Federal judge freezes US funds of Argentina’s central bank to pay off country’s creditors

Judge freezes US funds of Argentina central bank

NEW YORK — An American judge has frozen all property held in the U.S. by Argentina’s central bank, saying some or maybe all of that money rightfully belongs to corporations that are owed billions of dollars by that country’s government.

U.S. District Court Judge Thomas Griesa signed the order Monday in New York. The court made the order public Wednesday.

The amount of money involved still isn’t clear because lawyers in the case have yet to tally how much money the bank has deposited in the U.S., but the court has authorized the creditors to attach as much as $3.1 billion in Argentina’s assets.

Judge Griesa issued the order at the request of two investment firms, EM Ltd. and NML Capital Ltd., which were among the creditors owed billions of dollars from Argentina’s default on $95 billion in bonds in 2001.

EM and NML have been in court for years trying to recover some of that money. They have repeatedly accused Argentine officials of trying to dodge creditors by removing assets from the U.S.

The judge has previously authorized attachments of the central bank’s assets in the case. In late 2005, he garnished $105 million held by the institution, the Banco Central de la Republica Argentina, at the Federal Reserve Bank of New York. That money is still frozen.

Lawyers for Argentina plan to appeal the new attachment order.

In the past, they have argued that Argentina’s central bank is an independent institution, not a state organ, and as such cannot be raided by the country’s creditors.

Argentine Economy Minister Amado Boudou announced Tuesday that at least one government account at the central bank had been seized, but said the dollar amount was relatively small — between $1.7 million $15 million.

The attachment order comes amid a fight over whether the government of Argentina’s president, Cristina Fernandez, can tap central bank reserves to pay off national debt.