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Funds win on Liberia's 1978 debt | |
(about 10 hours later) | |
A British court has ordered Liberia to pay two Caribbean-registered investment funds more than $20m (£12m) for a debt that dates back to 1978. | |
The sum awarded to the firms - described as "vulture funds" by critics - is equivalent to about 5% of the Liberian government's budget this year. | |
Liberia says it has no money to pay the debt back and has accused the firms of profiting from poverty. | Liberia says it has no money to pay the debt back and has accused the firms of profiting from poverty. |
The country is recovering from a 14-year civil war that ended in 2003. | |
The details of the case are still unclear, but it is thought Liberia borrowed $6.5m from the US-based Chemical Bank in 1978 and that debt may have been resold a number of times. | |
The two funds requested London's High Court to grant a summary judgement in the case - making Liberia liable for the debt without the need for a full hearing. | |
'Tooth and nail' | |
In 2002 a New York court ruled that Liberia owed $18m - the current case is an attempt to collect that sum plus interest. | In 2002 a New York court ruled that Liberia owed $18m - the current case is an attempt to collect that sum plus interest. |
At the time of the New York case Liberia was wracked by civil war and did not offer a defence. | At the time of the New York case Liberia was wracked by civil war and did not offer a defence. |
Liberia's legal advisers think that if the funds do succeed in collecting the money, they will make a very large profit. | |
Ahead of Thursday's ruling, Liberian Finance Minister Augustine Kpehe Ngafuan told the BBC's Network Africa programme the country could not afford to repay the debt. | |
"Our lawyers are going to work tooth and nail to battle this," he said. | |
He added that he hoped that the international community would take action to make sure that "these people that survive on poverty do not thrive". | |
UK activists are lobbying the government to change the law so such cases cannot be heard in UK courts. | UK activists are lobbying the government to change the law so such cases cannot be heard in UK courts. |
Nick Dearden, of Jubilee Debt Campaign, said: "Currently these companies don't have to tell us anything about themselves because they're registered in tax havens - they can just turn up in London and sue one of the poorest countries in the world." | |
He called the High Court's ruling "disappointing but not surprising". | |
Very little is known about the funds - Hamsah Investments and Wall Capital. | Very little is known about the funds - Hamsah Investments and Wall Capital. |
Hamsah was awarded more than $11m in a similar action against Nicaragua. | |
BBC economics correspondent Andrew Walker says vulture funds are controversial - especially when they target nations already receiving debt relief on what they owe to rich countries. | |
Sometimes that debt relief frees the resources to pay creditors who take legal action, our correspondent says. | |
The solicitor representing Hamsah has not yet responded to requests for comments on the case. | The solicitor representing Hamsah has not yet responded to requests for comments on the case. |