NOTICE - Please read this important letter we are sending the Chairman of the SEC, Securities & Exchange Commission and other entities and individuales in he United States and elsewhere. 

If you agree with its content and would like support us by adding your name to the list of Signatories, then please answer this E-mail confirming this to  or .   

Also, please kindly help us inform the public at large about this, by retransmitting this message to whomever you consider convenient.  Thank You.

Buenos Aires, 30th October 2007

Mr. Christopher Cox,
Securities & Exchange Commission (SEC),
100, F Street,
Washington DC - USA

Ref: Argentine Sovereign Debt Bond Mega-Swap Operation Approved by the SEC in 2005

Dear Sir,

In June 2005, the Administration of Argentine president Néstor Kirchner implemented the largest Sovereign Debt Bond Mega-Swap Operation in our country's history, in a structurally flawed attempt to resolve Argentina's default as a consequence of the monetary and financial meltdown that took place in November and December 2001.   

Extensive negotiations in major global financial and bonds markets, coupled with complex financial engineering were done throughout 2004 and the first half of 2005 by a team led by former economy minister Roberto Lavagna, with the ensuing Mega-Swap proposal being accepted and approved, amongst others by the SEC, that was also - albeit grudgingly - accepted by the majority of defaulted bond holders.

At that time, the Undersigned together with other Argentine citizens strongly warned the SEC and other key players in international markets about the inherent perils implicit in that Debt Bond Mega-Swap, basically due to its potential inconsistencies and probable unsustainability in the medium- and long-terms.   As Argentina's economy grows at a fast pace - averaging almost 10% per annum over the past three years - the GDP-linked performance of the main new bond issues is becoming increasingly unsustainable. This will in all likelihood lead to new Sovereign Debt Defaults in years to come, with the prospect of yet another and even more devastating Debt Bond collapse looming on the horizon.

Accordingly and in defense of the interests of the Argentine People; of international and US investors; and of the international financial system, the Undersigned again very strongly recommend that a new approach towards resolving Argentina's cronic structural public debt problem be designed and implemented.  To that effect we request your support for the following measures and proposals:

  • Argentina's Responsability - In recent years, one of the key issues on this matter has been the fact that accountability for continued payment has been placed almost exclusively on the Argentine State, which is considered as being solely responsible for resolving and paying all Sovereign Debt outlays to global investors. This has systematically led to a quarter century of refinancings, roll-overs, "Brady" Bonds, and Bond Mega-Swaps, that have all generated increasingly severe economic and social hardship for the Argentine people, who has thus been forced to bear the brunt of these recurrent crises which, although they explode inside Argentina, they are in fact the result of actions and decisions taken in our country and in major international financial centers.

  • International Investors' Woes - At the other end of this very complex process, small and medium-sized investors in the United States, the European Union and the Far East have seen their savings dramatically diminish or evaporate alltogether, each time the Argentine Debt Bonds they invested in either become non-performing or their market values drop drastically.

  • Shared Accountability - There is, however, a third key player at the very center of this complex drama, which is the international financial community itself.  Notably, the major global trading banks, their interwoven investment funds and risk rating societies, and multilateral agencies like the IMF - International Monetary Fund - which was supposed to oversee the entire process in a supervisory and audit role. These fundamental players have yet to be brought to the negotiating table and made financially accountable for their suspiciously recurrent and systematic "mistakes and lack of foresight".   Especially in the case of the major lending banks, we can define their behaviours as potential cases of Professional Malpractice, Errors & Omissions, lack of Corporate Transparency & Governance, and improper Disclosure of fundamental data and information to millions of small- and medium-sized client investors the world over, who unwittingly placed their trust in these reknown financial institutions.

  • Sovereign Debt Engineering - From time to time, this has even been noted in the major media - e.g., in an extensive Washington Post article written by Paul Blustein in 2003 (later extended into a full-length book "And the Money kept Rolling In (and Out): Wall Street, the IMF and the Bankrupting of Argentina", Public Affairs/Perseus Books, New York, 2005)  - and elsewhere.  However, all major participating Banks have consistently looked the other way when called upon to assume their share of responsibility for their implicit wrong-doing, and unprofessional practices and behaviour when engineering Argentina's Sovereign Debt for years on end.   In this respect, they are strongly backed by an array of directly or indirectly controlled organizations: rating societies, specialized media linked to the financial community, and the IMF itself.   There can be no doubt that, structurally, they all have a common interest - often even sharing the same board members - in ensuring that debt fiascos such as Argentina's are kicked back in the face of debtor States so they can be conveniently "refinanced forward" and snow-balled into ever growing - and unpayable - sums.  

