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Funds sue Liberia over 1978 debt | Funds sue Liberia over 1978 debt |
(40 minutes later) | |
Two Caribbean-registered investment funds have launched a legal case in London against Liberia over a debt that dates back to the 1970s. | |
The firms, described as "vulture funds" by critics, are suing for more than $20m (£12m), some 5% of the Liberian government's total budget this year. | |
The case relates to a lending deal between Liberia and Chemical Bank of the United States in 1978. | The case relates to a lending deal between Liberia and Chemical Bank of the United States in 1978. |
Liberia is recovering from a 14-year civil war which ended in 2003. | |
The details of the case, to be heard in the High Court in London, are still unclear, but it is thought that the country actually borrowed $6.5m under this facility. | |
It appears that at some stage Chemical Bank sold the debt and it may have been resold a number of times. | It appears that at some stage Chemical Bank sold the debt and it may have been resold a number of times. |
There was a judgement in a New York Court against Liberia in 2002 for $18m. | There was a judgement in a New York Court against Liberia in 2002 for $18m. |
The current case is an attempt to collect that sum plus interest. | The current case is an attempt to collect that sum plus interest. |
Controversial practice | |
At the time of that New York case, Liberia was wracked by civil war and did not offer a defence. | At the time of that New York case, Liberia was wracked by civil war and did not offer a defence. |
Very little is known about the funds - although one, Hamsah Investments, was involved in similar action against another low-income country, Nicaragua. | Very little is known about the funds - although one, Hamsah Investments, was involved in similar action against another low-income country, Nicaragua. |
Firms which buy up problem debts are often known as vulture funds, and when the debtor is the government of a poor country, it is a very controversial practice. | Firms which buy up problem debts are often known as vulture funds, and when the debtor is the government of a poor country, it is a very controversial practice. |
That is especially true when the country concerned has received debt relief on what it owed to rich countries and to international agencies such as the World Bank. | That is especially true when the country concerned has received debt relief on what it owed to rich countries and to international agencies such as the World Bank. |
Sometimes that debt relief is what frees the resources to pay creditors who take legal action. | Sometimes that debt relief is what frees the resources to pay creditors who take legal action. |
The solicitor representing Hamsah has not so far responded to requests for comments on the case. | The solicitor representing Hamsah has not so far responded to requests for comments on the case. |