City law firm criticised for vulture fund cases
The ‘charity cake sale’ was intended to raise money to help “wean Dechert off the unprincipled money they make through vulture cases”. The sale comes days before Parliament is due to vote on legislation to curb the ability of vulture funds to sue through the British courts.
Last November, Dechert represented two funds in the High Court in London, winning a $20 million award against Liberia, one of the poorest countries in the world. Dechert’s London offices have also represented hedge fund Elliott Associates against Peru, Kensington International against the Republic of Congo and NML against Argentina.
Jubilee Debt Campaign (2) says Dechert’s action on behalf of vulture funds sharply contradicts their desire to be a socially responsible company. Dechert is sponsoring a summit on global ethics (3) in New York this week and is a member of Advocates for International Development (4), which aims to support the Millennium Development Goals.
On Friday Andrew Gwynne MP will introduce the Debt Relief (Developing Countries) Bill (5) which aims to prevent vulture actions against the world’s poorest countries. The UK Government recently came out in support of legislation against vultures, despite opposition from the financial services sector, saying that such legislation could save poor countries as much as £145 million. Dechert opposed such legislation, on behalf of several hedge funds, telling a Government consultation that legislation would be “unfair” and “unprincipled” (6).
Nick Dearden, Director of Jubilee Debt Campaign said:
“Today we have sent a clear message to Dechert and other law firms - you cannot claim on the one hand to be ‘socially responsible’ and on the other hand to be assisting vulture funds profiting from the misery and poverty of those living in the poorest countries on earth. Vulture funds are anathema to anyone interested in fighting global poverty, and making money from vulture cases is shameful behaviour.”
Andrew Gwynne, MP for Denton and Reddish said:
“On Friday I will have the Second Reading of my Private Member’s Bill that will seek to stop the activities of so called “Vulture Funds”. For too long, some companies have been allowed to get away with exploiting the debt relief received by developing countries for their own profit. Through my Private Member’s Bill I aim to put a stop to it.”
Augustine Kpehe Ngafuan, Finance Minister of Liberia, said of the case Dechert brought in November:
“For the people of Liberia, the amount the claimants are trying to extract represents half of this year’s total budget for health and education. As the Finance Minister, my prioirity is to ensure every dollar available to the Government is spent on addressing the real human emergency in Liberia. To think that valuable resources could be diverted to a claim which is based on a default judgment obtained during one of the darkest hours of our nation’s history makes me feel as though the Claimants are feeding on a country that is already fighting to stay alive.” (7)
Photos and video footage is available. Contact Jonathan Stevenson, Jubilee Debt Campaign, 020 7324 4726.
1. Vulture Funds are private investment companies which take advantage of the relaxed laws in British courts to buy up Third World debt at dramatically reduced prices and sue poor countries for their full value plus costs. In the process, companies make excessive rates of profit.
2. Jubilee Debt Campaign is a UK coalition demanding 100% cancellation of unpayable and illegitimate developing country debts. For more information see www.jubileedebtcampaign.org.uk.
3. ‘2010 Global Ethics Summit - A New Standard for Business Behavior: Effective Strategies for Global Corporate Compliance’ Presented by Dow Jones and the Ethisphere Institute with sponsorship by Dechert, February 23, 2010 - February 24, 2010, 7:30 AM - 6:00 PM, Grand Hyatt Hotel, New York, NY
4. A4ID facilitates free legal assistance to civil society, developing country governments, social enterprise and bar associations to help achieve the UN MDGs. www.a4id.org.
5. The Bill will be presented for its Second Reading on Friday: www.andrewgwynne.co.uk/cracking-down-on-the-third-world-debt-vultures-
6. See ‘Ensuring effective debt relief for poor countries: a consultation on legislation - July 2009’ at www.hm-treasury.gov.uk/consult_debt_relief.htm.
7. Taken from a statement read in Monrovia on 26 November 2009 by Finance Minister Augustine Kpehe Ngafuan, published in the Liberian Daily Observer. PDF available.