Vulture scavenges millions from Zambia
15 February 2007
A private company has sued Zambia, one of the poorest countries in the world, for millions of dollars - but, significantly, got far less than it asked for after the judge ruled that its whole claim was not valid, and that some witnesses had been "dishonest".
A London court has today ruled that a 'vulture fund' called Donegal International is entitled to millions of dollars from Zambia. He did not uphold the company's claim for a staggering $55 million, and claimed that witnesses for Donegal had at times been "dishonest". The Zambian government had fought hard to defend the claim, a strategy which helped it to limit the amount of money it will lose, after the judge ruled that parts of the original debt agreement were not reasonable. But Zambia will still lose millions. Jubilee Debt Campaign and Oxfam are arguing that the phenomenon of vulture funds targeting poor countries in this way is fundamentally immoral - and that the system needs to change to prevent it.
In 1999, Donegal bought a debt owed by Zambia to Romania, originally worth $15 billion, for a knock-down price of $3.3 million. Now it has sued Zambia for the full amount, plus interest and costs, demanding a staggering $55 million in total. The amount to be awarded is not yet decided, but may be around $20 million.
The problem is that this kind of action is completely legal (even though Donegal's attempts to maximise its money through particular clauses in the debt agreement were not upheld). If Donegal's award is $20 million, this will be equivalent to half of Zambia's savings in 2007 from the 2005 Gleneagles debt deal. Zambia desperately needs all its money for investment in doctors, nurses and hospitals.
We are calling for Donegal to return this money, and for change in the rules to keep other debt vultures at bay. You can help.
Email Donegal and ask them not to take Zambia's money
Ask Gordon Brown to stop this happening again
Follow the links above for more information about the case.