Argentina's Macri writes off $230 million in Postal Service debt owed by his family conglomerate

Argentine President Mauricio Macri signed a decree Thursday writing off most of a 4.28 billion peso ($268 million) debt owed to the nation's Postal Service by his family conglomerate SOCMA (the Macri Group).

The decree, issued with no congressional review, provoked widespread condemnation from opposition lawmakers and even a few allies, as well as a criminal complaint filed against Macri, Communications Minister Oscar Aguad, and the ministry's chief legal adviser Juan Carlos Mocoroa.

“We didn't forgive a penny of the Macris' debt,” Mocoroa declared yesterday. “The debt as audited is of 600 million pesos, and the Macri Group is paying 100% of that figure.” That figure, according to the Solicitor General's Financial Investigations Office however, is short by 3.68 billion ($230 million).

Macri's decree, moreover, allows SOCMA to pay that sum over 15 years, with half the total to be paid in 2033 - which if Argentina averages 20% inflation over the next 15 years (as it has over the past 15), could mean a 96% write-off in dollar terms.

An inquest was launched yesterday by the chief prosecutor at the Office of Public Administration Investigations (PIA), Sergio Rodríguez, pursuant to a request by Commercial Court Prosecutor Gabriela Boquín. Boquín had determined that the terms of the decree were “abusive” and could harm state finances.

Rodríguez subpoenaed all available documents from the Ministry of Communications, and may open a criminal investigation for malfeasance.

Mr. Postman

The debt in question dates to the Macri Group's tenure as majority owners of the Argentine Postal Service between 1997 and 2003.

The state-owned Encotel postal service was one of a number of state firms privatized by the Carlos Menem administration. SOCMA, then led by the president's father Francesco Macri, would gain control of Encotel as a concession in exchange for $103 million annually for 20 years.

The privatization was initially successful, and could boast of a new, $40 million sorting and processing facility - part of the $250 million the consortium had agreed to invest over 10 years.

Within two years however, Macri had stopped making annual concession payments. Losses at the Postal Service ballooned from $23 million in 1996 (under state control) to $58 million in 2000 even as its workforce was slashed by 40%, and millions of customers shifted to OCA and other private carriers as reports of lost mail became commonplace. Nearly $900 million in debts were incurred by the time the Postal Service declared bankruptcy in late 2001.

Citing 296 million pesos ($100 million at the time) in unpaid installments to the state, President Néstor Kirchner rescinded the concession on November 19, 2003 - the first of several renationalizations he and his successor, Cristina Kirchner, enacted to reclaim state firms run into debt or outright insolvency by private operators.

Vulture culture

Macri was a vocal opponent of Kirchner-era renationalizations, and upon taking office 14 months ago appointed as directors numerous business figures implicated in asset stripping at these firms while in private hands during the 1990s and early 2000s. One of these figures is Jorge Irigoin, who was earlier today installed as Postal Service director - and who was its CEO at the time it was under the Macris' control.

“The administration's attitude is in sharp contrast to the one they assumed with vulture funds,” prosecutor Boquín noted. “When the Argentine state was the debtor, Macri resolved that it was necessary to pay 100% of the debt at once and in cash - including all interest charges and even attorneys' fees.”

“Now that the creditor is the state, that same president decrees a write-off amounting to 96% of the debt.”

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