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ECONOMY | 30-11-2023 14:54

Luis ‘Toto’ Caputo returns to fore in Argentina with unenviable task

President-elect Javier Milei confirms that Macri-era finance chief will be tasked with leading Argentina’s economy out of the doldrums and “defusing the bomb that the government is leaving behind.”

The familiar face of Luis 'Toto' Caputo is returning to government as the economy minister in president-elect Javier Milei’s new Cabinet.

Caputo, 58, a former governor of the Central Bank and ex-finance minister, has been praised by Milei in recent television interviews and the president-elect’s office confirmed the news in a statement this week.

“Caputo is someone in a position to hold this post, with the necessary experience to dismantle the situation we’re in,” said Milei in a recent interview.

“He has the necessary expertise to solve the monetary problem and provide a solution from financial markets to get out of the issue of the Leliqs and ending foreign exchange restrictions,” the La Libertad Avanza leader concluded.

Leliqs, short-term debt securities issued by the Central Bank to financial institutions, are an obsession of Milei, since fulfilling these obligations causes major monetary emission for a country without access to credit, which, to a large extent, pushes up inflation.

Responding to news of his appointment, Caputo thanked Milei for his “trust” and vowed to “give everything to bring joy to Argentines.”

The founder of La Libertad Avanza said Caputo "is in charge of defusing the bomb that the government is leaving behind so that we avoid what would be the worst crisis in history."

Caputo is expected to put the libertarian’s dollarisation plans on hold and seek a “non-disruptive roadmap” for the short term that will win over markets.

His appointment to an area of vital importance confirms the strong influence of former president Mauricio Macri on the composition of the new Cabinet. Rumours of Caputo’s arrival also sparked unrest within the ranks of La Libertad Avanza. 

The head of the president-elect’s economic advisory team, Carlos Rodríguez described Caputo as “a finance man” who is “not minister material” and specialises only in “the speculation of financial assets.”

Economist Emilio Ocampo – once seen as Milei’s point man for dollarisation – is also now out of the picture. 

Economist and university professor Diego Giacomini – former best friend of the president-elect – complained last week that Milei had “always looked down on Luis Caputo because he knows nothing about economics and can only put citizens in debt and make money by gambling.”

A graduate in economics from the University of Buenos Aires (UBA) who was initially educated at the Cardenal Newman School, Caputo spent much of his career in the private sector, accumulating experience with US banking giant JP Morgan and later, Deutsche Bank. 

He built a career as a respected trader able to obtain results for clients even in adverse situations.

Caputo is currently the head of Anker economic consultancy firm and has been advising Milei on economic matters.

The likely economy minister is the cousin of Nicolas ‘Nicky’ Caputo, a construction businessman who is one of Macri’s closest friends. 

The incoming minister’s brother is Claudio Caputo, the late father of Santiago Caputo, the 38-year-old political scientist who worked intensely on the La Libertad Avanza election campaign and whom Milei called the “architect of victory.”

 

Back to prominence

This will not be Caputo’s first rodeo, but the ex-official faces an unenvitable task. Argentina’s economy is likely to enter recession imminently and with inflation running at more than 140 percent annually, more than 40 percent of the population currently lives in poverty. 

With tight currency controls to unwind, the peso trading at wild rates on parallel markets, short-term debt to unwind and little international reserves, the margin for error is practically non-existent.

During Mauricio Macri’s 2015-2019 administration, he was finance secretary and then finance minister until 2018, when he changed post to take over the Central Bank after Federico Sturzenegger’s exit (incidentally, the latter was also a candidate for the economy minister post).

Under Macri – who once dubbed Caputo the “Messi of finance” – as finance secretary, he renegotiated an agreement with the so-called “vulture funds, holdout bondholders, for around US$16.5 billion that allowed Argentina to return to international credit markets. Caputo also issued a controversial 100-year bond that was later scrapped.

During his time in office, Caputo famously took part in negotiations with the International Monetary Fund over the record US$57-billion loan granted to Argentina in 2018 under Macri’s Cambiemos government.

However, his time at the Central Bank lasted little more than three months, amid rumours of a bad relationship with the IMF.

Caputo is one of a number of ex-Macri administration officials who are under investigation by the courts due to the historic IMF agreement. 

Both he and Macri, among others, have been denounced for the alleged crimes of “fraud due to aggravated mismanagement to the detriment of public administration and misappropriation of public funds.”

Regardless of the volume of indebtedness (US$45 billion) and the conditions imposed by the international body in terms of devaluation of the peso and adjustment of public expenditure, there is an internal investigation underway due to capital flight.

After the leak of the Paradise Papers in 2017, Caputo once again became a subject of controversy.

Media reports indicated that when he took public office, he was a shareholder in offshore companies created to manage hundreds of millions of dollars in tax havens. This was revealed by official documents of the Securities and Exchange Commision (SEC), accessed by Perfil together with the local branch of the Paradise Papers team.

The official was, between August 2009 and July 2015, the main shareholder in the company Princess International Group, based on the Cayman Islands. He held over 75 percent of the shares, but Caputo failed to add that information in the affidavits filed before the OA Anti-Corruption Office when he took public office in December 2015, when he should communicate his assets and shares for the 2014 fiscal period. He also concealed that information again in 2016, when he should have informed his assets as of early 2015. 

His involvement in Princess International Group was key and evidenced the mechanism whereby tax havens facilitate the concealment of assets, information and money. Through this company, Caputo was the owner of between 50 and 74 percent of another offshore company: Affinis Partners II, also based on the Cayman Islands and owner of Noctua, the manager of investment funds based in Delaware and Miami. 

The corporate structure of Noctua works like Russian dolls: one company owns another company which is the parent company of another.


– TIMES/PERFIL

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