COHA’s letter to Congressman Eric Massa (D-NY)

The Honorable Congressman Eric Massa October 16, 2009
1208 Longworth House Office Building
Washington, DC 20515

Dear Congressman Massa,

Our greetings to you. First permit me to establish our bona fides. Our organization, the Washington-based Council on Hemispheric Affairs (COHA) is a well known and highly regarded 35-year old non-profit research group committed to monitoring and contributing to the improvement of US-Latin American relations. Due to the fact that COHA’s former chairman, Charles A Perlik Jr., was also the President of the now 34,000-member Newspaper Guild, (representing much of the print and electronic media in this country and Canada), COHA has been accorded extremely high visibility in the nation’s press, literally from the moment of its founding. This explains in part why COHA has been cited tens of thousands of times with its staff making countless appearances in the major print media, network TV, and radio programs in the United States, Latin America, and much of the world.

COHA also has been close to the U.S. Congress, with several House and Senate members having served on our Board of Trustees. The late Senator Ted Kennedy referred to the organization in the Congressional Record as “one of our nation’s most respected bodies of scholars and policy makers.” We do not accept funds from any foreign government, private company, or cause of any description. This includes funds from any lobbying organization, including those operating in the financial field, and we have no connection to any entity that can be described as a “vulture fund.”

A number of months ago, we were startled to discover that one of the three pieces of legislation that you introduced in your first 100 days in office was H.R. 2493, the Judgment Evading Foreign States Accountability Act. What initially mystified us was why a freshman Congressman who had just narrowly won a seat in what is not a traditionally Democratic district would concern himself with such a recondite issue that could not possibly be of interest to more than a handful of his constituents. At the time, we felt that it was our civic responsibility to assign one of our research teams to look into the issue. While our probe into the matter is still relatively young, our discoveries have encouraged us to step up the pace of our efforts and focus major attention and resources on a story that has remained beyond our comprehension.

Upon reviewing your voting pattern, we were unable to establish a rational explanation for why you would take such an interest in Argentina’s defaulted bonds, an issue of no major demonstrable U.S. national interest. We thus became curious to uncover the motivations behind your embrace of this legislative initiative, particularly at a time when your constituents in the NY-29 District are suffering from a deeply troubled economy and when a number of Representatives and Senators have shown serious shortcomings in their financial rectitude. This effort has taken a step forward by your proselytizing some of your colleagues to become co-sponsors of your legislation.

We hope that your intention is not to strong-arm Argentina for the benefit of large-scale bondholders. As you know, many of these bondholders are not the original owners of these bonds, but are speculative “vulture funds” that bought these bonds at pennies on the dollar after Argentine authorities were forced to default on some of the country’s national debt. After this occurred earlier in the decade, a category of bondholders abstained from legitimate negotiations conducted between the Argentine government and 75 percent of the original holders of the country’s defaulted bonds. This was done with the intention of pressuring Argentine authorities through litigation in US courts and lobbying in Congress to pay the full face value of the bonds, threatening to seize state property to satisfy the debt. Investing in defaulted bonds is a highly speculative venture, and investors in volatile securities should be obliged to accept the consequences of the inherent risks that come with investing in potentially lucrative emerging market funds. Of course, one could also argue that it is not a wise foreign policy to sanction the requisitioning of public assets to settle outstanding private financial disputes without concern for the financial well-being of Argentina and its citizens.

As someone who has lived in Argentina and considers himself a “friend” of the country, I feel obliged to ask: why would you sponsor a bill that mostly benefits a handful of ethically dubious, primarily non-American investors at the expense of the Argentine people? Like the “vultures” for whom they are named after, they seek only to profit off of Argentina’s economic misery and collect on loans originally issued to help bolster the Argentine economy and run the country. Why would you wish to pursue a path that would obviously prove harmful to the country and average Argentines, while providing no relief for your local constituents? In addition, why would you sponsor a bill that contradicts the spirit of another piece of legislation that you have sponsored, the American Credit Card Reform Act? This legislation, seeking to limit credit card rates to fourteen percent and prohibiting the more sordid tactics of credit card companies, stands in stark contrast to your efforts to help “vulture funds” rake in unconscionable profits, some in excess of 100 percent.

COHA’s work, among other public missions, is to encourage responsible investments in the international market, which can help foster stable economies and orderly growth throughout the hemisphere. Our fear is that if your legislation passes, the end result would be the normalization of the arbitrary use of U.S. political institutions to settle scores between private investors and foreign governments. Furthermore, your legislation may risk alienating allied countries and endangering developing economies, while aiding fat cat bondholders. In fact, those you say are the “victims” of the Argentine government are prepared to jeopardize good relations between the U.S. and Argentina.

We also are very interested in your time spent training on the Argentine vessel the Libertad upon graduating from Annapolis. I happened to have had a rather lengthy, if not disputatious relationship with the then commander of the Argentine Navy, Admiral Emilio Massera, and was one of this nation’s most persistent critics of the Navy’s deplorable human rights record, which happened to peak just at the time that you boarded the training vessel. The commander of the Libertad, Captain Carlos Vahiginger, along with several other members of the crew such as Oscar Calandra, Luis Mancenido, and Francisco Lucio Rioja, were all intimately involved with gross human rights violations at the time. Your time aboard this ship in 1981 is, simply stated, very troubling, and the explanation offered to assuage your collaboration needs to be more rigorously scrutinized.

Given that your participation with the Argentine navy occurred long after the United States government had been made aware of the human rights abuses occurring under the auspices of the then ruling dictatorship, we are concerned as to the nature of your involvement with the Argentine Navy, if any, and the compromised individuals listed above, as well as your awareness of the human rights abuses that were occurring at the time at naval facilities. We welcome any insights you can provide regarding this epoch of your career.

In order to advance a good faith inquiry into this issue, we would be most interested in speaking with you, or some senior member of your staff, who is familiar with the entire matter and is in a position to clarify your point of view as well as the nature of your ties to the vulture funds now holding the defaulted bonds. Before we move ahead with our investigation into the background of your proposed legislation and the multiple interests it may reflect, we would be very grateful to receive any documents you may have that demonstrate that you have had an arm-length relationship from those who will benefit financially from any face-value payoff on the defaulted bonds. Finally, we would welcome any insights you might provide that could help explain some of the disturbing and somewhat confounding matters that have come to the surface in this case. Please communicate with us at your earliest convenience. We eagerly anticipate your response.

Sincerely,

Larry Birns, Director
Council on Hemispheric Affairs