  • Corporate Governance in the US - In 2004, then New York State Attorney General Mr Elliot Spitzer energically went after major players in the US insurance and reinsurance broking industry that were allegedly not abiding by full Transparency & Disclosure norms when doing business and receiving remuneration.   No doubt, Mr Spitzer's initiative was largely politically motivated by the Democratic Party - Mr. Spitzer has since moved on to become Governor of the State of New York - however, it did show that on matters referring to Corporate Governance, when there is a will there is a way.   In 2005 and 2006, major US insurance & reinsurance brokers and companies paid out literally hundreds of millions of dollars in penalties and fines to the Govrnment and, additionally, even more hundreds of millions of dollars were reimbursed to clients themselves around the world who were allegedly over-charged by those brokers for their services. 

  • Banks' Accountability - If this could be achieved - albeit through the use of political clout and party leverage - to help begin to clean up the domestic insurance industry in the US, how much more could be done to help clean up the Banking & Bond Trading market in the US and globally, if a Spitzer-style investigation (Mr. Spitzer took his fight against major insurance brokers as a veritable Crusade) were to be launched now on major US and foreign banks operating in the US, and their closely aligned rating societies.  This would automatically spill over to the necessary deep scrutiny regarding the leading role played by multilateral agencies as the IMF.  

    • May we point out that the major banks involved in Argentina's debt catastrophe are the very same banks that have been repeatedly fined by the US, European and Japanese authorities over the past decade for such professional malpractices as exerting insufficient controls over money laundering operations; providing incorrect, insufficient or misleading information to potential investor clients; and of having been privy to increasing the negative impact of such criminal bankruptcies as Enron, WorldCom, Global Crossing, Arthur Andersen and others.  

    • We particularly stress the shared responsbilitiy of major banks involved in artificially orchestrating Argentina's sovereign debt over the past thirty years, because we know that they, in turn, have the additional resources available to pay their share in Argentina's on-going Sovereign Debt problem by filing claims on their own insurance/reinsurance programs that cover such key risks as: (a) Professional Malpractice Liability, (b) Errors & Omissions Liability, and (c) Directors' & Officers' Liabilities.  These insurance coverages are normally placed with top-rated insurers and reinsurers in international markets. 

  • Growing Concern and Awareness amongst the Argentine Public - The contents of this letter voice the views of a sizeable part of Argentine public opinion, which is concerned over the - still unresolved - situation of our Public Debt sector which, in the medium- or long- terms, will no doubt trigger new bouts of Public Debt Crises, defaults, and financial & banking meltdowns like the ones we lived through during the eighties and nineties which at the end of 2001 culminated in the worst crisis in Argentina's modern history.   We seek your support and assistance to address all these issues in a professional manner because there is still time to mitigate, if not neutralize, a sizeable part of these impending systemic crises which will not only bring renewed hardship to the Argentine people, but will would also lead to huge financial losses for small and medium-sized investors abroad, and growing international distrust towards those entities running and supervising the US and international financial system, at a time when there are growing signs of instability.

  • "Odious Debt": the Illegal Origins of the Bulk of Argentina's Sovereign Debt - May we also stress that the bulk of Argentina's Sovereign Debt can be construed to be potentially illegal in accordance with the legislation of various jurisdictions, including that of the United States, because it can be clearly and directly traced back to illegitimate, fraudulent and illegal measures taken by the Military and Civilian Règime which usurped power over the Argentine State from 24th March 1976 to 10th December 1983, forcibly removing the constitutional government then in power, in full and flagrant breach of the Constitution of the Argentine Republic. 

    • During that period, the international financial community knew about the illegitimacy of that Règime and were thus at all times fully aware that the loans they made could later be construed and classifed as "Odious Debts" under US, UK and European law and, most definitely, under Argentine Law once democracy was again reinstated in our land (which occurred in 1983).    

    • The private banks loaned tens of billions of dollars to that repressive and genocidal Règime which systematically perpetrated the worst Human Rights violations against our Citizens and was responsible for the persecution, injury and death of tens of thousands of Argentine and foreign citizens then living on our soil. The fact that the international banking communitity helped finance such criminal acts no doubt warrants further accountability on the part of its bank members. 

