'Vulture funds' circle as Greece fears grow

As Greeks rush to withdraw savings, bailout fund pays US tax exile €400m

Athens

An American tax exile living in the Cayman Islands has emerged as a winner from the chaos engulfing Greece, even as the political and economic turmoil in the beleaguered nation deepened yesterday, with Athens putting a senior judge in charge of an emergency government to lead it to fresh elections.

Kenneth Dart, the Michigan-born heir to a disposable cups fortune, was handed an estimated €400m (£320m) cheque from Greece this week, after successfully calling the country's bluff and refusing to take part in the restructuring of government debt that saved Greece from default in the spring.

Amid alarming reports of depositors withdrawing their cash from Greek banks, the government decided it could ill afford a showdown with Mr Dart's hedge fund, Dart Management, and similar "vulture funds" who have purchased Greek debt and are threatening to sue if the interest payments are not made. Concerns over the state of the nation's banks have mounted as the odds of a disorderly Greek exit from the eurozone have shortened in recent days, and keeping the financial system sound will be the No 1 priority of Panagiotis Pikramenos, named caretaker Prime Minister after the collapse of coalition talks on Tuesday.

He is charged with steering Greece to new elections on 17 June without incident, although concerns over the risk of financial panic have risen since European political leaders began to speculate that Greece could leave the euro. Moreover, recent opinion polls suggest that anti-bailout parties – in particular the Syriza party led by Alexis Tsipras – could return with a bigger slice of the vote after the June elections.

This already complex picture is further complicated by the role of the vulture funds. Dart Management holds a significant portion of the roughly 5 per cent of Greek debt that was not subject to renegotiation under the terms of its bailout deal, and took a reported 90 per cent of the €436m paid by the Greek government to bondholders on Tuesday. While Mr Dart is still a board member of the family company, Dart Containers, which is America's largest producer of plastic cups, he has not lived in the country since 1994.

After decamping from the US on his 220ft yacht, he settled in the Cayman Islands, where he is a powerful real estate developer. Dart Management, along with another vulture fund Elliott Associates, is likely to have picked up Greek debt at a fraction of its value in the hope of being able to force the country into paying some or all of what it owes. The two firms are still suing Argentina in the US courts to demand full payment of bonds on which that government defaulted in 2002. Mr Dart first came to international attention in this sphere by pocketing an estimated $600m from putting pressure on the Brazilian government after its default in 1993.

Yesterday, the company refused to comment on what it called market rumours. The Greek government, meanwhile, said Tuesday's payments did not set a precedent that meant it would divert any more of its precious bailout cash to the vulture funds in future.

The threat of a legal battle that could tie up funds earmarked for Greece from European bailout coffers adds another concern to that stoked by news that more than €1bn has been withdrawn from Greek banks in two days by savers fearing financial chaos if the country returns to the drachma.

These worrying figures were not reflected in the streets of Athens, however. On Syntagma Square, no long queues had formed at cash machines.

"We can't all start panicking and running to the bank. The country will collapse if we do that, "said Marika Tilanogiannis, a mechanical engineer. "What little I have left, I leave for Greece."

Marika's brother didn't share her optimism – Giorgos had moved his savings to a bank abroad. But Marika's reasoning was echoed by experts who cautioned that politicians' pessimistic statements about the country's finances risked turning into a self-fulfilling prophecy.

"This entire situation has got my family extraordinarily worried about our savings, in case we return to the drachma," said Yannis Paleologos, a 40-year-old pharmacist. "We have a considerable amount of money and we're scared to lose it." Mr Paleologos was about to go to a bank to discuss how to preserve his deposits in case of an exit from the single currency union.

PROMOTED VIDEO
News
ebooksNow available in paperback
Latest stories from i100
Have you tried new the Independent Digital Edition apps?
Independent Dating
and  

By clicking 'Search' you
are agreeing to our
Terms of Use.

iJobs Job Widget
iJobs Money & Business

Reach Volunteering: Trustee – PR& Marketing, Social Care, Commercial skills

Voluntary Only - Expenses Reimbursed: Reach Volunteering: Age Concern Slough a...

Reach Volunteering: Charity Treasurer

Voluntary Only - Expenses Reimbursed: Reach Volunteering: Crossroads Care is s...

SThree: Trainee Recruitment Consultant - Soho

£20000 - £25000 per annum + OTE £35,000: SThree: We consistently strive to be ...

Ampersand Consulting LLP: Markit EDM (CADIS) Developer

£50000 - £90000 per annum + benefits: Ampersand Consulting LLP: Markit EDM (CA...

Day In a Page

Mau Mau uprising: Kenyans still waiting for justice join class action over Britain's role in the emergency

Kenyans still waiting for justice over Mau Mau uprising

Thousands join class action over Britain's role in the emergency
Isis in Iraq: The trauma of the last six months has overwhelmed the remaining Christians in the country

The last Christians in Iraq

After 2,000 years, a community will try anything – including pretending to convert to Islam – to avoid losing everything, says Patrick Cockburn
Black Friday: Helpful discounts for Christmas shoppers, or cynical marketing by desperate retailers?

Helpful discounts for Christmas shoppers, or cynical marketing by desperate retailers?

Britain braced for Black Friday
Bill Cosby's persona goes from America's dad to date-rape drugs

From America's dad to date-rape drugs

Stories of Bill Cosby's alleged sexual assaults may have circulated widely in Hollywood, but they came as a shock to fans, says Rupert Cornwell
Clare Balding: 'Women's sport is kicking off at last'

Clare Balding: 'Women's sport is kicking off at last'

As fans flock to see England women's Wembley debut against Germany, the TV presenter on an exciting 'sea change'
Oh come, all ye multi-faithful: The Christmas jumper is in fashion, but should you wear your religion on your sleeve?

Oh come, all ye multi-faithful

The Christmas jumper is in fashion, but should you wear your religion on your sleeve?
Dr Charles Heatley: The GP off to do battle in the war against Ebola

The GP off to do battle in the war against Ebola

Dr Charles Heatley on joining the NHS volunteers' team bound for Sierra Leone
Flogging vlogging: First video bloggers conquered YouTube. Now they want us to buy their books

Flogging vlogging

First video bloggers conquered YouTube. Now they want us to buy their books
Saturday Night Live vs The Daily Show: US channels wage comedy star wars

Saturday Night Live vs The Daily Show

US channels wage comedy star wars
When is a wine made in Piedmont not a Piemonte wine? When EU rules make Italian vineyards invisible

When is a wine made in Piedmont not a Piemonte wine?

When EU rules make Italian vineyards invisible
Look what's mushrooming now! Meat-free recipes and food scandals help one growing sector

Look what's mushrooming now!

Meat-free recipes and food scandals help one growing sector
Neil Findlay is more a pink shrimp than a red firebrand

More a pink shrimp than a red firebrand

The vilification of the potential Scottish Labour leader Neil Findlay shows how one-note politics is today, says DJ Taylor
Bill Granger recipes: Tenderstem broccoli omelette; Fried eggs with Mexican-style tomato and chilli sauce; Pan-fried cavolo nero with soft-boiled egg

Oeuf quake

Bill Granger's cracking egg recipes
Terry Venables: Wayne Rooney is roaring again and the world knows that England are back

Terry Venables column

Wayne Rooney is roaring again and the world knows that England are back
Michael Calvin: Abject leadership is allowing football’s age-old sores to fester

Abject leadership is allowing football’s age-old sores to fester

Those at the top are allowing the same issues to go unchallenged, says Michael Calvin