Former Economy Minister cleared of charges, accuses President of using him as a scapegoat
Two times Economy Minister Domingo Cavallo was acquitted yesterday for his role in 2001’s “mega-swap,” which had seen him accused of favouring the private banks which acted as intermediaries to complete the bond exchange that rolled over US$50 billion of debt until after 2005, in an ultimately failed bid to avoid default.
The ruling by the Oral Federal Tribunal No. 4 stated that prosecutor Fabiana León “wasn’t able to prove” the charges against Cavallo, who was accused of engaging in negotiations incompatible with his role as public servant by conducting the operation “with the goal of benefitting the authorized banks.”
Speaking in Court before the Tribunal’s decision, Cavallo accused president Cristina Fernández de Kirchner of trying to make him “responsible for the new crisis that is now starting to take shape” with her mentions to the mega-swap, and predicted that “in terms of social costs, this coming crisis could be as damaging” as the one triggered in 2001.
Judges Néstor Costabel, Patricia Mallo and Enrique Pose will read a full version of the ruling with the detailed legal basis for Cavallo’s acquittal on October 14.
Lower House representative and UNEN-front leader Elisa Carrió spoke strongly against the verdict, describing it as part of the “habitual impunity for public servants with national or international power.” Carrió was amongst those who originally denounced Cavallo for the mega-swap, together with former legislator Mario Cafiero, who had been insulted by Cavallo’s wife Sonia last week before the final pleas.
Cafiero reacted to the ruling by saying that Cavallo “took the money and ran, but wasn’t caught.”
Speaking to the Herald, Buenos Aires University (UBA) professor Abraham Gak, who had worked with the prosecutors to build an expert team to put together the case against Cavallo, claimed that he wasn’t surprised by the ruling, because he had been starting to see the legal dispute as a “lost cause” in which even if the experts had presented a clear-cut case against Cavallo, the “powerful lawyers” of the other side had made it an “uneven battle.”
“The technical reports showed how the agreement between the government and the bondholders had only managed to postpone the inevitable default, without solving it, but increasing interest rates and with a shameful 150-million-dollar commission,” argued Gak, adding that “even a high-school student could have understood the case against the mega-swap, given how clearly the technicians explained it.”
In his defence, Cavallo said that these charges had little legal basis, and that he had been made the “scapegoat” that the country needed for the 2001 crisis. “We found a group of seven first-level banks with whom we successfully completed the operation, paying the typical comissions for this kind of services, even smaller than the usual going rates”, Cavallo claimed, “we were taken out of office just when we were about to successfully complete the debt restructuring by the politicians who wanted to cause (former President Fernando) De la Rúa’s fall.”
Before the ruling, Di Tella University economist Lucas Llach had also supported Cavallo’s innocence, stating on Twitter that “the prosecutors are demanding a three year jail sentence for Domingo Cavallo for getting into debt at the same interest rates that Chávez charged Argentina (during the Kirchner administration).”
By the end of the day, Cavallo added on Twitter that he wasn’t only legally innocent, but that he also shouldn’t be politically blamed for the 2001 crisis. “I wasn’t in office when the original debt that led us to 2001 was authorized, that happened in 1998,” Cavallo explained.
Economist Andrés Asiain called for an “economic malpractice law” to deal with these kinds of cases, in which economic damage against a country could be used to prosecute former state servants. Abraham Gak agreed, but qualified it by saying that “these are usually very difficult cases, not easy to prove, as with medical malpractice.”
“Political decisions, if there’s no personal Benefit for those who made them, shouldn’t be punished generally, they can be thought of as positive or negative in personal terms, but in this case the damage against the country was very clear to see,” concluded Gak.
buenosairesherald.com