Kirchner to prosecute US firm for plant closure

Argentina’s government is seeking to prosecute a US company under anti-terrorist legislation for shutting down its local operation in the latest twist in the country’s struggle with foreign creditors.

By closing its Argentine plant, President Cristina Fernández de Kirchner accused printing group RR Donnelley & Sons of collaborating with bondholders in a 13-year struggle with the government that forced the country into a default last month.

She said the Chicago-based printers were part of a "Mafioso network" headed by the US hedge fund owned by billionaire Paul Singer, who is seeking to use the US courts to force Argentina to pay face value on bonds it defaulted on in 2001.

She said anti-terror legislation could be used against Donnelley as its sudden closure of its factory was “an effort to frighten society”.

“They want to see the country on its knees but with me as president never will it kneel,” she said to applause from party militants. The case is already before a local judge.

State investigation

Ms Kirchner claimed Mr Singer’s hedge fund group had previously held shares in Donnelley and she announced her government has launched an investigation to discover if other companies operating in Argentina have any relationship with what she terms the “vulture funds” pursuing her government in the US courts.

More than 400 workers were locked out from their jobs after they showed up on Monday to find the plant in the city of La Plata closed and a notice saying Donnelley had ceased operations due to an “insurmountable crisis”. Ms Kirchner dismissed the justification as “false”.

It would be the first time Argentina used its anti-terrorist legislation since it became law in 2011. The government had previously threatened to use it against farmers for hoarding their soy crop as a hedge against the collapse in the value of the local peso. That threatened soy exports, taxes on which are one of the government’s only sources of foreign currency.

The judicial move against Donnelley is the latest indication the government is hardening its stance in its battle with the holdouts who have won a ruling in the US that prevents Argentina serving most of its debt unless it pays them in full.

Fading hopes

Hopes of a private sector resolution to the standoff led by a group of local and foreign banks have faded in the last week after one of the holdouts,

Aurelius Capital Management

, said “there is no realistic prospect” of such a deal.