UK lawyers support Vulture Funds that plague developing countries

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The Guardian has reported that:

research by the Guardian and Legal Business magazine shows that some top London law firms, who claim to support the UN's millennium goals of reducing global poverty, are making fortunes representing the vultures.

Vulture funds buy up sovereign debt issued by poor countries at a fraction of its face value, then sue the countries in courts - usually in London, New York or Paris - for their full face value plus interest.

As example:

Donegal International, an offshore vulture fund, burst into the spotlight this year when it won an award for $15m from impoverished Zambia in the UK High Court. Donegal paid $3m for some old Zambian debt, then sued for $55m, although the London judge reduced the award to $15m.

Not all will be so (relatively) lucky though:

A paper prepared for the IMF/World Bank meetings this week shows there are now $1.8bn of lawsuits against poor countries where people typically live on less than $1 a day. Eight cases were launched in the past year - five against Nicaragua, two against Cameroon and one against Ethiopia. It shows that of the 24 countries that have received debt cancellation under the Heavily Indebted Poor Countries initiative, 11 have been targeted for legal action by private creditors. And they have already seen awards in courts of just under $1bn - money that could have been spent on schools and hospitals.

And where is this happening:

The IMF said litigating creditors were concentrated in the US and UK, as well as UK protectorate tax haven the British Virgin Islands (BVI).

And who is doing it:

Top London law firms are reaping the benefits from bringing many of the vulture funds' cases to court in London. One such is Allen & Overy (A&O), which represented Donegal against Zambia and billed their clients about £2m in fees. The average Zambian survives on less than $1 a day.

Other firms named include Weil Gotshal and Dechert.

But as the Guardian notes:

While representing the vultures in court, law firms Weil Gotshal and Allen & Overy are members of a progressive organisation called Advocates for International Development (A4ID), which aims to support the Millennium Development Goals for reducing global poverty.

Which is pure hypocrisy. Walk the talk, or don't say it. But best, walk and let your actions do the talking.

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