Domingo Felipe Cavallo and Julio Gonz�lez del Solar. A special comment is made on the behaviour of our current (august 2000) Minister of Economy, Dr. Jos� Luis Machinea, who acted as Manager of Public Finance in the Central Bank during the whole military regime. He is found guilty of �non compliance of his duties as public official�. Reports by the experts are still harder against Machinea. Dr. Sabatino Fiorino of the College of Law in Buenos Aires agrees with other experts in declaring that: * "there was connivence (of public officials) and the presumed creditors in the tramitation of the public debt... *�t is my personal conviction that Dr. Machinea has been an outstanding element in these events. Without his active participation, or his passivity, according to the situation, the contracts would have been impossible to sign" * "Machinea was in charge of technically justifying the indebtedness of YPF" * "The fault incurred by Machinea when he did not disclose the arbitrary relationship between creditor and debtor is impossible to overlook" * "This places on Machinea the ensuing burden of responsibility, and makes it necessary that he is not allowed to take part, in the name of our country, in any negotiation whatsoever implying any form of acceptancy of the legitimacy of our debt" Other individuals signaled as particularly important culprits are: Cristian Zimmermann (ex Vice-President of the Central Bank), Enrique Folcini and Francisco Soldati (former Directors of the Central Bank), and Guillermo Walter Klein (Vice-Minister of Economy of Mart�nez de Hoz). Dr. Klein, it should be noted to point out the independence of the Judge and the experts, is the son of the economist of same name who proposed the expert Dr. Tandurella. He also is, or was, partner of the son of the lawyer, reactionary journalist and grey eminence of many gorilla regimes Mariano Grondona in the legal firm �Estudio Jur�dico Klein-Mayral�. The premises of this firm were legally searched by order of the C�mara de Diputados (House of Representatives) of the Nation in 1984, because there was evidence that this firm kept record of documentation that would prove the connivence with foreign banks. A judge ruled later that the documents had to be returned to Klein, and the investigation of the House of Representatives reached nowhere. The ruling also makes every high officer in the MInistery of Economy and the Central Bank of those times responsible. 1.6.- Additional burdens Dr. Ballestero comments in his ruling that the gravest circumstances are still more compromising for the executors of this national disaster: First The regime, through the Ministery of Economy and the Central Bank, requested or forced others to request loans that we did not need at all. The dollars thus obtained were deposited by the Central Bank in foreign banks, which paid an interest notoriously below the one we had to pay ourselves for the same dollars. Thus, only during the five months that go from july to november 1976, the Central Bank obtained credits for 22 million dollars, at a rate of 8,75%. These dollars were immediately deposited in the Chase Manhatann Bank of New York, at a rate of 5,60%. These dollars of ours, at so low an interest rate, were afterwards used by the Government of the United States of America to finance at a very low cost its own fiscal deficit. We shall later on see that this very Anglo-American government, all the foreign banks that are our creditors, the IMF and the World Bank were the ones who "advised" us (actually they forced us) to get indebted between 1976 and 1983, against our convenience and necessities. The case appeared not once, but many times, that a credit was received from, say, a bank "A" only to be reinvested _in the same bank_ which thus obtained an impudent profit from the differences in interest rates. All this wrecking management of credts and deposits attains the most shadowy hues when we remember that Dr. Mart�nez de Hoz was, at the same time, Minister of Economy and a member of the International Advisory Council of the Chase Manhatann Bank of Nueva York. Second Every civilized country in the world where the state signs up a contract with a private foreign firm establishes -particularly when the contract is signed in the very territory of that state- that it is the local judiciary that must take intervention in case of a difference or doubt on the terms of the agreement. This was expressly established in our law. The military regime was yet in the bud, and Dr. Mart�nez de Hoz obtained a reform to this regulation. The government was thus allowed to sign contracts with private foreign groups while allowing the latter to decide which judge would be to decide in case of litigation. In the language of law, this is known as "jurisdiction extension". Private individuals do quite usually resign their right to be judged by the courts that are mandatory by law, but very few cases are known in world history where a state makes this decission. And these cases are always of countries that have been defeated in a war. A