Vulture Funds awarded $20 million from Liberia in High Court
Liberia – one of the poorest countries in the world (2) – had been taken to court by Hamsah Investments, registered to the British Virgin Islands, and Wall Capital Ltd, registered in the Cayman Islands, to recognise a US judgement from 2002 worth $18.4 million, plus accrued interest of over $2 million. The original loan, of $6 million, had been made to Liberia by US-based Chemical Bank in 1978. But the debt has been sold on so many times that there is no longer any record of what was paid at any point.
Mr Justice Burton, presiding, said: “The only issue raised is plainly a sad one, that Liberia is a poor country, and cannot afford it”. But he was forced to find against the country. The judgement means the Vulture Funds can now seize Liberian assets in the UK.
Campaigners from Jubilee Debt Campaign (3) said the judgement strengthens the case for legislation in the UK to effectively prevent such cases being heard in British courts. They are calling on the 10 MPs who were today drawn at the top of the Private Member’s Ballot to take up a ‘Vulture Funds’ Bill when they are given parliamentary time later this year. (4)
Nick Dearden, Director of Jubilee Debt Campaign said:
“Today’s judgement is disappointing but not surprising. We are going to be standing outside courtroom after courtroom where a judge has been forced to award millions of pounds to these funds until a law is put in place to clip the vultures’ wings. Millions of people around the world have taken action for debt cancellation over many years so that money can be freed up for schools and hospitals. But today it’s gone into the pockets of offshore traders about whom we know almost nothing. We now need the Government or one of the MPs at the top of today’s ballot to step forward and put an end to this outrageous practice.”
Earlier in the year Sally Keeble MP introduced a Ten-Minute Rule Bill (5) in Parliament which would have curbed the extortionate profits which vultures depend on to be successful. Over 200 MPs signed Early Day Motion 1440 earlier in the year, supporting the Bill (6). A bill is currently making its way through the US House of Representatives (7).
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NOTES FOR EDITORS
1. Vulture funds are investment companies that buy up the defaulted debts of poor countries extremely cheaply and then sue for full, immediate repayment with steep levels of interest and penalty charges. They can make enormous profits from taking money out of the economies of very poor countries – money which has often been freed up by debt cancellation.
2. The United Nations Development Project lists Liberia as 169 out of 182 countries measured on their Human Development Index.
3. Jubilee Debt Campaign is a UK coalition calling for 100% cancellation of unpayable and illegitimate poor country debts, set up as a successor to the Jubilee 2000 campaign. For more information, including about its vulture funds campaign, see www.jubileedebtcampaign.org.uk.
4. The Private Members’ Ballot is an annual Parliamentary event in which 400 MPs compete for Parliamentary time in which they can introduce their own Bill. Although many fail, some of these bills end up as law, especially when supported by the Government. The 10 MPs drawn at the top of the ballot today were: Dr Brian Iddon MP, David Chaytor MP, Andrew Gwynne MP, Albert Owen MP, Julie Morgan MP, Anthony Steen MP, Alistair Burt MP, John Smith MP, Chris Grayling MP and Nigel Dodds MP.
5. The Developing Country Debt (Restriction of Recovery) Bill was introduced by Sally Keeble MP in May 2009 and sponsored by: Rt Hon Hilary Armstrong MP, John Austin MP, John Bercow MP, David Borrow MP, Tom Brake MP, David Drew MP, Rt Hon Sir Gerald Kaufman MP, Mark Lazarowicz MP, Rt Hon Peter Lilley MP, Andy Reed MP and Andrew Stunell MP.
6. See http://edmi.parliament.uk/EDMi/EDMDetails.aspx?EDMID=38604&SESSION=899
7. The Stop Vultures Act, was introduced into the US House of Representatives in June 2009, sponsored by Congresswoman Maxine Waters.