    • The Military-Civilian Règime never even properly registered huge tranches of those loans in official government registries in the Central Bank, the Economy Ministry and various State companies and agencies.  Much less could they show that those loans were in anyway applied to benefit the Public Well-being and Common Good of the Argentine population.  Quite the contrary. 

    • This clearly points to strong bases substantiating a case for declaring that original so-called debt and its subsequent re-financing, roll-overs and bond swaps as "Odious Debt".   The Règime`s debt-generating strategies allied with the international banking community are described in a law-suit filed in 1982  by Argentine Citizen Alejandro Olmos (regretably deceased in April 2000) which lists at least 477 criminal acts perpetrated by the authorities then occupying the Economy Ministry, the Argentine Central Bank and other entities, in connivance with various local players in the private sector (lawyers, accountants, international bank branches, corporations and others). 

    • Many of these loans breached basic contractual norms and international jurisprudence by, for example, unilaterally increasing interest rates (by the Creditor banks) without securing proper agreement from the Debtor (the Argentine State), as former Argentine Ambassador Miguel Angel Espeche Gil has clearly demonstrated.

  • The Need to Investigate - Successive democratic governments in Argentina starting in December 1983 to date, seem to have been successfully coerced, pressed - even forced - NOT to investigate the illegal origins of this alleged sovereign debt.  Irresistable pressure and leverage from such key players as the US Treasury Department, the International Monetary Fund and other institutions were brought to bear in order to ensure that local governments - from Alfonsin to Kirchner - would systematically implement policies that run against the National Interest of the Argentine Republic by not investigating the illegal origin of that Debt.   In short, the bulk of Argentina's Public Debt can de construed to be:

    • Illegal, because it was negotiated by a Military and Civilian Regime that usurped power by force, breaching Argentina's Constitution;

    • Fraudulent, because there is no clear, solid and consistent proof as to where those funds actually went and what they were used for, and 

    • Immoral, because it was to a great extent based on Usury, because interest levels were increased abruptly, unilaterally and excessively, and included capitalization of interests (anatocism) which is illegal not only under Argentine Law, but also under the laws of major industrialized countries, aside from the fact that Usury had been systematically condemned as immoral by key human rights organizations and most religious institutions, notably the Catholic Church.

  • Submission to US Courts - In the Manhattan Federal District Court (500 Pearle Street), Argentina was accused by so-called Hedge Funds of having defaulted on its Sovereign Debt.  The Honorable Judge Thomas Griessa threw this claim out, thus giving Nestor Kirchner's Administration the green light to go ahead with the above-mentoned 2005 Sovereign Debt Bond Mega-Swap.  On 14th November 2004, a group of Argentine Citizens delivered Judge Griesa's Court full documentation supporting what is summarize herein.  I.e., a file containing full details of Law Suit 14467 filed by Alejandro Olmos in 1982 mentioned above, a CD containing details of a watershed sentence given by Argentine Federal Judge Jorge Ballesteros in July 2000 confirming that criminal acts were in fact perpetrated by government officers during the Military-Civilian Règime even though by then they had become time-barred, and lastly recommending that Argentina's Congress fully investigate the legitimacy of the alleged Sovereign Debt (as is required by Constitutional Mandate).  This was submitted in order to assist Judge Griessa's court to have a better idea on this very complex matter.  Although no reply has so far been received, nor any actions were apparently taken, we consider that these are but a handful of the key elements that need to be properly addressed by US Courts and the SEC, amongst others.

  • Human Rights Violations - Finally, we would stress that the perverse, aggregated and mounting effects of Argentina's continuous and unresolved Sovereign Debt continues to have a negative and destructive impact on Argentine society as a whole.  This has in the past caused, today continues to cause, and in the future will continue causing untold hardship, poverty, illness and death for thousands of anonymous Argentine citizens.  May we strongly stress that all democratic countries have a basic duty to preserve the Human Rights of all peoples, irrespective of sectorial interests and political objectives of major banking, financial, economic and political power structures.  Hence, the urgent need to address and invesigate this matter from a financial point of view within the scope proposed herein.

We would be most grateful if we could have the opportunity of maintaining a meeting with a senior SEC officer in order to discuss and describe these and other relevant matters in greater depth.

Yours truly,

Adrian Salbuchi                                                                 Alfredo De Bartolo

International Consultant, Writer & Researcher          Argentine Businessman; US Citizen

(Buenos Aires)                                                                  Resident in New York since 1975