state cannot lift the ban on judgement by courts of a different state, because this is part of its sovereign power, thus of national sovereignty of which the state is only a depositary. Of course, each creditor bank chose the courts of its own home country. Thus, any claim we might want to do for our foreign debt must be taken to judges in New York, or in London, or in Tokyo, Frankfurt, and so on. This may be one of the greatest harms inferred to Argentina by the process of the foreign debt, not only because of the loss of sovereignty implied, but also due to the economic consequences that we shall analyze further ahead. Third We have already stated that the Ministery of Economy forced public utilities to get indebted in dollars. Many of these companies lacked any property in foreign country. Others had it. It was in the interest of the foreign banks, in order to have us further subject to their will, that all of the state companies indorsed each other for the credits contracted by any of them (this is known as "indorsement crossing"). And the Minister of Economy of the military regime gladly accepted this arrangement. All the state owned firms thus became indorsers of each other. Aerol�neas Argentinas, whose planes flew to many places the world over, thus became an indorser for, say, OSN or SEGBA (sewage works, power utilities), whose property was exclusively in Argentinian territory. If the debtor (OSN or SEGBA) defaulted payments for a loan, the creditor bank could seize the planes of Aerol�neas at whichever airport in the world where these planes landed. None less. All the above explains why Judge Jorge Ballestero, in the concluding words of his sentence, establishes in harsh damnatory wording that "since 1976 our country has been put under the rule of foreign creditors..., under the supervision of the IMF and the World Bank... by means of a vulgar and aggraviating economic policy that forced Argentina to kneel down... in order to benefit national and foreign private firms, to the detriment of publicly owned firms". The judge, however, condemned nobody, because due to the passing of time (18 years) the action has prescribed. It is our point of view that this can be contested, and we shall try to go for an appeal. It is worth pointing out that from the interested sectors of our society we are permanently preached that the "foreign debt must be honored". But, if we consider things in an objective way, and we agree to the irrefutable amount of evidence that has been summed up in this process, this is not a "honorable" debt. And much less honorable were the creditors and the Argentinian officials who signed it. Why should WE be honorable then?. There is only one truth here: that while it is not shown otherwise, the only honorable ones in this national tragedy are the Argentinians on whose shoulders falls the burden of payment. 2.- Can we pay the foreign debt without provoking enormous harm on our economy and our people? Moral principles, as well as universally accepted Law, prevent a creditor from claiming redress of a credit if this redress implies great harm to the debtor. This rule is respected the world over, and William Shakespeare the greatest poet and playwright in English language (the language spoken by our most powerful and exacting creditors) wrote, 400 years ago, _The merchant of Venice_ a play on the coldness with which an insensitive and unhuman creditor claims for "a pound of flesh" of his debtor as a payment, when the debtor runs out of money to "honor his debt. �t is not an exaggeration at all to state that creditor banks are today cashing their credits with a pound (or many pounds) of flesh from our own people. 55 Argentinian children die each day out of malnutrition. It is unnecessary to expose the suffering of our retired grandparents, of the unemployed, of the underemployed, of those who go for eventual jobs so that their families do not die of hunger, etc. Those social cancers, we have shown this above, are the direct and ineluctable byproduct of the 11,7 billion dollars of interests we have to pay year after year for the foreign debt. This enormous bill of interests takes away, additionally, almost all the money we should put to productive investment, to development of our economy, and to the creation of new jobs. Students of Law, on the other hand, learn that when a debtor is weaker than the creditor, and the creditor demands the greatest sacrifices in order to have the contract honored, the debtor is free from honoring the contract. This case is known as "the gravest injury". We are suffering a clear situation of "the gravest injury". We are exempt from payment, both on the moral and the legal ground. The problem is that if we wanted to make this right good, we should go and state our claims at the Courts of New York, London, Frankfort, etc., thanks to the irresponsible "extension" accepted by the rulers of the Proceso. No Argentinian is fool enough to expect those Courts to rule that right is on our side, even though it actually is. Such is the seriousness of the "extension" obtained by Mart�nez de Hoz and his team. This is one of the most terrible things they did to us: they tied us, feet and hand, with a hard rope. 3.