Minpeco

Minpeco S.A. was established by the government of Peru in 1974 with "the exclusive right and obligation to trade" the silver produced by the state mining company Centromin, which refined about half the country's output, and by private miners. Its charter defined it as "a public enterprise, as a juridical person of public internal law, with administrative, economic and technical autonomy." It held short positions in silver futures when the price rose from about six dollars an ounce to fifty between 1979 and January 1980. The Banco Central de Reserva lent it physical silver and joined a loan to cover its margin calls.¹

The Defendants

Minpeco sued in the federal court in Manhattan in 1981, docket 81 Civ. 7619, before Judge Morris Lasker. The defendants were Nelson Bunker Hunt, William Herbert Hunt, and Lamar Hunt; the International Metals Investment Company, their Bermuda partnership with Saudi investors; Sheik Mohammed Aboud Al-Amoudi and Sheik Ali Bin Mussalem; the Brazilian speculator Naji Nahas; Mahmoud Fustok; Faisal Bin Abdullah; Gilian Financial; Banque Populaire Suisse; Advicorp Advisory and Financial Corporation; the trader Norton Waltuch and his firm ContiCommodity Services; the brokers ACLI International, Merrill Lynch, Bache Halsey Stuart Shields, and E.F. Hutton; and the two exchanges, the Commodity Exchange and the Chicago Board of Trade. The Hunts were represented by Hughes Hubbard and Reed of New York and by Shank, Irwin, Contant, Williamson and Grevelle of Dallas. Arnold and Porter appeared for the Swiss bank.²

On November 24, 1982, the court refused to dismiss the claims against the brokers, holding that financing a conspiracy "with the intent of participating in and aiding" it could create liability where ordinary lending did not. It dismissed the antitrust claims against the exchanges, because the complaint alleged a failure of oversight and not an agreement with the conspirators.²

The Single Entity Defense

The defendants argued from 1982 onward that the Peruvian mining sector was one government enterprise "from cradle to grave," so that the gain to Peru from the higher price of the silver it mined must be set against the trading company's loss. After five years of discovery they showed that the central bank was state owned, that its board was appointed largely by the government, and that it had lent Minpeco silver and money. In an opinion dated May 12, 1988, the court held this insufficient to overcome the presumption that a government instrumentality is distinct from its sovereign, and removed the defense from the case.¹

Verdict

The jury found the Hunts, International Metals, and Fustok liable for antitrust violations and common law fraud, and all of them except Lamar Hunt liable under the Racketeer Influenced and Corrupt Organizations Act. The judgment exceeded 132 million dollars, covering the losses on the short positions, the interest on the loans taken to meet margin calls, and lost profits. The court denied the defendants' motions for judgment notwithstanding the verdict on July 18, 1989, and later that year refused to reconsider the racketeering verdict in light of the Supreme Court's decision in H.J. Inc. v. Northwestern Bell. Bunker Hunt had filed for personal bankruptcy in September 1988.³⁴