Argentina Evacuates Ship, Blasts Elliott

Oct 22 2012 | 12:29pm ET

An Argentina naval vessel impounded at a hedge fund's behest still can't leave Ghana, but most of its crew can.

Most of the 326 people aboard the Argentine navy's flagship, the ARA Libertad, are to leave the ship and the West African country, where they have been stuck since the beginning of the month. Argentina has chartered an Air France flight to bring some 281 crew members, primarily navy cadets, back to Argentina, choosing the French carrier reportedly because it feared its own planes could be seized themselves upon arrival in Ghana.

The Libertad will remain in the hands of a skeleton crew and its captain and Argentina seeks to win its release while refusing to give in to Elliott Management, which won the seizure through an affiliate.

Elliott and NML Capital have been fighting Argentina for years over that country's 2001 sovereign debt default. The hedge funds are demanding to be paid full value for their bonds; Argentina dismisses them as "vulture funds."

The evacuation was necessitated by the court order that keeps the Libertad in Tema—it bars the ship from refueling, which imperils everything from cooking to fire protection, Argentina said.

Argentina's foreign minister on Friday said it would not open talks with Elliott, whose Ghanian lawyer has said the Libertad could be freed if the country pays a $20 million bond. Instead, Argentina has said it will exhaust all of its international legal options.

"Argentina is keeping all of its options open in the area of international law," Hector Timerman told his countrymen in a televised address. "If necessary it will go to the United Nations. Negotiating with vulture funds isn't nor will it be one of those options."

Timerman himself is in New York today to meet with the head of the UN Security Council, while other Argentine officials are in Ghana seeking the ship's release. But another Argentine official, Cabinet chief Juan Abal Medina, echoed Timerman's hard line, saying that "vulture funds will never see Argentina kneeled down before their decisions."

It has, however, seen some fallout in Argentina: Two top military officials, including the navy's head, Admiral Carlos Alberto Paz, have resigned. The other was María Lourdes Puente Olivera, Argentina's military intelligence director. Argentina has also suspended the two officials responsible for allowing the Libertad to remain overnight in Ghana.

While Elliott gets to keep the Libertad in Ghana, it has failed to get its hands on some of the country's money in Switzerland. Elliott had asked Switzerland's Federal Council to allow it to embargo Argentina's assets deposited in the Bank for International Settlements. The Swiss demurred, saying they have no authority over the central bank for the world's central banks.

Argentina has most of its US$60 billion in foreign reserves stored at the BIS to prevent their seizure.

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