Feast of the Vultures
Dec 8, 2003
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
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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