Forbes, June 22, 2007
Ecuador on Thursday appealed to the U.S. Securities and Exchange Commission for help with its investigation into a scandal involving the Andean country's foreign debt.
Attorney General Jorge German is investigating whether there were irregularities in Economy Minister Ricardo Patino's February announcement that Ecuador would miss a Feb. 15 deadline for a $135 million payment on its 2030 global bonds.
Patino said Ecuador lacked funds to make the payment before the deadline, but two days later, the government said it would pay on time, raising suspicions Ecuador was trying to spark sharp fluctuations in bond prices.
German said Thursday he asked the U.S. ambassador in Quito to pressure the SEC to provide the names of people who hold Ecuador's 2030 global bonds.
He also ordered an investigation of the Ecuadorean representative of New York-based Citigroup Inc. for allegedly "obstructing justice" by withholding the names of debt holders from authorities. Local Citigroup executives were not available for comment.
The investigation began after a videotape was aired on local TV showing Patino meeting with investors and a former Ecuadorean economy minister discussing a plan to "shock" the market by driving down the bond prices and allowing them to shoot up after the announcement of an on-time payment. Patino, who denies the allegations, said he recorded the meeting himself to expose "corruption" in the debt sector.
The attorney general also ordered an investigation of the Ecuadorean representative of New York-based Citigroup Inc. for allegedly "obstructing justice" by withholding debt holder names from authorities.
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