Paul Singer’s NML Capital wants Citibank to provide evidence it was threatened by Argentina, as it maintains.

Citigroup could lose its business in Argentina

Citibank’s parent company, Citigroup Inc (NYSE:C), has argued the bank could lose its Argentine business and its executives could face jail if the court doesn’t allow it to pay Argentina’s bondholders. U.S. District Judge Thomas Griesa had previously barred such payments unless defaulted debtholders are also paid.

In court papers filed this weekend, NML Capital, the hedge fund controlled by Singer, is requesting the court to compel Citigroup to deliver evidence supporting claims Argentina threatened the bank measures if it complies with Griesa’s order, Bloomberg is reporting.

NML had said that their legal request is “urgent, time-sensitive and critical.” For its part Citigroup, appearing before the U.S. Court of Appeals in New York, maintained that in complying with the court order it will be placed in a “dangerous position.”  The bank further said it would be subject to “grave sanctions” imposed on it by the Government of Argentina if it complied with court orders, the report noted.  Such actions, the bank maintained, could include sending its Argentine officers to jail and shuttering the bank’s business in the country.

In court papers NML said Griesa’s intervention was required to compel Citibank’s to produce evidence it had been threatened by September 15, days before oral arguments in the case.

Argentina threatening U.S. executives in such matters is not without precedent.

Argentina Flag

Argentina threatened U.S. business executives

As previously reported in ValueWalk, Argentina has threatened U.S. business executives under terrorism charges in relation to the debt issue. After labeling U.S. hedge fund holdouts as part of an “international mafia,” Argentina’s President Cristina Kirchner accused executives from U.S. printing giant RR Donnelley & Sons Co (NASDAQ:RRD) as being terrorists for shutting down a printing plant.

At the time Kirchner was threatening to lean on a controversial anti terrorism law in light of Argentina’s recent defeat in US court over its debt and related efforts to damage the economy.  “We are faced with a true case of a fraudulent maneuver and attempt to sow fear in the population,” Kirchner was quoted as saying.  The anti-terrorism law being used to attack private enterprise business decisions was passed into law in 2011. It hands the government unprecedented powers to prosecute not only individuals but also businesses suspected of trying to destabilize the economy and financial system through speculative maneuvers.