Creditors of the Republic of Argentina (and there are a lot of them) wanted to go after Banco de la Nación Argentina (BNA), wholly-owned by the republic, in order to satisfy their claims against the latter: Seijas v Republic of Argentina, 2012 US App LEXIS 22167 (2d Cir, 25 October 2012). The plaintiffs argued that the government of Argentina appointed and removed the bank’s directors, that BNA had made loans to individuals and corporations that were favourable to Argentina’s sovereign interests and loans to Argentina itself (in breach of BNA’s charter) and that BNA’s financial records were sufficiently murky as to give rise to a need to pierce the corporate veil.  

Sorry, said the 2d Circuit in affirming summary judgment for the republic. The Argentine government exercised its rights as sole shareholder to appoint BNA’s directors, but this didn’t make the bank the alter ego or instrumentality of the state. There was not ‘extensive’ control by the government over the bank’s day-to-day operations. The bank’s loans were consistent with its charter to act in a manner consistent with government policy. The ‘purported obscurity’ of BNA’s records was too speculative a basis on which to ignore its separate legal personality. Compare Kensington Int’l Ltd v Republic of Congo (SDNY, 30 March 2007), where the instrumentality had a corporate structure that was used for complicated schemes to confound the state’s creditors, had a state employee for a president, passed up revenue which was simply transferred to the state’s coffers, engaged in no significant commercial activity, commingled its own assets with those of the state and refused to disclose records in the course of an IMF and World Bank audit. The alleged facts in Seijas fell ‘far short’ of those in the Kensington case, and the district court was correct to find in favour of the defendant.