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BAUEN, day 18

Chapter 3

How to scam the State

The complex business framework we have described provides the starting point for the asset-stripping and bankruptcy of the Bauen hotel, which was a scam on the treasury right from the beginning. The plot of this operation is widely detailed in a work by Federico Tonarelli (former president of the cooperative, current vice-president, and president of the Argentine Federation of Self-Managed Worker Cooperatives, FACTA) and Fabián Pierucci (economist and filmmaker, director of the documentary BAUEN, struggle, work, culture1), which was included in the book Crisis and Self-management in the 21st Century.2 In that text, the authors give an exhaustively detailed explanation of the large-scale financial plot to scam the State (and, therefore, the Argentine people) by means of the construction of the Bauen and its later appropriation by the Iurcoviches’ business. In his words:

At the beginning of the ’80s, Bauen, SA, sued BANADE for noncompliance in granting the above-mentioned credit, as a strategy of repudiating the original debt, of extending time periods, and of liquidating the amount originally owed in a context of high inflation. After having made only a few payments consisting of amortization of interests, until the whole amount agreed with the BANADE was disbursed, plus the expansions to the original credit for changes in the building project, no more payments were ever made on the amount due to the bank. In March of 2007, there was a ruling by the Court of Appeals, which is in the Supreme Court of the Nation today, in the case of Bauen SACIC vs BANADE where the liquidation indicates that the debt to BANADE, updated to April 1, 1991, is AR$4,670,262.84. Applying a 5% annual interest rate between January first, 1983, and March 31, 2007, gives an amount of AR$11,118,718, minus a penalty of AR$2,502,193 imposed on BANADE for noncompliance with timely disbursement of the installments, gives a final balance of AR$8,616,524 in favor of BANADE.

In the liquidation agreement, we can see that the period of 1991 to 2007 was not updated, which meant a considerable liquidation of the debt. Now, if we go through the exercise of applying the fee for noncompliance with the terms of 5% monthly on capital of origin over the 62 months from the signing to the present, the amount of AR$4,670,262.84 becomes AR$14,477,814.80, which, updated by IPIM 2012/2007 [the Index of Wholesale Prices], brings us close to a debt of AR$25,000,000 today.3 This judgment largely achieves the objective of the economic group led by Iurcovich: to hold on to the building he profited from since it was constructed practically for free. This strategy of a chain of successive scams allowed the economic group, which today demands ownership of the building, to use the flow of revenue created by the hotel to become rich and invest in other ventures, which are public knowledge (Bauen Suite in Buenos Aires, Bauen Buzios in Brazil, etc.) without any kind of State control.”4

  1. Fabián Pierucci (dir.), BAUEN. Struggle, culture and work (video recording), Argentina: Alavío Group, 2014, DVD (75 min). Recovered from:
  2. Fabián Pierucci and Federico Tonarelli, “Worker Cooperative Hotel BAUEN: an experience of self-management and freedom,” in Ruggeri, A.; Novaes, H.T. ; Sardá de Faria, M. (comps.), Crisis and self-management in the twenty-first century. Cooperatives and recovered businesses in times of neoliberalism, Bs. As.: Ediciones Peña Lillo/Continente, Worker Economy Library series, 2014.
  3. Author’s note: the date of publication of the book the quote is taken from is 2014.
  4. Fabián Pierucci and Federico Tonarelli, ob. cit., pp. 153-154.

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