Maravi

Donegal shouldn't accept money from Zambia

Donegal shouldn't accept money from Zambia - debt campaigners
By Bivan Saluseki
Monday February 19, 2007 [02:00]

DEBT campaigners have said Donegal - a 'vulture fund' should not accept any money from Zambia. Donegal International had sued the Zambian government and Ministry of Finance before the London High Court for US$55 million plus compound interest at eight per cent on a debt the company secured from Romania in 1999 for US$3.2 million. Royal Courts of Justice ordered that Zambia should pay a much-reduced sum (to be decided next month) to US Company, Donegal International, as repayment on debts incurred by Zambia from Romania in 1979. Donegal's claim was for over US$55 million, but the judge decided that although the original agreement with Zambia was legal, the award should be significantly less.

Donegal bought the debt from Romania in 1999 when Zambia was on the verge of renegotiating it.

Adrian Lovett, director of campaigns and communications at Oxfam said Zambia, a poor country, desperately needed the money for its basic health and education services. "The judge was unable to dismiss the whole claim but it is clear that while the actions of Donegal International were not strictly illegal, they were immoral. When a country is as poor as Zambia, in desperate need of money to pay for basic services like health and education, it is unconscionable to pursue an inflated claim for a debt that should have been written off years ago. Donegal should not take the money," said Lovett.

Trisha Rogers, director of Jubilee Debt Campaign, said Vulture funds' predatory practices should be put to an end. "There is a clear need for a fair, comprehensive and binding framework for dealing with poor country debt, which will ensure that commercial creditors will never again have the chance to profit in this way. Gordon Brown, as UK Chancellor and Chairman of the IMF Finance Committee, is in a strong position to make this happen. He has previously stated that he is against vulture funds: he should use his position to put a stop to their predatory practices," said Rogers in a statement. The campaigners stated that vulture fund must not take cash from Zambia. UK Chancellor, Gordon Brown, has condemned vulture funds in the past.

The campaigners said Donegal International's claim threatened to undermine Zambia's plans for poverty reduction. A London court stated that witnesses for Donegal had at times been "dishonest". Jubilee Debt Campaign and Oxfam are arguing that the phenomenon of vulture funds targeting poor countries in this way is fundamentally immoral - and that the system needs to change to prevent it.

Visiting United Nations Development Programme executive director for legal empowerment of the poor Naresh Singh said the vulture fund tactics were ruthless.

Labels: DEBT, VULTURE FUND

posted by MrK @ 6:41 PM