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THE SECRET STORY OF A FURIOUS FRIDAY: The government was minutes away from carrying the Central Bank's cash to the Treasury
Clarin
January 11, 2010

It was three and a half hours to the limit. The keys: the resistence of the directors and an unexpected call.

by Sebasti n Campanario

The government on Friday was scarce minutes away fro crediting 25 billion pesos of Central Bank reserves to the Treasury. What stopped the officials from moving ahead was that the directives didn't have legal arguments, an unexpected call from New York warning about the dangers of a rainstorm of embargoes on behalf of the vulture funds and, finally, the arrival of the preventive ruling of Judge Mar a Jos Sarmiento suspending the application of the Bicentennial Fund.

But amidst this was a story of pressure and threats, which included all the necessary condimentso for a screenplay. It was, in total, 3 hours and 35 minutes, but the protagonists involved swear it felt like years. With three of them, Clarin was able to reconstruct step by step the hidden events of an unsually furious January day.

On Friday at 9:15am, Miguel Pesce arrived at the headquarters of the BCRA on Calle Reconquista with the order from the presidency to transfer to the Treasury the US$6.569 billion put forward by the DNU of the Bicentennial Fund.

Pesce, an economist with UCR origins, who cut his teeth in the public arena in the 1980s at the hands of Federico Storani, is a man of friendly ways, who was seen as uncomfortable and nervous with his assigned mission. According to those present, the one dedicated to "prime the pump" more enthusiastically was Sergio Chobos, one of the government's men on the board of directors.

In previous days, Chodos called at least a half dozen directors and subdirectors to sounds out "what side they were on" if the conflict escalated.

The first step was to call an urgent meeting of the board to name a new subdirector in the legal department, a position that was vacant for two years. The chosen one was Marcos Mois s, head of the "Legal Affairs" section, which handles third party litigation against the Central Bank. Moises had at the beginning of the week sent an informal email to Pesce, three paragraphs long, backing the "legality of the DNU". But it wasn't his job to give an opinion on that issue. Who had to do this was Mar a del Carmen Urquiza, head of the "Legal Studies and Findings" section, who on December 30th, before going on vacation, left behind a very critical 12-page memo on the running of the Bicentennial Fund, which was awaiting its turn at review in the technical office of Juan Carlos Barboza (director of Administration of the Reserves) and Juan Ignacio Basco (Foreign Operations). The idea that the Kirchnerist officials had was that Moises would annul Urquiza's memo and give the legal green light to the DNU.

At 11am, Pesce called Hern n Lacunza then and for a few hours more, director-general of the BCRA to ask him to open the account in the name of the Treasury. Lacunza, a 40 year-old economist, with a technical background, refused to do it. At that time it had already been splashed across TV screens and the websites of newspapers that Sarmiento's ruling against the official effort had been issued, but the notification had not yet arrived in writing at the front door. It was a race against the clock.

Before Lacunza's refusal, Pesce and Chodos went personally to the office of Silvia Zaragoza, an analyst at the monetary entity, to ask her in a bad way, according to some 15 witnesses to handle the opening of the account. She explained to them that they lacked a half dozen authorizing signatures from higher-ups at the Central Bank. Pesce used a document signed on Thursday afternoon by the K-loyalists on the board self-convoked (the Charter establishes that meetings of the Board must be called by the President of the BCRA.)

"What do you need to open the account," Pesce asked Zaragoza.

The analysts listed some paragraphs on her computer, printed it out and Pesce signed it. The government has completed its first step at 12:20pm: to open the account (in rigor, there were many). Each step was then immediately reported by phone to the Economy Minister and the Casa Rosada.

However, there was still a second part, the fundamental one: credit the funds to the Treasury. But for that they needed the approval of Basco who, equal to Lacunza, answered that he wouldn't think of doing it. Pesce and Chodos threatened to fire him. The same token was taken minutes before with Ren Gracia, the budget director.

In the midst of this squeeze, which included shouts from Chodos, a call came in to the Central Bank from New York, from the firm of Sullivan & Cromwell, which defends the interests of the entity in Manhattan, informing them about a decision by Judge Thomas Griesa that meant a warning sign in the case of the vulture funds.

The news froze the K-officials for some minutes and spread doubt among them. They were fatal moments for the government effort, which gave time for the arrival at 12:50pm of the preventive ruling at the front gate.

At 2:30pm, Pesce told Lacunza that he'd been removed from the leadership staff.

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