Bondholder sues Sri Lanka in US court

In its lawsuit, the bondholder said the default is being ‘orchestrated by officials at the highest levels of government’.

Sri Lanka fell into default in May for the first time in its history since independence

Sri Lanka was sued in the US by a bondholder after the South Asian nation defaulted on its debt for the first time in history while struggling to stop an economic meltdown.

Hamilton Reserve Bank Ltd., which holds more than $250 million of Sri Lanka’s 5.875% International Sovereign Bonds due July 25, filed the suit Tuesday in a New York federal court seeking full payment of principal and interest.

Sri Lanka, an island nation off the southern tip of India, fell into default in May after the expiry of a 30-day grace period for missed interest payments on two of its sovereign bonds. It was the first sovereign debt default by the country since it gained independence from Britain in 1948.

Hamilton Reserve, based in St. Kitts & Nevis, said in the lawsuit that the default is being “orchestrated by officials at the highest levels of government,” including the ruling Rajapaksa family, and accused Sri Lanka of excluding bonds held by domestic banks and other interested parties from an announced debt restructuring.

“As a result, these favored Sri Lankan parties stand to be paid principal and interest in full, while the Bonds — which are also broadly held by US retirement systems including Fidelity Investments, BlackRock, T. Rowe Price, Lord Abbett, JPMorgan, PIMCO, Neuberger Berman and other US investors — remain indefinitely in default and unpaid, causing American retirees tremendous suffering from potentially massive losses of up to 80% of their original investment value,” lawyers for Hamilton Reserve said in their complaint.

A group of Sri Lanka’s largest creditors, including Pacific Investment Management Co., T. Rowe Price Group Inc. and BlackRock Inc., has been set up and restructuring talks are expected to start soon, Bloomberg reported, citing people familiar with the arrangement who requested anonymity ahead of a formal announcement.

The island nation is grappling with a worsening humanitarian crisis after it ran out of dollars to purchase imported food and fuel, pushing inflation to 40% and forcing the default. Sri Lanka needs $5 billion to ensure “daily lives are not disrupted,” and a further $1 billion to strengthen the rupee, Prime Minister Ranil Wickremesinghe told parliament earlier this month.

Sri Lanka hired Lazard Ltd. and Clifford Chance LLP in May to serve as financial and legal advisors on debt restructuring as the country seeks a bailout from the International Monetary Fund.

Sri Lankan authorities on Monday began talks with the IMF, working toward an agreement that could offer creditors enough comfort to lend fresh funds to the bankrupt nation that’s seeking $6 billion in coming months.

The case is Hamilton Reserve v. Sri Lanka, 22-cv-5199, US District Court, Southern District of New York (Manhattan).

ICC: Netherlands

 

Russian spy caught seeking to infiltrate ICC: Netherlands

The Dutch authorities uncover a Russian military spy posing as a Brazilian intern to infiltrate the Hague-based international war crimes court.

An exterior view of the International Criminal Court in the Hague

The Dutch intelligence service has uncovered a Russian military agent attempting to use a false identity to infiltrate the International Criminal Court (ICC) which is investigating accusations of war crimes in Ukraine.

Sergey Vladimirovich Cherkasov created an elaborate cover story dating back years to attempt to enter the Netherlands as a Brazilian national for an internship at the Hague-based ICC in April, the agency’s head told the Reuters news agency on Thursday.

“This was a long-term, multi-year GRU operation that cost a lot of time, energy and money,” said Dutch intelligence agency chief Erik Akerboom, using the acronym for Russia’s military intelligence service.

No GRU representative could be immediately reached for comment, though President Vladimir Putin’s government has in the past frequently denied spying accusations as a Western smear campaign against Moscow.

The Dutch General Intelligence and Security Service (AIVD) said in a statement that the man, who went by the alias Viktor Muller Ferreira, was picked up at a Dutch airport.

He was declared an undesirable alien and put on the next flight back to Brazil, where he faces court proceedings, it added.

“It clearly shows us what the Russians are up to – trying to gain illegal access to information within the ICC. We classify this as a high-level threat,” Akerboom added, saying the ICC had accepted him for an internship.

ICC spokesperson Sonia Robla said the court was grateful to Dutch authorities for the operation and the exposing of security risks.

“The ICC takes these threats very seriously and will continue to work and cooperate with The Netherlands,” she said.

There was no immediate comment on the case from Brazilian authorities.

‘Well-constructed cover’

The Dutch agency said it had taken the unusual step of releasing detailed information on the case to expose the workings of Russian intelligence and the threat to other international institutions.

It distributed a four-page document outlining what it said was Cherkasov’s invented cover story, which included a supposed troubled family history and details from a club where he liked to listen to electronic trance music and his favourite restaurant in Brasilia where he would eat cheap brown bean stew.

“Cherkasov used a well-constructed cover identity by which he concealed all his ties with Russia in general, and the GRU in particular,” the statement said.

The ICC, a permanent global war crimes tribunal with 123 member states, opened an investigation in Ukraine just days after Putin sent his troops in on February 24. It is examining allegations of war crimes, crimes against humanity and genocide.