The Republic of Liberia is to be sued in the High Court in London by two “vulture funds” – Hamsah Investments and Wall Capital Ltd., - both registered in the British Virgin Islands. These companies are seeking to get large profits from the debt of Liberia that dates back to the 1970s. One of the “vulture funds”, Hamsah Investments, previously won a similar case against Nicaragua, having received US$11.6 million on a debt which was bought just for US$2.5 million.
The case of these two BVI companies against Liberia showed once again the difficulty of identifying the vulture funds through voluntary schemes: the World Bank and International Monetary Fund report on outstanding commercial creditor claims against heavily indebted poor countries did not even detect this case.
Liberia is one of the poorest countries in the world, which has also most heavily suffered from vulture funds. US$357 million have been received by such companies in their lawsuits against the country - 49% of its GDP. Earlier in 2009, Liberia engaged in a World Bank scheme to purchase back a large part of its commercial debt at discounted rates.
Vulture funds are investment companies that buy up the defaulted debts of poor countries extremely cheaply and then sue them (very often in Britain or the US) for full immediate repayment of this sums including interest and penalty charges. These funds can make enourmous profits from taking money out of the economies of very poor countries.
Some months ago, the African Development Bank launched legal support organisation to protect the poor African countries from the vulture funds. Many international organisations say there is need for legislation that would prevent such cases.