Argentine Ship Held in Ghana Causing Political Fallout in Argentina

The political tug-of-war over an Argentine naval ship – which has pitted an American hedge fund owner against the country of Argentina – came to a head this week after Argentina’s military intelligence director resigned and the navy chief and two other navy officials were suspended.

María Lourdes Puente Olivera, the first woman to head the military intelligence, was the latest casualty in the fight over ARA Libertad, a naval ship held hostage in Ghana after a New York hedge fund manager made an issue over Argentina’s unpaid debts.

Once the ship made an unexpected stop in Ghana, Paul Singer, who runs $15 billion hedge fund Elliot Capital Management, convinced a judge to hold the ship as a way to force the country to pay up its bonds. The ship was originally supposed to stop in Nigeria, and the decision to stop in Ghana has led to the resignations and suspension of the Argentine officials.

U.S. creditors are demanding payment in full on Argentine bonds, for which most investors accepted 30 cents on the dollar in 2005.

Justice Richard Agyei-Frimpong had ordered the tall sailing ship held at Tema harbor days earlier, after creditors cited judgments in the U.S. and Britain approving the seizure of Argentine assets anywhere in the world. The judge later ruled that Argentina failed to persuade him to remove the injunction.

Argentina's government said the ruling violates international norms as well as rulings by judges in the U.S., Germany and France that found Argentine military vessels immune from the seizures.

The ruling "compromises Ghana's international responsibility, adding a political dimension to the judicial case that affects bilateral relations," Argentina's defense ministry has said.

The case was brought by NML Capital Ltd., a subsidiary of the Elliot Capital Management fund run by billionaire Paul Singer, who leads a group of holdouts demanding payment in full plus interest for Argentine bonds bought at fire sale prices after Argentina's economy collapsed in 2002. Some 93 percent of bondholders accepted pennies on the dollar seven years ago, but Argentina has failed to come to terms with the holdouts.

The three-masted training vessel Libertad came to Ghana on a goodwill mission as part of a West African tour with hundreds of navy cadets from Argentina, Chile, Uruguay and Peru. Chile's government said Thursday it was keeping in contact with the Argentine navy and their cadets' families as the situation developed.

Luis Suarez, a cadet working in the ship's galley, told an Argentine radio station that they access to Internet and phones and can communicate with their families back home. He said that there is food aboard the ship and the crew rode buses into town to buy things, but that their movements are restricted.

"We are not freely circulating," Suarez said.

NML now plans to seek an auction of the ship, which it hopes will pressure Argentina to post a bond in Ghana reflecting the vessel's value. At that point, the ship and its crew would be able to leave port, Argentina would forfeit the bond, and NML would collect the money.

With reporting by The Associated Press.

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