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These gold claims turned out to be only paper

Section: Daily Dispatches

Where's the Counterparty Risk Management Group when you really need it?

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Restitution Groups File Lawsuit to Force Payment of Old Polish Bonds

By The Associated Press
Monday, September 18, 2006

WARSAW, Poland -- Holders of pre-World War II gold-backed Polish bonds and others filed suit in a U.S. district court Monday against the government in Poland, seeking repayment on thousands of the notes they estimate to now be worth millions.

The lawsuit was filed in the name of three restitution groups and two individuals at the United States District Court, Southern District of New York, against Poland, its Finance Ministry, the National Bank of Poland, the city of Warsaw and Citibank, said attorney Ed Fagan, who is representing the plaintiffs.

The court could not immediately confirm the filing of the lawsuit.

Poland's Finance Ministry said it has yet to receive notification of the suit and declined to comment, spokeswoman Dominika Tuzinek-Szymkowska said.

Most of the gold-backed bonds were issued by the Polish national and municipal governments before World War II to build infrastructure and public utilities in the 1930s, Fagen said.

The dollar-denominated bonds, with a face value ranging from $1,000 to $50,000, were payable in New York, Fagan said. At today's prices, the $50,000 bond would be worth $6.8 million, he said, while the total value of the bonds is "in excess of $1 billion."

Payment of the bonds stopped with Nazi Germany's invasion of Poland in September 1939, which sparked World War II.

After the war, Poland's communist authorities did not honor the bonds, although Fagan insists the Polish government is "still the debtor on the bonds."

Most of the bondholders inherited the notes, although a few are held by collectors, he said.

Since the end of communism in 1989, the owners' children and their heirs have pressed the government for payments, which Poland's post-communist governments have declined to pay.

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