US hedge fund seizes Argentine naval ship

The ARA Libertad is now the property of Elliott Capital Management.

An American hedge fund has seized a ship owned by the Argentine navy from a Ghanaian port, as part of an attempt to collect on bonds purchased after Buenos Aires defaulted in 2001.

The fund, Elliott Capital Management, has been engaged in a long-running legal battle with the Argentine government. It specialises in what is euphemistically termed "distressed debt" – it buys up bonds held by countries which are extremely likely to default, or which have already defaulted. As a result, it gets them for a pittance, around one fifth of face value.

The strategy from there is to refuse to accept the default. If it does not voluntarily enter into any debt-swaps, then the company can continue to claim it is rightfully owed the full amount on the bonds. If, eventually, it gets paid, a massive profit has been earned.

This tactic has led to Elliot, and other funds which operate in a similar manner, being dubbed a "vulture fund", profiting from dead or dying economies. The firm itself insists it only takes action against countries that can afford to pay, but choose not to.

The decade-long fight to recover the face value of the Argentine bonds has been carried out on a number of battlefields, from the US Courts to the World Bank (£), but the latest turn is the most nautical of them all.

The seizure, of a 100m-long tall ship staffed by 200 sailors, appears to have been planned for some time by Elliott. The FT reports (£):

Elliott had been waiting for the ship to stop in a port where it would have a chance to enforce legal judgments previously awarded by UK and US courts. The hedge fund declined to comment. . .

US and UK courts have awarded $1.6bn in claims in [Elliott's] favour, but Argentina has taken a tough line on lingering holdouts, saying there will be no further offers.

If a US court ruling from February 23 is upheld on appeal, Argentina must pay interest to Elliott before making any payment to holders of bonds issued in the 2005 and 2010 swaps. An appeals ruling has not yet been issued.

The Libertad, which Elliott expects to be awarded ownership of, has been estimated in value at between $10m and $15m.

The vessel, a tall ship used by the Argentine Navy to train sailors and a former holder of the world speed record for a transatlantic crossing by sail, was on a graduation tour. It is free to leave the Ghanaian port of Tema if Buenos Aires posts a bond with the court, which Elliott would then also seek to recover.

In the long-run, Elliott will still rely on winning court cases to pressure the Argentine government into paying the outstanding loan in cash, rather than boats.

The ARA Libertad in better days. Photograph: Getty Images

Alex Hern is a technology reporter for the Guardian. He was formerly staff writer at the New Statesman. You should follow Alex on Twitter.

COREY HOCHACHKA/ALAMY
Show Hide image

He went in to report on crystal meth – before long, Luke Williams was hooked

The journalist moved into a house of meth addicts to investigate the drug. Within a month, he was using, too.

“I got a story, a very good story,” writes the young Australian journalist Luke Williams in the first chapter of his new book, The Ice Age. “Only it wasn’t the one I was expecting.” For three months in 2014, he lived in a house of crystal meth addicts in a suburb of Melbourne, Australia, to investigate the drug. Within a month, he had forgotten why he was there. He had become addicted himself.

What follows is a dizzying retelling of his experiences, which veers between stories of Williams’s psychotic episodes and facts about his drug of choice. His descent into addiction happened in a nondescript house in Pakenham, a suburb to the south-east of Melbourne – “one of the most badly affected meth areas in Australia”.

Williams, now 36, grew up nearby and went to school there. He already knew two meth users in the area well enough to rent a room with them – an out-of-work labourer called Smithy and his live-in ex-girlfriend Beck. It was they who gave Williams his first shot of crystal meth, less than three weeks into his stay.

The crystal form of methamphetamine, also known as “ice”, is an addictive and powerful stimulant that causes euphoria. It heightens alertness, energy and arousal, with comedowns that can lead to aggression and violence.

It has gained cultural significance in recent years because of the US television drama Breaking Bad, in which an otherwise mild-mannered and law-abiding chemistry teacher “cooks” and sells crystal meth. Yet not much is known about the long-term effects of the drug, which in some countries – such as the Czech Republic – is a graver problem than heroin. In the UK, crystal meth activity is low and mainly linked to the gay chemsex party scene, where drugs are used to enhance group sex experiences.


Photo: Scribe

The drug is linked to severe psychosis, which Williams experienced first hand. Detailed in his book in a neat little list, like a morbid twist on a teenage diary, are Williams’s delusions, entitled: “My psychotic ideas”. Some are harrowing. His conviction that his parents are trying to poison him, for example, which results in him threatening to kill them “with my bare f***ing hands”. Others are amusing: he abandons his journalistic endeavour almost immediately in the belief that his calling is to become a famous rap star.

“I think that I could maybe do spoken word, but rapping? No, no,” he chuckles, when he speaks to me via Skype from Nepal, where he is researching another story. He says that he wanted to investigate crystal meth use partly because he was bored. He had left journalism to work at a law firm, and his life “lacked a bit of kick”.

Although he describes himself as “white, middle-class [and] educated”, he was fixated by the characters from his youth on the city’s outskirts. “I missed [them] in the middle-class world; it seemed so polite and clean . . . I looked forward to getting back there, living cheap, and when I saw the state some of my friends were in, I was very curious to know what was going on with them. Nobody was writing about the working class and the underclass.”

Williams quickly shifted from observer to addict. In alarming and frank detail, his book tells of marathon masturbation sessions (his record was 16 hours), physical altercations and a thick fog of paranoia. He would search his name online and become convinced that anything written by, or about, the name “Luke Williams” involved him.

He became so obsessed with the memory of an ex-boyfriend called Nathaniel that he believed that Smithy had turned his ex “into a transsexual, so that he and his mates could have their way with the new female Nathaniel”.

After three months, Williams was kicked out of the house by an aggressive Smithy, who thought the journalist was stealing his cannabis (he wasn’t). The nearby hospital gave him no help, so Williams ended up on the streets. After a lot of persuasion, he eventually returned to safety with his parents. He has been recovering ever since.

There is talk of a crystal meth “epidemic” in rural and suburban areas of Australia, which has among the highest usage of the drug in the world. The number of people using it there tripled from 2011 to 2016, and 7 per cent of Australians over the age of 14 have reported using amphetamines or methamphetamines (in the UK, it’s 1 per cent).

Although Luke Williams’s story is an insight into one of the world’s most dangerous substances, it’s also a lesson in doing your research. The first time Williams took crystal meth, it was injected by one of his housemates and he believed that it was no different from powdered meth – more commonly known as speed – which he had been using occasionally to give him the energy to write.

The group called everything “meth”, regardless of what they were taking. “Our lingo just didn’t differentiate,” Williams tells me. “People don’t really understand the difference. I got the opportunity to say in the public domain that [crystal meth] is different . . . It eats away at your inside.”

The Ice Age: A Journey Into Crystal-Meth Addiction by Luke Williams is published by Scribe.

Anoosh Chakelian is deputy web editor at the New Statesman.

This article first appeared in the 19 January 2017 issue of the New Statesman, The Trump era