Wednesday February 20, 3:30 pm Eastern Time
Argentine judge bans bankers from leaving country

By Gilbert Le Gras

BUENOS AIRES, Argentina, Feb 20 (Reuters) - About 20 top executives from five of Argentina's biggest banks were banned on Wednesday from leaving the country by a judge investigating allegations of illegal capital flight, court and police officials said.

The chiefs and other senior executives of the Argentine operations of Citigroup's Citibank (NYSE:C - news) of the United States, Italian-controlled Banque Sudameris of Brazil, Argentina's Banco Galicia, U.S. bank FleetBoston Financial Corp.'s (NYSE:FBF - news) BankBoston and Canadian Bank of Nova Scotia's (Toronto:BNS.TO - news) ScotiabankQuilmes were ordered to remain in Argentina while a judge probes alleged irregular transfers of funds.

``There are about 20 bankers in this capital flight case so, for the moment until the investigation is over, they cannot leave the country,'' a federal police spokeswoman said.

The order does not mean that any of the bankers are accused of illegal activity, but only that they are the subject of an investigation. Four of the five banks covered by the order are foreign-based.

FOREIGN BANKS UNDER INCREASING SCRUTINY

Foreign banks have come under increasing scrutiny in the past months amid depositor protests, following December's banking curbs and January's arrest of an Argentine manager of Banco General de Negocios for alleged money laundering.

Banco General is owned by Argentine investors as well as by foreign banks J.P. Morgan Chase & Co. (NYSE:JPM - news) of the United States, Credit Suisse Group of Switzerland and Dresdner Bank of Germany.

Argentina has devalued its currency and defaulted on its debt amid political and economic upheaval. About a quarter of all deposits fled the banking system last year, until the government in early December banned cash withdrawals over a strict monthly limit. The bank curbs remain in place.

Officials at Citibank, Banco Galicia and BankBoston declined comment, while a spokesman at Banco Sudameris did not return messages. The spokesman for the Argentine Bank Association declined to comment.

``Given that this is a court case, it would be inappropriate for us to comment. Other than that, what I can tell you is we're continuing to work very closely with Argentine authorities,'' said Bank of Nova Scotia spokeswoman Pam Agnew.

``We are in full compliance with all laws governing operations in the country,'' Agnew told Reuters in Toronto.

``Clearly our staff management continue to perform their banking operations and they're operating under very difficult circumstances, the rules are still changing daily and there are riots on the street. They're doing simply an outstanding job under the circumstances,'' she added.

Last week another judge ordered Eduardo Escasany, the chairman of Argentina's largest financial holding company Grupo Financiero Galicia, from leaving Argentina while she investigated other allegations of illegal capital flight.

Escasany took out full-page newspaper ads to reject the allegations which were made in a magazine by his sister, with whom he has been in a legal battle over traditional family ownership of the company.

Last month, Argentine police detained Carlos Rohm -- who together with his brother Jose, owns a large stake in Banco General de Negocios -- after a congressional report alleged he was involved in money laundering.

Jose Rohm was in Switzerland at the time of his brother's arrest for a board meeting of Banco General but left that country before Swiss police could act on an international warrant to detain him, police said.

Gruss

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