YPF case: Argentina refuses to reveal information on gold reserves to hedge fund

The Argentine government refused to disclose the location and movements of the Central Bank’s gold reserves to a hedge fund in a New York lawsuit over the expropriation of state-owned energy company YPF. The country’s main argument is that the monetary authority is a separate entity from the government, while the hedge fund says it is an “alter ego” of the administration. The dispute stems from the legal battle Argentina has been waging against Burford Capital in U.S. courts over the 2012 expropriation for more than a decade now.  In 2023, Judge Loretta Preska ruled that the country had breached its contract and ordered it to pay US$16.1 billion, a judgment Argentina’s lawyers have appealed. Burford Capital is demanding some of the country’s assets as partial payment, including the Central Bank’s gold. Burford’s grounds to demand the gold Last week, Burford’s lawyers requested a conference to compel Argentina to “provide a sworn statement identifying the location, movements, and account(s) holding” the Argentine Central Bank’s gold reserves.  If Argentina couldn’t provide the information, the plaintiff’s attorneys asked that a new hearing be called for. Burford had also requested access to several government officials’ text messages, arguing that they would show that five entities, including YPF and the Central Bank, are actually “alter egos” of the Argentine government. The hedge fund has also asserted that Economy Minister Luis Caputo has knowledge of the gold reserve’s movements, citing newspaper articles reporting that he commented on the issue in June 2024.  Argentina’s defense In a letter to Judge Preska, Argentina’s lawyers said those comments were made after the movement of the gold reserves had already been “widely reported” on. “The Court should deny Plaintiffs’ baseless request,” said Argentina.  Burford has also accused Argentina of “concealing more than US$1 billion in gold reserves,” but the government’s legal representatives said that is false. “Nothing has been ‘concealed’; instead, the [Central Bank] publishes information about the amount of the gold reserves it holds,” Argentina’s letter said, adding that the country “has repeatedly explained that all gold reserves are the property of and managed by the Central Bank,” which is a “legally separate and distinct” entity from the government. “For the foregoing reasons, Plaintiffs’ request should be denied,” Argentina said.  The government, however, offered a small compromise. In an “effort to accommodate Plaintiffs’ unreasonable demands,” the administration stated that it would request the Central Bank, the Security Ministry, and the National Internal Audit Office information on the gold reserves. Scrutiny over the gold’s location Burford is not the only party interested in knowing the gold’s location. Last month, a local court ordered the Central Bank to hand over information regarding the location of the gold bars it allegedly shipped abroad in June last year.  Despite the ruling, the court also offered the bank a way out.  In its ruling, it stated that, should the bank intend to stand by its position, it should thoroughly explain its main argument for denying the information request. According to bank authorities, handing out the data “poses a threat to the financial or banking system or could harm the interests of the Central Bank.” The information request stems from a presentation filed by banking workers union La Bancaria immediately after Economy Minister Luis Caputo confirmed that the Central Bank had sent the gold bars overseas.