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| Zambia loses 'vulture fund' case | Zambia loses 'vulture fund' case |
| (30 minutes later) | |
| A High Court judge has ruled that Zambia must pay a substantial sum to a so-called "vulture fund". | A High Court judge has ruled that Zambia must pay a substantial sum to a so-called "vulture fund". |
| British Virgin Islands-based Donegal International paid less than $4m (£2m) for a debt the African nation owed, but sued Zambia for a $42m repayment. | |
| It said its bill was the result of interest and costs, but the judge has indicated that Zambia should pay less. | It said its bill was the result of interest and costs, but the judge has indicated that Zambia should pay less. |
| The ruling has angered anti-debt campaigners, who say it will undermine Zambia's plans for poverty reduction. | The ruling has angered anti-debt campaigners, who say it will undermine Zambia's plans for poverty reduction. |
| The judge ruled against Zambia's application to dismiss Donegal's claim, but at the same time proposed to end a freeze of Zambian assets secured by the fund. | The judge ruled against Zambia's application to dismiss Donegal's claim, but at the same time proposed to end a freeze of Zambian assets secured by the fund. |
| Donegal, however, will have a chance to argue the case for a continued freeze of Zambian assets. | Donegal, however, will have a chance to argue the case for a continued freeze of Zambian assets. |
| According to BBC economics reporter Andrew Walker, people familiar with the case believe that the judge will order Zambia to pay Donegal between $10m and $20m, less than half what Donegal sought. | According to BBC economics reporter Andrew Walker, people familiar with the case believe that the judge will order Zambia to pay Donegal between $10m and $20m, less than half what Donegal sought. |
| Lawyers for Zambia, however, said the judgement was a victory for Zambia. | Lawyers for Zambia, however, said the judgement was a victory for Zambia. |
| Janet Legrand of DLA Piper called the ruling "fantastic news for both the government of Zambia and its people". | Janet Legrand of DLA Piper called the ruling "fantastic news for both the government of Zambia and its people". |
| The fight against Donegal's claim had been "entirely vindicated and [marked] a significant milestone in the efforts of [the Zambian government] to fight corruption and maintain a stable economic course". | The fight against Donegal's claim had been "entirely vindicated and [marked] a significant milestone in the efforts of [the Zambian government] to fight corruption and maintain a stable economic course". |
| Concerns | Concerns |
| Vulture funds - as defined by the International Monetary Fund and UK Chancellor Gordon Brown among others - are companies which buy up the debt of poor nations cheaply when it is about to be written off, then sue for the full value of the debt plus interest. | Vulture funds - as defined by the International Monetary Fund and UK Chancellor Gordon Brown among others - are companies which buy up the debt of poor nations cheaply when it is about to be written off, then sue for the full value of the debt plus interest. |
| There are concerns that such funds are wiping out the benefits which international debt relief was supposed to bring to poor countries. | There are concerns that such funds are wiping out the benefits which international debt relief was supposed to bring to poor countries. |
| A Zambian presidential adviser and consultant to Oxfam, Martin Kalunga-Banda, said $42m was equal to all the debt relief it received last year. | A Zambian presidential adviser and consultant to Oxfam, Martin Kalunga-Banda, said $42m was equal to all the debt relief it received last year. |
| "It means 30,000 children who would have benefited from going to school free will not be able to do so," he told the BBC. | "It means 30,000 children who would have benefited from going to school free will not be able to do so," he told the BBC. |
| "It also means the treatment, the Medicare, the medicines that would have been available to in excess of 100,000 people in the country will not be available." | "It also means the treatment, the Medicare, the medicines that would have been available to in excess of 100,000 people in the country will not be available." |
| The Zambians at that time did not even have the capacity to know this was happening Martin Kalunga-Banda | The Zambians at that time did not even have the capacity to know this was happening Martin Kalunga-Banda |
| Mr Kalunga-Banda added that while the repayment might be legal, it arose from debts accrued when the country was under "an undemocratic system". | Mr Kalunga-Banda added that while the repayment might be legal, it arose from debts accrued when the country was under "an undemocratic system". |
| "The consequences of the debt are impacting on the people of Zambia," he said. | "The consequences of the debt are impacting on the people of Zambia," he said. |
| "The Zambians at that time did not even have even the capacity to know this was happening and that is probably what brings in this issue of unfairness." | "The Zambians at that time did not even have even the capacity to know this was happening and that is probably what brings in this issue of unfairness." |
| 'No comment' | 'No comment' |
| In 1979, the Romanian government lent Zambia money to buy Romanian tractors. | In 1979, the Romanian government lent Zambia money to buy Romanian tractors. |
| Zambia was unable to keep up the payments and in 1999, Romania and Zambia negotiated to liquidate the debt for $3m. | Zambia was unable to keep up the payments and in 1999, Romania and Zambia negotiated to liquidate the debt for $3m. |
| But before the deal could be finalised, Donegal International, which is part owned by US-based Debt Advisory International (DAI) stepped in and bought the debt from Romania for less than $4m. | But before the deal could be finalised, Donegal International, which is part owned by US-based Debt Advisory International (DAI) stepped in and bought the debt from Romania for less than $4m. |
| DAI founder Michael Sheehan was confronted by the BBC's Newsnight programme before the court ruling, but said only: "No comment. I'm in litigation. It's not my debt." | DAI founder Michael Sheehan was confronted by the BBC's Newsnight programme before the court ruling, but said only: "No comment. I'm in litigation. It's not my debt." |
| Profiteering doesn't get any more cynical than this Caroline PearceJubilee Debt Campaign | Profiteering doesn't get any more cynical than this Caroline PearceJubilee Debt Campaign |
| In 2002, Gordon Brown told the United Nations that the vulture funds were perverse and immoral. | In 2002, Gordon Brown told the United Nations that the vulture funds were perverse and immoral. |
| "We particularly condemn the perversity where vulture funds purchase debt at a reduced price and make a profit from suing the debtor country to recover the full amount owed - a morally outrageous outcome." | "We particularly condemn the perversity where vulture funds purchase debt at a reduced price and make a profit from suing the debtor country to recover the full amount owed - a morally outrageous outcome." |
| Jubilee Debt campaigner Caroline Pearce said that vulture funds "made a mockery" of the work done by governments to write off the debts of the poorest - a key theme of 2005's Live8 concert. | Jubilee Debt campaigner Caroline Pearce said that vulture funds "made a mockery" of the work done by governments to write off the debts of the poorest - a key theme of 2005's Live8 concert. |
| "Profiteering doesn't get any more cynical than this," Ms Pearce said. | "Profiteering doesn't get any more cynical than this," Ms Pearce said. |
| "Zambia has been planning to spend the money released from debt cancellation on much-needed nurses, teachers and infrastructure. | "Zambia has been planning to spend the money released from debt cancellation on much-needed nurses, teachers and infrastructure. |
| "This is what debt cancellation is intended for, not to line the pockets of businessmen based in rich countries." | "This is what debt cancellation is intended for, not to line the pockets of businessmen based in rich countries." |