Liberia agrees debt settlement with offshore 'Vulture Funds'
Jubilee Debt Campaign has today described the news that Liberia has reached agreement with two Caribbean-based ‘vulture funds’, Hamsah Investments and Wall Capital Ltd, over a debt dating back to the 1970s, as proof of the importance of the UK’s landmark vultures law.
The BBC reports that Liberia has agreed to repay just over 3% of the face value of the $43 million debts (1).
The case caused controversy in November 2009 when a judgement was obtained in the British High Court ordering Liberia to repay the full debt (2). It sparked a campaign for a change in the law, which resulted in the Debt Relief (Developing Countries) Act being passed on the eve of the general election (3).
The law, which is a world first, requires commercial creditors to comply with the terms of international debt cancellation schemes, which specify a single discount rate for commercial creditors to ensure equal treatment. The law applies to the UK courts and ensures that public money given towards debt cancellation is not diverted to private investors. However, it has a sunset clause meaning it is due to expire next year unless renewed.
Debt campaigners claim Liberia’s debt should have been cancelled outright, but current debt relief schemes do not bind all creditors. However, the UK’s law strengthened Liberia’s position in negotiating with the vulture funds.
Nick Dearden, Director of Jubilee Debt Campaign, said:
“This settlement is proof of the importance of the UK law in fighting against vulture activity. Without the law, these companies would have been able to go on harassing Liberia for extreme profits. It is essential that the Chancellor agrees to make the law permanent in the coming months, and pushes for it to be extended to other countries, including the Channel Islands and British overseas territories.”
Earlier this month the Democratic Republic of Congo’s state-controlled mining company was hit with a $100m judgement in a Jersey court for a Mobutu-era debt bought up by vulture fund FG Hemisphere. [4]
ENDS
For more information contact Nick Dearden, 07932 335464.
Notes to editors
1. Liberia agrees deal with 'vulture funds' , 23 November 2010.
2. Vulture Funds awarded $20 million from Liberia in High Court, 26 November 2009.
3. The Debt Relief (Developing Countries) Act, a result of a private members bill by Andrew Gwynne MP, became law on 7 June 2010, following campaigning by Jubilee Debt Campaign and others. See http://www.legislation.gov.uk/ukpga/2010/22
4. Vulture Fund awarded $100m in Jersey court, 4 November 2010.
5. For more information about Jubilee Debt Campaign and vulture funds see www.jubileedebtcampaign.org.uk/vultures.