President Cristina Fernández this week decreed the takeover for a 60-day period of Compañía de Valores Sudamericana SA (CVS), the only company (or institution) able to print the Argentine peso. Officially, the decision was taken so that the state could regain sovereignty over the printing of money; the opposition, however, argues that the takeover is part of a strategy intended to remove Vice-President Amado Boudou and the head of the tax agency (Afip), Ricardo Echegaray, from the eye of a corruption storm relating to the 2011 purchase of the company (better known for its previous name, Ciccone Calcográfica), which had declared bankruptcy in December 2010.
The state’s weakness in relation to the printing of money of legal tender became particularly obvious after a consignment of paper money recently printed by Ciccone lacked standard security measures and was even made to the wrong size, failing to fit inside Automated Teller Machines (ATMs). The bills were those commemorating the 60th anniversary of the death of Eva (‘Evita’) María Duarte de Perón, arguably the most important of all Peronist icons. This blunder was in many ways the proverbial straw that broke the camel’s back; while Fernández had not intervened in the so-called Boudou-gate at all, last week’s charging of Echegaray, who became the second member of her administration to face legal proceedings over the suspicious bankruptcy rescue of Ciccone after Boudou, followed by the 100-peso-bill debacle, forced her to take action.
That said, Decree of Necessity and Urgency (DNU) 1338/12, which was signed by Fernández and all members of the cabinet, does not mention in any of its six articles the corruption scandal involving the vice-president or the Evita bill gaffe. It does, however, announce that Fernández will send a bill to congress declaring Ciccone of “public utility and subject to expropriation” – the bill has already been submitted and the commission of constitutional matters and the budget commission should approve it before the end of this week. It would then go to the plenary of the senate. Considering that the ruling Frente para la Victoria (FPV) has a majority in both chambers, the bill should be approved easily.
However, Boudou will have to preside over the senate session, in which he has no voice (or vote lest there is a tie), and face the accusations the opposition will hurl at him. At the top of the list will be his personal relationships: both with members of the company’s administration until the takeover [WR-12-08], and with those who will administer on behalf of the state. The government administrators are close associates of Boudou: Minister of Economy Hernán Lorenzino was promoted to the post as per Boudou’s recommendation when he left that portfolio vacant to take over the vice-presidency; the head of the Casa de Moneda, Katya Daura, worked for Boudou at the social security agency (Anses) when he was in charge of the institution and was also promoted to head the mint as per his recommendation. Making matters worse, Daniel Reposo, the controversial head of the Sindicatura General de la Nación (Sigen), will be in charge of controlling Lorenzino and Daura’s administration of Ciccone.
Compensation unlikely
The Argentine state should compensate the owners of Ciccone, but the issue of who owns the company remains the proverbial ‘million-dollar question’ (see sidebar). In fact, it is a subject of formal judicial investigations in three countries: Argentina, Uruguay and the Netherlands. Several questions also remain as to how the value of the company is to be calculated. The issue is very sensitive as it could result in further corruption allegations. Ciccone owes the Afip some AR$300m (US$65.28m). If the state were to pay the company’s market value without taking into account this debt, it would allow the owners of The Old Fund to make a profit on a company they stand accused of purchasing illegally.
- The elusive owners
So far, it is known that 30% of Compañía de Valores Sudamericana SA belongs to the founders (the Ciccone family) and the remaining 70% to The Old Fund. The Old Fund seems to be controlled, in equal parts, by the Dutch fund Tierras International Investments CV – which was dissolved in the Amsterdam public registry in February when the scandal broke as its capital was almost non-existent and those who presented the paperwork to set it up feared prosecution in Europe for money laundering – and to the Uruguayan limited company Dusbel SA. The owners of both companies remain virtually anonymous. Lately, two Argentine bankers have claimed that they own part of The Old Fund, Raúl Juan Pedro Moneta and Jorge Brito.
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