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Argentina threatens to sue banks helping Falklands oil explorers
The threats were made in a series of letters sent to as many as 15 banks by the Argentine embassy in London over the last ten days. The letter, a copy of which has been seen by The Sunday Telegraph, warns the institutions that even merely writing research notes on exploration companies involved in the Falklands constitutes "a violation of the applicable domestic and international rules".
The two-page letter, to which a schedule of legal declarations about the Falkland's ownership are attached, is intended to warn off the banks from any further involvement in the South Atlantic oil industry. In an element that is likely to heighten diplomatic tensions, the letter - written in Spanish - contains the header "2012 - Ano de Homenaje al doctor D.Manuel Belgrano". This is a direct reference to the Argentine economist after whom the ARA General Belgrano was named. The ship was sunk by British forces during the 1982 conflict. The letter warns the banks to "bear in mind, when offering their opinions, risk ratings and investment recommendations, the existence and characteristics of the above mentioned sovereignty dispute and of the consequences of any unlawful hydrocarbon exploration activities in the Argentine continental shelf in proximity to the Malvinas [Falkland] Islands." "It should also be borne in mind that . . . participation in those activities will cause companies directly or indirectly involved in them to be subject to such administrative, civil and criminal actions as may be provided for in the Argentive laws governing such activities." It goes on to threaten that any oil company involved in "unlawful hydrocarbon exploration activities" will trigger legal proceedings. The letters were sent to the individual banks by the Argentine embassy in London on March 20 and were not signed, but contained the crest of the Ministry of Foreign Affairs and Worship. The document appears to be aimed at cutting financial support to the five London-listed exploration companies - together worth a combined £1.6bn - which are active in the Falkland's basin, of which Rockhopper Exploration is the largest by market capitalization. The recipients of the letters fall into two separate categories - those who are advising the five oil companies and those who have written research notes either on the subject of Falklands oil or on specific companies. The banks and stockbrokers which have undertaken advisory and fundraising roles for the five which are believed to have received the letter include RBS, Credit Suisse, Barclays, and Oriel Securities. Those institutions whose research teams have written on the subject and have been targeted by the Argentine government are believed to include Goldman Sachs, Jefferies and Edison Investment Research. It is not thought that the letters have been dispatched to the oil exploration companies themselves at this time. Juliet Blanch, partner and head of the international dispute resolution at law firm Weil, Gotshal & Manges, believes the legal threat could be a ploy by Argentina to try and cut off funding to the oil companies rather than having to resort to a protracted legal battle. Ms Blanch said: "Clearly if Argentina has sent this letter to banks and advisers and not to the independent oil companies themselves, it could be interpreted as a ploy by Argentina to find a way to stop the exploration without having to resort to a legal solution which would be costly, protracted and uncertain. Argentina could be hoping that application of pressure to the financiers might result in a reassessment of the relationship between them and the oil companies." None of the banks named chose to comment. The Argentine embassy in London did not return telephone calls yesterday. Posted by: Steve White 2012-04-02 |
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