New Report from Peruvian-American Bondholders for Justice (PABJ) Says Peru Is Not Ready For Membership In The OECD
Criticizes Country's Default On Sovereign Land Bonds, Poor Financial Reporting, Weak Rule Of Law, And Adherence To OECD "Core Values"
WASHINGTON, Dec. 4, 2017 /PRNewswire/ -- A report attacking Peru's candidacy for membership in the Organisation for Economic Co-operation and Development (OECD) was released this week, saying the country's conduct with respect to its longstanding selective default on sovereign land bonds should preclude it from joining the exclusive club of global economic leaders.
The 37-page report written by a former top economist at the OECD, concluded that "Peru should not be considered a viable candidate for full OECD membership" and cited numerous reasons, including:
- Peru's decades-old selective default on sovereign Agrarian Reform Bonds and its "refusal to provide fair compensation" for those bonds, "despite the fact that such repayment appears far from impossible for Peru";
- Peru's failure to properly report the default to international organizations and regulators, including the International Monetary Fund (IMF), the U.S. Securities and Exchange Commission (SEC), and the Luxembourg Stock Exchange; and
- Peru's "shortcoming in public integrity….in particular its commitment to the rule of law, human rights and transparency." The report criticized President Kuczynski's recent and continued reliance on a forged 2013 Peruvian Constitutional Tribunal decision on the defaulted bonds that is currently under criminal and Congressional investigation.
"Peru's conduct generally demonstrates a lack of readiness by Peru with respect to its ability to take part in the OECD accession process, in particular is ability to promote the OECD core principles," the report said. "Despite Peru's economic progress, the country does not meet some of the key requirements for OECD membership, due to long-standing debt obligations that it has repeatedly failed to address or disclose."
The report was written by Dr. Hans J. Blommestein, who was head of Public Debt Management at the OECD from 2001 to 2016 and supervised the organization's Financial Affairs Division from 1998 to 2000.
The report centers on Peru's expropriation of 23 million acres of land from citizens between 1969 and 1979 and the Agrarian Reform Bonds the citizens were forced to accept in exchange for their land. In many cases the bonds were never repaid, and as many as 20% of the outstanding bonds are now held by international investors, including about 200 U.S. pension funds.
The report was commissioned by Peruvian-American Bondholders for Justice (PABJ) and the Agrarian Debt Bondholders Association (ABDA). They and six other bondholder groups sent the report and an accompanying letter to OECD Secretary-General Ángel Gurría. Together, the bondholder groups represent thousands of Peruvian and Peruvian-American bondholders. Copies of the report and letter were delivered yesterday to more than 60 OECD officials, ambassadors to the OECD in Paris, OECD member-nation Ambassadors in Peru, and Peruvian Finance Minister Claudia Cooper Fort.
"We fully expect Peru to issue blanket denials and attempt to label this issue as a 'valuation dispute' with a few select bondholders, as opposed to an ongoing bond default impacting thousands of bondholders (aided by criminal action by the highest levels in the judiciary and executive branch) and a willful and purposeful attempt to not report the Agrarian Reform Bond debt," the bondholder letter to Gurría said. It urged him to conduct "an unbiased and objective analysis" of the issue and a full review of the report, adding "Peru has failed to meet OECD standards of transparency and has instead done everything possible to sweep this issue 'under the rug.'"
For further information, please contact:
Agrarian Debt Bondholders Association
Peruvian-American Bondholders for Justice
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