The seizure of the ARA Libertad (built circa 1950) off Ghana follows an ongoing dispute between Elliot Capital Management offshoot NML Capital (NML) and Buenos Aires over a debt debacle that erupted more than ten years ago.
While the tall ship is believed to be worth more than $10m even the highest estimates represent a mere fraction of the $1.6bn in claims awarded to NML by courts in the US and UK after Argentina defaulted on billions in bonds that were later restructured.
According to the Financial Times most bondholders agreed to forgive the debt for roughly $0.30 on the dollar but Singer’s firm and several others opted out and instead filed lawsuits in hopes the South American nation would be forced to settle the tabs in full, plus interest.
Observers say the arrest will likely be lifted if Buenos Aires posts a bond with a Ghanaian court but did not rule out the possibility of diplomatic efforts bearing fruit despite the fiery public retort doled out by Argentina’s foreign ministry in reaction to the seizure.
In a Spanish language statement the ministry accused what they described as “vulture funds” controlled by “unscrupulous financiers” of crossing a “new limit in their attacks on the Argentine Republic” by violating the Vienna Convention on diplomatic immunity.
“The ministry reiterates that it is the decision of President Cristina Fernandez de Kirchner to not bow before the international and local attempts at extortion that have been brought forth by the vulture funds and will continue to denounce them in various forums,” it continued.
The agency noted NML is based in the Cayman Islands, a British colony they called a “fiscal lair” where “those who don’t submit themselves to the laws of any jurisdiction operate”, a point that will likely resonate with those familiar with the feud over the Falkland Islands.
It also blasted Singer for ties to American Tax Force Argentina, which it accused of “using extortion to obtain usurious profits from buying Argentine bonds for pennies during the 2001 crisis and refusing to join the 93% of the investors that agreed to the debt restructuring”.
The group countered with a statement in which it said “Argentina’s status as an international scofflaw has been well-documented” and went on to accuse the country of refusing to honour more than 100 judgments against it “despite having the means to pay with more than $45bn in reserves”.
Singer and his fund made TradeWinds headlines late last month after trading blows with Wall Street heavyweight Wilbur Ross over the purchase of Navigator Holdings shares previously held by bankrupt banking giant Lehman Brothers.
