US investigators home in on Trump nominee’s links to Dublin company

IFSC bond vehicle used kids charity as shareholder, raising concern in Washington

 

Investigators vetting one of US president Donald Trump’s senior nominees to the department of the treasury have zeroed in on his role at a Dublin outfit linked to Argentina’s sovereign debt crisis, and its links to an Irish children’s charity.

Adam Lerrick, an economist and renowned critic of sovereign bailouts, was picked by Mr Trump as assistant secretary of the treasury for international finance.

It is one of the most senior roles after treasury secretary Steven Mnuchin, and incorporates the US administration’s relations with global finance bodies such as the International Monetary Fund and World Bank.

In common with other White House picks, Mr Lerrick’s nomination has gone to the US Senate finance committee for vetting and a hearing, before a decision is taken on whether or not to clear the selection.

The committee’s investigators are examining Mr Lerrick’s past links to Argentine Bond Restructuring Agency (ABRA), a collective of mostly European-based investors who held $1.2 billion of the South American country’s bonds when it defaulted in 2001, sparking economic collapse and riots.

Mr Lerrick was ABRA’s lead negotiator with the Argentine government and helped to set its overall strategy. In 2003, ahead of the start of restructuring talks with Argentina, ABRA established a special purpose vehicle (SPV) in the International Financial Services Centre in Dublin to hold its members’ bonds.

The tax-efficient SPV was established for ABRA by top Dublin corporate law firm Matheson. Its shareholders were listed as three charitable trusts, Medb, Badb and Eurydice, which until recently operated together as children’s charity Matheson Foundation.

Hedge funds

This type of structure was routinely deployed over many years by Matheson for its corporate clients, such as hedge funds, to set up Dublin tax efficient SPVs.

However, the practice recently became a source of political controversy here when it was revealed some SPVs established by Matheson for so-called “vulture funds”, with the children’s charity entities as shareholder, were dealing in Irish distressed property loans.

After criticism in the Dáil based on reporting by The Irish Times, and in the midst of an investigation by the charities regulator, Matheson recently relinquished the charitable status of Medb, Badb and Eurydice.

It is understood that both Republicans and Democrats on the US Senate finance committee now have major concerns over Mr Lerrick’s links to ABRA, primarily because it used a children’s charity to set up a tax efficient vehicle.

“Mr Lerrick is undergoing the same bipartisan vetting process as every nominee that comes before Senate finance committee,” a spokeswoman for the committee said, in response to detailed queries over the concerns surrounding his Dublin SPV links.

Vetting process

She declined to comment further because investigators were in the middle of the vetting process. Mr Lerrick’s hearing has yet to be scheduled. It is believed that the Trump administration is still keen on Mr Lerrick, despite the bipartisan concerns over his links to ABRA.

Mr Lerrick has already begun working at the treasury, ahead of his confirmation. He is considered a maverick choice for his role by Mr Trump because of the nominee’s hawkish view of the IMF. During the financial crisis, Mr Lerrick repeatedly criticised the sovereign bailouts, and was expected to champion Mr Trump’s “America First” policy in his sphere.

The US treasury made no response to several queries seeking comment from it and from Mr Lerrick.