16 February 2007

A moral and a pyrrhic victory?

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.

5 comments:

beakerkin said...

I do not know if you read the discussion of Haiti on my site.

The question is why are some countries poor and does intervention and maintaining the status quo help.

Political stability is one of the first reasons Haiti is poor. Are foreign investors going to invest in a country that is always in turmoil? African countries also are rife with tribal rivalries due to the wacky way they were created in Colonial countries.

Acceptance of political corruption
and bribe taking as part of the culture is also a factor.

elasticwaistbandlady said...

Beakerkin is so right. I get a little tired of American taxpayers being expected and beseeched by the likes of Bono to keep sending huge aid packages to other countries only to find out that they've been diverted straight into the pockets of their turd world dictators/leaders.

elasticwaistbandlady said...

I'm not sure if vulture funds work in the same way as companies who buy old debt from other corporations for pennies on the dollar and then harrass the crap out of the debtors to pay up. Those people suck and often resort to illegalities to prey on the poor and those ignorant of the debt collecting laws that protect the consumer.

jams o donnell said...

I agree Beakerkin. There are a lot of things to consider when ;ooling at poverty on Africa.

THe grab for Africa in the 19th Cewntury, divide and rule - exploiting old differences to facilitate, corruption, naked tyranny and so on and so forth.. all of tese have contributed to the terrible state Africa is in.

Add also the Cold war conflicts by proxy, the creation of the illusion of stability by supporting kleptocratic and/or murderous dictators (Mbnto sese Seko on one side Mugabe or Mengistu on the other).

It just strikes me that with all of the other problems the vulture funds are just another bunch of bastards adding to the long list of bastards sxrewing over the continent.

Ewbl sadly a lot of aid and support goes into the pocket of corrupt bastards in the places where the help is most needed. Some of the worst african kleptocrats were the ones supported by the USSR and the USA.

That sounds like an apt description of the way they work ewbl... It may be all legal and the like but they really are vultures, or very large lice.

Tony said...

Don't Be Confused: DAI Is NOT "Debt Advisory International"

Check out our homepage, www.dai.com. DAI is an employee-owned consulting firm whose mission is Advancing Human Prosperity. We have no connection of any kind with "Debt Advisory International," the company that was profiled on BBC's Newsnight program earlier this week. That program described a predatory investment company that trades in distressed debt from very poor countries such as Zambia. To our knowledge, "Debt Advisory International" does not use the name DAI, but the BBC program might lead some viewers to conclude that we are the same company. Nothing could be further from the truth. We have been operating for more than 36 years, supporting sustainable economic development and improving the lives and livelihoods of people in more than 150 countries. Please browse our site: see what a growing, global team of development professionals is doing to make the world a better place.

Tony Barclay, Chief Executive Officer