PERU TO SEEK DISMISSAL OF BANK SUITS

PERU TO SEEK DISMISSAL OF BANK SUITS

A lawyer representing the government of Peru said Monday the country will seek the dismissal of 11 lawsuits filed by international banks trying to recover at least $2 billion in debts.

Mark Cymrot, of the Washington firm of Cole Corette & Abrutyn, told U.S. District Judge John Keenan during a hearing in Manhattan federal court that he will travel to Peru on Tuesday to determine possible grounds for dismissal.Judge Keenan gave Peru until July 9 to reply to the main suit pending before him. That suit, in which Bank of America is the lead plaintiff, calls for immediate repayment of $1.2 billion under the original terms of the loans.

Lawyers representing other banks said they are seeking to have the other 10 suits heard by Judge Keenan. Among other plaintiffs are Citibank, Chemical Bank, Chase Manhattan, Manufacturers Hanover Trust, J.P. Morgan, Wells Fargo, Bank of Nova Scotia, Bank of Tokyo, and Credit Lyonnais.

Peru has been in default on its foreign debt service since 1985. It now has an external debt of about $20 billion.

Although it is highly unusual for banks to sue a sovereign government for repayment of debt, the group of international banks filed earlier this year

because the federal deadline for taking such action expired in early March.

The banks were concerned if they did not file their lawsuits by that date, they would have no legal recourse against Peru. The banks' individual loan agreements with Peru specify that U.S. courts have jurisdiction over disputes concerning the loans.

The suits are important because of the possible impact on the Brady debt plan, Mr. Cymrot said. In 1989 U.S. Treasury Secretary Nicholas Brady proposed a broad plan under which banks would swap existing loans for loans of lesser value, allowing developing nations to cut their debts.

The plan recognized that debtor countries will never be able to repay in full. Under the Brady plan's guidelines, debt reduction agreements have been reached with Mexico, the Philippines, Costa Rica and most recently, Venezuela.

Mr. Cymrot said the banks, through their lawsuits, are seeking a unilateral solution to Peru's debt problems by demanding full immediate repayment of the debt under the original terms.

"This tactic by banks has rarely been used in the past," Mr. Cymrot said. "It flies in the face of the Brady plan."

Mr. Cymrot said during the hearing that a possible basis for dismissal is a Feb. 28 agreement with Peru's lenders signed by Cesar Vasquez Bazan, the country's finance minister.

Under the accord, Peru waived its legal defense of non-payment suits based on the U.S. Statute of Limitations. The waiver is for a certain period to allow time for negotiations.

But the banks were worried that the finance minister did not have the authority to grant such a waiver and filed their suits shortly afterward.

Among their concerns is the presidential election runoff early next month between Mario Vargas Llosa and Alberto Fujimori. No new government is due to take over in Peru until July 28.