Conflict disclosure of the day, Forbes edition

By Felix Salmon
December 1, 2010
Hal Scott has an op-ed in Forbes, taking the Obama administration to task for supporting the Argentine government in its court fight against holdout creditor

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Hal Scott has an op-ed in Forbes, taking the Obama administration to task for supporting the Argentine government in its court fight against holdout creditors. As the prospect of sovereign default spreads from emerging markets to the euro zone, Scott wants the US to do everything it can to encourage other governments to never default. “Default,” he writes, “should only be a last, disgraceful resort.”

What I’m most interested in here is the way that Scott is identified:

Hal S. Scott, a professor of international finance at Harvard Law School, has filed an amicus brief in the Argentine litigation.

This is true, but it needs to be parsed very carefully to be properly understood. In reality, Scott is a paid partisan in the Argentine-debt wars, and has been for years. In September 2006, he released a paper entitled “Sovereign Debt Default: Cry for the United States, Not Argentina”, which can be found hosted on the website of ATFA, the vulture-fund-backed pressure group which is the lobbying arm for Argentina’s holdout creditors. (ATFA also emailed me to make sure I’d seen Scott’s piece in Forbes.)

Scott’s 2006 paper was very radical: it suggested massive changes to the Foreign Sovereign Immunities Act which would be tantamount to repealing the entire thing. He said that “the US should endeavor to give creditors the same rights against sovereign borrowers that they have against private borrowers” and that if foreign central banks have assets in the US or Switzerland, those assets should be “available to be attached in satisfaction of debts owed by the sovereign” — as should sovereign payments to the IMF. Creditors should also, he said, be able to seize state-owned companies if those companies were owned by a state in default.

This is very extreme stuff, and violates every norm in international diplomacy: it’s never going to happen. Scott’s paper was a salvo in the court battle over Argentina’s debt, and I have always assumed that it was paid for—as was his amicus brief—by Argentina’s creditors. (Scott was writing briefs siding with them as long ago as 2004.) But as Charles Ferguson showed so well in his movie Inside Job, academics are incredibly bad at disclosing even when they’ve been paid by vested interests, let alone how much they’ve been paid.

Scott, then, is hardly a disinterested law professor here, as a naive reading of his Forbes bio might suggest. Is it too much to ask that he disclose that he’s been paid by Argentina’s creditors, even if he doesn’t have to give a dollar amount?


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Why don’t you call him and ask him?

Posted by ericinaustin | Report as abusive


Were you paid by Hal Scott? It’s not Felix’s job to do MORE work; rather, it’s Hal’s job to reveal his sources of funding. Alternatively, Hal Scott has zero academic credibility.

Of course, Argentina’s entire effort falls apart if they don’t have “intellectually neutral” backers of their position, so Hal’s paper isn’t exactly unexpected.

Posted by Unsympathetic | Report as abusive

Unsympathetic, isn’t it Mr Salmon’s job to do so?

Is there any actual issue you have with the article Mr Scott published? You get paid by Reuters, does that mean you won’t offend media companies and financial institutions who are the largest clients of Reuters? I suspect in alot of these “conflict” cases the academic has been picked because he believes what he is writing anyway.

Posted by Danny_Black | Report as abusive

Surely there is nothing wrong with Argentina pay? The Argentine government is scum when it comes to dealing with creditors.

Posted by SGKingsley | Report as abusive

> You get paid by Reuters, does that mean you won’t offend
> media companies and financial institutions who are the
> largest clients of Reuters?

The important distinction is we *know* Felix gets paid by Reuters, so the reader can choose to account for whatever bias we feel might be present because of that.

Being paid is not the crime. Failing to disclose it so that readers can’t use this information to inform their perception of the piece is.

Posted by TomWest | Report as abusive

Perhaps I’m misreading the post, but have you presented any evidence (other than your long-held assumption) that Scott is a paid partisan?

Posted by MattJ | Report as abusive

So if you just happen to be innately biased thats fine but you should disclose every single possible source of income or possible income? You think this group just picked a random guy and offered him money or do you think they picked someone who already believed what he said and paid him to do tart it up and present it?

Reminds me in the aftermath of the research scandal that interviewers were asking every analyst if they had any commercial relationship with the company under discussion and one SG analyst said “your viewers should assume on any topic that if we aren’t already doing business we are working round the clock to remedy that situation”.

Personally, I would rather go on the facts and arguments presented rather than their “biases”.

Posted by Danny_Black | Report as abusive

Countries are a little different from individuals. When they tell their creditors to go to fly a kite and it is time for sovereign collections.

The historical recourse in this situation is to go enter the debtor nation without asking and take ownership of what you need. For instance if you are trying to collect war debts after World War I, you could go in and assume ownership of factories the Ruhr Valley. The debtor nation would completely understand, because debts are debts, after all.

Posted by DanHess | Report as abusive

DanHess, pity historians whining about “imperialism” were not as forgiving.

Posted by Danny_Black | Report as abusive