Following on from my earlier post today about vulture bonds, the Lawyer.com reports that law firm DLA Piper won a moral victory for the Zambian Government today as the High Court delivered a scathing attack on the claimants Donegall International.
Investment funds company Donegal International (part of Debt Advisory International?) brought proceedings in the Commercial Court to enforce a claim again the Republic of Zambia in respect of a debt which it bought from Romania eight years ago for just $3.2 million (£1.6m). But key payment terms that Donegal were relying on were struck out drastically reducing Zambia’s liability, which will be determined at a later date. Mr Justice Andrew Smith in his judgement also found that Donegal's injunction over Zambia's assets should also be discharged because of the misleading nature of the evidence with which it was secured.
Smith J said that Michael Sheehan of Donegal had lied to or misled the courts of three different jurisdictions in relation to the debt, while his consultants were “dishonest and thoroughly unreliable”. The judgment comes as fears continue to increase over whether “vulture funds” hold up or undermine debt restructuring efforts. On this point Smith J said: “The proceedings arouse strong feelings. Zambia is a poor country and sees itself as being vulnerable to 'vulture funds'. I am concerned, of course, with the legal questions that are raised by the applications before me and not with questions of morality or humanity.”
It’s a shame That Donegall wasn’t told to go and reproduce with itself but the law and justice do not intersect as often as one would like.
UPDATE: Tony Barclay, the CEO of Development Alternatives inc has left a comment on this post rightly seeking to distance the work of his company from those of Debt Advisory International. Click here for further details.