'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.

Sport
Mourinho lost his temper as well as the match
sportLiverpool handed title boost as Sunderland smash manager’s 77-game home league run
Voices
Sweet tweet: Victoria Beckham’s selfie, taken on her 40th birthday on Thursday
voices... and her career-long attack on the absurd criteria by which we define our 'betters', by Ellen E Jones
Arts & Entertainment
Billie Jean King, who won the women’s Wimbledon title in 1967, when the first colour pictures were broadcast
tv
News
Snow has no plans to step back or reduce his workload
mediaIt's 25 years since Jon Snow first presented Channel 4 News, and his drive shows no sign of diminishing
VIDEO
Life & Style
food + drinkWhat’s not to like?
Voices
Clock off: France has had a 35‑hour working week since 1999
voicesThere's no truth to a law banning work emails after 6pm, but that didn’t stop media hysteria
Arts & Entertainment
Maisie Williams of Game of Thrones now
tvMajor roles that grow with their child actors are helping them to steal the show on TV
Life & Style
Lana Del Rey, Alexa Chung and Cara Delevingne each carry their signature bag
fashionMulberry's decision to go for the super-rich backfired dramatically
Arts & Entertainment
Kingdom Tower
architecture
Life & Style
Sampling wine in Turin
food + drink...and abstaining may be worse than drinking too much, says scientist
Arts & Entertainment
Game of Thrones writer George R.R. Martin has been working on the novels since the mid-Nineties
books
News
Easter a dangerous time for dogs
these are the new ones. Old ones are below them... news
News
Brand said he
people
Voices
Actor Zac Efron
voicesTopless men? It's as bad as Page 3, says Howard Jacobson
Sport
Roger Federer celebrates his victory over Novak Djokovic in the Monte Carlo Masters
sport
Arts & Entertainment
The monster rears its head as it roars into the sky
film
Voices
For the Love of God (2007) The diamond-encrusted skull that divided the art world failed to sell for
its $100m asking price. It was eventually bought by a consortium
which included the artist himself.
voicesYou can shove it, Mr Webb – I'll be having fun until the day I die, says Janet Street-Porter
Have you tried new the Independent Digital Edition iPad app?
Independent Dating
and  

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

iJobs Job Widget
iJobs Money & Business

1st Line Helpdesk Engineer Apprentice

£150.00 per week: QA Apprenticeships: This company has been providing on site ...

Telesales & Sales Support Apprentice

£221.25 per week: QA Apprenticeships: This company is a well established Inter...

Client Relationship Manager - SQL, Python

£40000 - £50000 per annum: Harrington Starr: Client Relationship Manager - SQL...

**Financial Services Tax**

£35000 - £50000 per annum: Pro-Recruitment Group: Take your chance to join the...

Day In a Page

How I brokered a peace deal with Robert Mugabe: Roy Agyemang reveals the delicate diplomacy needed to get Zimbabwe’s President to sit down with the BBC

How I brokered a peace deal with Robert Mugabe

Roy Agyemang reveals the delicate diplomacy needed to get Zimbabwe’s President to sit down with the BBC
Video of British Muslims dancing to Pharrell Williams's hit Happy attacked as 'sinful'

British Muslims's Happy video attacked as 'sinful'

The four-minute clip by Honesty Policy has had more than 300,000 hits on YouTube
Church of England-raised Michael Williams describes the unexpected joys in learning about his family's Jewish faith

Michael Williams: Do as I do, not as I pray

Church of England-raised Williams describes the unexpected joys in learning about his family's Jewish faith
A History of the First World War in 100 moments: A visit to the Front Line by the Prime Minister's wife

A History of the First World War in 100 moments

A visit to the Front Line by the Prime Minister's wife
Comedian Jenny Collier: 'Sexism I experienced on stand-up circuit should be extinct'

Jenny Collier: 'Sexism on stand-up circuit should be extinct'

The comedian's appearance at a show on the eve of International Women's Day was cancelled because they had "too many women" on the bill
Cannes Film Festival: Ken Loach and Mike Leigh to fight it out for the Palme d'Or

Cannes Film Festival

Ken Loach and Mike Leigh to fight it out for the Palme d'Or
The concept album makes surprise top ten return with neolithic opus from Jethro Tull's Ian Anderson

The concept album makes surprise top ten return

Neolithic opus from Jethro Tull's Ian Anderson is unexpected success
Lichen is the surprise new ingredient on fine-dining menus, thanks to our love of Scandinavian and Indian cuisines

Lichen is surprise new ingredient on fine-dining menus

Emily Jupp discovers how it can give a unique, smoky flavour to our cooking
10 best baking books

10 best baking books

Planning a spot of baking this bank holiday weekend? From old favourites to new releases, here’s ten cookbooks for you
Jury still out on Manchester City boss Manuel Pellegrini

Jury still out on Pellegrini

Draw with Sunderland raises questions over Manchester City manager's ability to motivate and unify his players
Ben Stokes: 'Punching lockers isn't way forward'

Ben Stokes: 'Punching lockers isn't way forward'

The all-rounder has been hailed as future star after Ashes debut but incident in Caribbean added to doubts about discipline. Jon Culley meets a man looking to control his emotions
Mark Johnston: First £1 million jackpot spurs him on

Mark Johnston: First £1 million jackpot spurs him on

The most prize money ever at an All-Weather race day is up for grabs at Lingfield on Friday, and the record-breaking trainer tells Jon Freeman how times have changed
Ricky Gervais: 'People are waiting for me to fail. If you think it's awful, then just don't watch it'

Ricky Gervais: 'People are waiting for me to fail'

As the second series of his divisive sitcom 'Derek' hits screens, the comedian tells James Rampton why he'll never bow to the critics who habitually circle his work
Mad Men series 7, TV review: The suits are still sharp, but Don Draper has lost his edge

Mad Men returns for a final fling

The suits are still sharp, but Don Draper has lost his edge
Google finds a lift into space will never get off the ground as there is no material strong enough for a cable from Earth into orbit

Google finds a lift into space will never get off the ground

Technology giant’s scientists say there is no material strong enough for a cable from Earth into orbit