The African Development Bank launched legal support organisation to protect the poor African states negotiating commercial transactions or facing litigation by the so-called vulture funds. These funds have already provoked international criticism by launching lawsuits – many of them being in the US and Britain – to force repayment of poor country debt they have bought at discounted prices on world markets.
One of the most prominent cases in the last years connected with complex commercial transactions that faced litigation by vulture funds was Donegal International, a fund based in the British Virgin Islands, which sued Zambian government for more than $55 million, as repayment for Zambian government debt that was bought for less than $4 million in 1999. As a result of the lawsuite, the BVI fund was awarded $15.5 million in 2007 by the High Court in London.
Now, the Africa Legal Support facility will provide funding and advice so that governments of African countries will have the top level legal representation when facing the debt claims similar to that of the BVI fund against Zambia. It was estimated by the World Bank that in 2007 38 creditors had won $1bn from lawsuits against countries in its debt relief programme, many of them being African nations. For example, the claims of 10 creditors against Liberia – the country devastated by almost 15 years of civil war – amounted to $130 million, the sum which makes almost fifth part of annual gross domestic product.