Feast of the Vultures
Two investment firms are suing Nicaragua for full
repayment of defaulted debt from the 1980s. The outcome could
establish precedents with far-reaching repercussions.
Nicaragua is a poor country that has suffered civil wars,
natural disasters and a series of corruption scandals that have
led to the detention in jail of former president Arnaldo
Alemán. The present government says it is trying to end
corruption, reduce poverty - average incomes are just $500
a year - and qualify for debt relief under the Highly
Indebted Poor Country Initiative (HIPCI). Now it is having to
fend off a group of US investors who are suing the government
for full repayment of defaulted commercial bank debt from the
1980s, plus accrued interest.
Leucadia National Corp., a troubled New York-based
conglomerate, and Van Eck, a New York investment fund, bought
the debt eight years ago for a few cents on the dollar. If they
get their way, their Nicaraguan investment will repay
spectacularly. Van Eck alone bought about $50 million in face
value Nicaraguan loans, which if it were to...
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