UN Expert Sounds Alarm Over Court Order For Liberia To Pay Back ‘Vulture Funds’
New York, Dec 17 2009 3:10PM A United Nations human rights expert voiced concern today over the decision of a court to
order Liberia to pay debts of about $20 million to two so-called “vulture funds” – private investment firms that buy the
debts of struggling countries or companies at below face value and then aggressively pursue repayment of the entire sum.
Cephas Lumina, the UN Independent Expert on the effects of foreign debt and other related international financial
obligations of States, said in a statement issued in Geneva that asking Liberia to pay back the debts – which date to
1978 – was “a morally unacceptable trade-off.”
London’s High Court ruled late last month that Liberia must pay the $20 million owed to Hannah Investments and Wall
Capital Limited.
Dr. Lumina said the amount sought was equivalent to a “significant portion” of the West African country’s annual budget
for health and education.
“Payment of this debt by Liberia would have a direct negative effect on its Government’s ability to fulfil its human
rights obligations, resulting in further impoverishment and privation of basic human rights, especially economic, social
and cultural rights, such as the rights to water and sanitation, health, housing and education,” he said. “In return,
two private speculative investors will unfairly increase their profit margins.”
Liberia is currently undergoing the Heavily Indebted Poor Countries Initiative (HIPC) process, an internationally agreed
measure for debt relief that is designed to free up funds so that poor countries can invest in health, education and
poverty reduction.
This follows its emergence from a protracted and brutal civil war in the 1990s and early this decade that devastated the
country’s infrastructure and economy.
Dr. Lumina noted that Liberia was one of several HIPC countries that had been targeted by vulture funds for the
repayment of debts owed.
“I strongly urge the international community, the Paris Club and, in particular, the United Kingdom, the United States
and France – which are preferred jurisdictions for many vulture funds – to urgently consider enacting legislation to
prevent vulture fund activity within their jurisdictions as a clear indication of their commitment to find a durable
solution to the debt problem.
“It is illogical to cancel poor country debt and at the same time allow unconscionable vulture fund claims.”
Dr. Lumina added that poor countries should for their part “ensure transparency, participation and accountability in the
negotiation, contraction, restructuring and settlement of public loans, including through legislation providing for
oversight by parliaments and civic organizations. It is time to move beyond the rhetoric to more robust action outlawing
this retrogressive practice.”
ENDS