- Are we actually indebted, yet? Our debt began an abrupt and incresingly fast upwards movement immediately after the March 24th, 1976, coup d'etat. We shall see why. There was by those times an unwritten, but universally accepted, rule, on the amount of the interest rate: it could not be higher than one or two points above the inflation suffered by the currency of the loan. By those times, an Argentinian economist who headed the United Nations Economic Commission for Latin America and the Caribbean (ECLA), Dr. Ra�l Prebisch, publicly stated that "The country that accepts to pay interests of three per cent above inflation will go bankrupt". In 1979, when our debt had already risen to many billion dollars, the USA substantially raised the interest rates in dollars, as an attempt to curb inflation. Up to this moment, we were paying rates of between 6 and 8%. This one-sided decission of the Anglo-Americans took us to pay, during the 80s, rates of even 22% a year. When a debt suffers such an interest rate, it doubles by itself in less than four years. And this was what happened to us. Drs. Alfredo Eric Calcagno and Eric Calcagno have computed that, if we had been consistently paying an interest rate of about one or two points above the inflation in the USA, we would have finished paying our debt in 1988! The former President of Per�, Alan Garc�a, has at his turn calculated that this one-sided and unjustified raise in the rate of interest, Latin America, which in 1979 was indebted for 191 billion dollars, has been paying interests since that year for 1,165 billion! And in spite of that, in 1999 we are still indebted for 750 billion! These figures speak for themselves: We Argentinians have paid for our debt twice if not thrice, and we are still indepted for 200 billion dollars! The drama, however, is performed again: which Court, in New York, London, Tokyo or Frankfurt, will bend to our right? This question, then, begs the following one: 4.- Are our creditors innocent, or they share some guilt in this tragedy that affects us? Let us allow Judge Ballestero to speak again: * It is imposingly notorious that the international financial institutions displayed a permisivity that was equalled by the attitude of the foreign banks that are now demanding that the Argentinian Republic pay its credits" * The IMF is, currently, the main controlling institution for the behaviour of the international financial system." *Thus, the exact corresponsability and eventual guilt of the international financial institutions (particularly the IMF and the World Bank) must be established, as well as that of the creditors, because during the whole period under examination (1976 to 1982) many technical missions sent by the IMF visited our country and analyzed the performance of the Argentinian economy" *Additionally, technical missions from the World Bank came to our country with identical ends and to discuss the financial side of different projects" *What was the advice given by the IMF and the World Bank on the Argentinian economy and its degree of foreign indebtedness?" *The banks were very interested in those years to invest their funds in developing countries, and they were not interested either in the destination of the funds, nor in the ability of payment of the debtors." *The conclusion is extracted that the creditor banks, the IMF and the World bank acted with imprudence themselves, and that they awarded loans with an overruling urge to somehow place the funds generated by the apogee of oil industry." Dr. Ballestero states in his sentence, with the greatest accuracy, that the foreign banks were in 1976 eager to somehow or another place the gigantic amass of money that they were receiving from the oil producing countries. It was under these circumstances that they "convinced" Dr. Mart�nez de Hoz and his team (and the ruling military) that it was a great deal if you took money at 8.75% and then placed the some money at 5.60% at the very same bank that gave you the money... Then, when the USA -because of their own problems, which we had had nothing to do with- needed to raise the rate of interest in dollars, we were the ones to pay for the broken China. What remains is recent history. Now we shall have to act with decission and ability. It is not an easy issue, but it isn't unsolvable either. The first step we must take is to understand that this is not an economic problem, that this is a politic problem. Without enough national power, it is useless to expect a succesful outcome. There are solutions, but in order to get to them, we Argentinians must begin to find an organization that sticks us together again. N�stor Miguel Gorojovsky [EMAIL PROTECTED] _______________________________________________ Crashlist resources: http://website.lineone.net/~resource_base To change your options or unsubscribe go to: http://lists.wwpublish.com/mailman/listinfo/crashlist
