For Immediate Release
Melinda St. Louis, Jubilee USA (202) 783-0215 / (202) 441-7579
Michael Stulman, Africa Action (202) 546-7961 / (202) 469-9542
Tamara Gaw, TransAfrica Forum (202) 223-1960
Ian Schwab, American Jewish World Service (202) 379-4271
Emira Woods, Institute for Policy Studies (202) 234-9832 / (301) 523-2979
Advocacy Groups Decry Profiteering by Vulture Funds in Liberia
UK Judge Awards Funds $20 million, More Than Liberia’s Total Spending on Education Last Year
WASHINGTON - Leading global development and Africa advocacy groups reacted with
outrage today to news that a London court recently awarded two Vulture
Funds a $20 million judgment against Liberia. This amount of money
represents the country’s entire education budget and 150% of their
spending on health in 2008.
On November 26, the British High Court announced that Vulture Funds
Hamsah Investments and Wall Capital were to be awarded $20 million
based on a default judgment received in 2002 by previous creditors in
New York courts. The Vulture Funds had recently acquired the loan to
Liberia on the secondary market. The original credit, dating back to
1978, was estimated to be worth $6 million, but it had been in default
Advocates point out that Liberian President Ellen Johnson-Sirleaf’s
government has demonstrated its commitment to start fresh by clearing
its past debts, even those incurred by dictatorial governments and used
to fuel and finance the 14 years of civil war. In 2007, Liberia paid
off its arrears to the World Bank and African Development Bank, and in
April of this year successfully negotiated a $1.2 billion buy-back of
its commercial debt. Under the aegis of the World Bank, the process was
widely acknowledged by creditors to be fair and open.
However, Hamsah Investments and Wall Capital were the only two private creditors that refused to participate.
"The Liberia case is a textbook example of kicking a country while it’s down,” said Ruth Messinger, President of American Jewish World Service. “Liberia
has done everything right to gain debt relief, yet our system allows an
off-shore, unaccountable corporation to hold out on the deal and
instead profiteer in international courts by squeezing the country for
funds representing more than its entire education budget.”
“U.S. taxpayers who finance debt relief for poor countries intend
for that money to be redirected towards poverty alleviation, not into
the private accounts of Vulture Funds that operate in secret and
without any sense of corporate responsibility,” said Melinda St. Louis, Deputy Director of Jubilee USA Network.
Gerald LeMelle, Executive Director of Africa Action stated, “We
call these debts illegitimate precisely because of irresponsible
lending policies by U.S. and UK based international financial
institutions, and military support that protected and defended the
regime of a dictator, Samuel Doe, while he mismanaged the country's
resources and looted Treasury. The final insult is that now poor
Liberian people are being asked to pay back wealthy investors.”
This judgment in favor of the Vulture Funds sets back much of the
progress made in Liberia, a country that ranks 169 out of 182 in the
UN’s Human Development Index. In response to last week’s news, the
Liberian Finance Minister Augustine Ngafuan has told reporters that the
country is unable to pay the awarded judgment.
The advocacy groups note that because Vulture Funds are set up in tax
havens of the British Virgin Islands and the Cayman Islands, Hamsah
Investments’ and Wall Capital’s actions and their principal
beneficiaries are almost impossible follow.
“There is an ever-urgent need for the U.S. and the UK to prevent raw
exploitation of poor countries and profiteering on their debt relief.
The most recent judgment will unfortunately result in Liberia facing
ever larger barriers to providing the necessary social services to lift
its population out of poverty,” said Nicole Lee, Executive Director of TransAfrica Forum.
Advocacy groups dismayed by this latest attack by Vulture Funds point
to the urgent need to pass legislation currently before the U.S. House
of Representatives and the UK government to prevent the further misuse
of US and UK courts for debt profiteers. The Stop VULTURE Funds Act,
H.R.2932, introduced by Representatives Maxine Waters and Spencer
Bachus on June 18 of this year, would prohibit sovereign debt
profiteering from poor countries and require greater levels of
transparency by creditors suing those poor countries.
“These Vulture Funds are violating the promise of debt relief and Liberia’s path to peace and economic stability,”
decried Emira Woods, a Liberian national and Co-director of Foreign
Policy in Focus at the Institute for Policy Studies. She added, “After
26 years of war, Liberia’s schools and healthcare centers remain
severely underfunded. Unemployment is over 80%. The government and
people of Liberia cannot have scarce resources funneled to Vultures.
Women and children will pay the heaviest price. Congress and the courts
must act urgently to clip the wings of these Vultures."
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Africa Action is a national organization that works for political, economic and social justice in Africa. Through the provision of accessible information and analysis combined with the mobilization of public pressure we work to change the policies and policy-making processes of U.S. and multinational institutions toward Africa. The work of Africa Action is grounded in the history and purpose of its predecessor organizations, the American Committee on Africa (ACOA), The Africa Fund, and the Africa Policy Information Center (APIC), which have fought for freedom and justice in Africa since 1953. Continuing this tradition, Africa Action seeks to re-shape U.S. policy toward African countries.