Protestors against vulture fund FG Hemisphere
In a surprise decision, the UK’s Privy Council has ruled against vulture fund FG Hemisphere in a case brought against Democratic Republic of Congo’s state mining company for $100 million. The judgement marks the final appeal in a case brought in Jersey for payment on a debt bought by FG Hemisphere for just $3 million. The debt originated in the 1980s when the Yugoslavian government lent money to Dictator General Mobutu to win contracts for their businesses.
Such a case would not have been brought in the UK since a law was passed in 2010 limiting the amount vulture funds could claim from some impoverished countries, including DRC. However, the law was not made to apply in British crown dependencies such as Jersey.
FG Hemisphere was seeking assets held in Jersey which are owed to DRC’s state mining company, Gecamines. The vulture fund claimed Gecamines was an 'organ of the state' and so responsible for debts owed by Democratic Republic of Congo. However, the Privy Council found that whilst Gecamines is a state-owned company, it is not responsible for the Congolese government's debts.
Campaigners welcomed the court’s decision, but said that the case was not the end of the story for either Jersey or DRC.
Nick Dearden, Director of Jubilee Debt Campaign, said: “We welcome the fact that these funds will not flow into the coffers of a secretive vulture fund which tries to unfairly profit from the past debt distress of impoverished countries. Jersey now needs to do what it should already have done - pass a law to make such cases unprofitable for the vultures.
"But greater questions remain about this case. Why is DRC's mining wealth being fought over in faraway Jersey? The emergence of offshore havens such as Jersey has had a serious impact on the ability of governments to realise revenue from companies exploiting their resources, and the ability of people in those countries to hold their governments to account. We urgently need to end the secrecy that is preventing accountability, country by country reporting would be a good first step."
Vulture funds specialise in buying up the debts of countries in financial difficulty. Once other creditors have written-off debts and a country has become ‘solvent’, they sue for the full amount, claiming extortionate profits.
For more information, see: http://www.jubileedebtcampaign.org.uk