Argentina's former economy minister Cavallo absolved in debt swap case

BUENOS AIRES, Argentina – Argentina’s former Economy Minister Domingo Cavallo was absolved by a local court on Monday in a case over the 2001 debt swap ahead of the country’s worst economic crisis.

Cavallo, 68, had faced charges of illegal negotiations in the hiring of banks to carry out the $30 billion swap. A Buenos Aires court said that he didn’t commit any crime in the failed operation aimed at preventing the country from going into default. Details of the court ruling will be released Oct. 14.

Prosecutors had requested a three-year jail sentence for Cavallo and a lifetime ban from holding public office. They maintained that Cavallo had favoured some banks during the swap and harmed the government by charging a commission for the deal. But Cavallo always denied any wrongdoing, saying he was a scapegoat for Argentina’s worst economic crisis.

“I’ve been judged and absolved, because I never committed any crime,” Cavallo wrote on his Twitter account after the ruling.

“I thank all of those who with respect have criticized me and continue to do so. I made, and still make mistakes, but always in good faith.”

Cavallo served twice as economy minister — under the 1989-1999 presidency of Carlos Menem and the 1999-2001 presidency of Fernando De la Rua.

The Harvard University-trained economist was widely credited with turning around Argentina’s inflation-wracked economy during his first stint in 1991-96 by pegging the Argentine peso one-to-one with the U.S. dollar.

He tried to pull Argentina from a deep recession when he returned to the ministry under De la Rua. But his belt-tightening policies, along with his decision to partially freeze banks accounts, proved highly unpopular. He was forced to step down in December 2001, along with De la Rua, amid days of supermarket looting and deadly street riots. Argentina’s economy unraveled and eventually defaulted on a record debt of more than $100 billion.