AFRICAN LEGAL SUPPORT FACILITY
Kalidou GADIOActing General Counsel
African Development Bank
Doha, 18 February 2009
OUTLINE
1. What is the African Legal Support Facility (ALSF)?
2. Why was it created?
3. What are its expected benefits?
4. Where will it be domiciled?
5. How will it work?
6. Next steps
1. WHAT IS THE ALSF
An International Organization in the process of creation Purpose: Enhancing access
of RMCs to sound technical
legal advice in dealing with
lawsuits by Vulture Funds
& other claims that arise
or may arise from contracts
entered into with third parties
to finance development in extractive industries.
ALSF CURRENT STATUS
29 countries have signed the treaty establishing the ALSF
One International Organization (the ADB) has also signed
9 countries have accepted, approved or ratified the treaty
ALSF establishment treaty entered into force on 15 December 2008
2. WHY: CREATION OF ALSF #1/3
60’s-70’s-80’s - African Gov’ts contracted Loans with Commercial Banks for diverse development purposes (e.g. mining, trade and infrastructure)
The bulk of these projects turned out to be white elephants because of the lack of negotiation expertise leading to defaults
Commercial banks sold their unpaid loans to individuals, companies and vulture funds
The reaction? Outrage from African Ministers of Finance and G8 members at Gleneagles (2005), African Round Table (Addis-Ababa 2008), and by ADB and Other Multilateral Donors
2. WHY: CREATION OF ALSF #2/3
1.1.vulture funds = outrageousFrequently used example: the Zambian case - Donegal International bought Zambian debt owed to Romania in
1999: Original Debt = 15 million USD Amount of purchase by Donegal = 3.4 million USD Donegal’s Claim = 55 million USD (17 times) Court Judgment obtained = 15.4 million USD Settlement = 15 million USD.
2. CREATION OF ALSF #3/3
Vulture funds = merciless
Vulture funds: Sue for the total amount &
penalties on debt Refuse to Participate in HIPC relief
of Debtor Countries’ debt After obtaining judgment or arbitral
award, they attach the debtor’s assets in foreign countries (e.g. France, UK,USA)
Since 1999, 19 other countries have been sued by vulture funds
3. ALSF EXPECTED BENEFITS
Legal expertise to countries involved in
Vulture Fund litigation
Legal advise to countrieswishing to negotiate
complex development contracts
with 3rd parties
Payment of services
from Funds endowed by ADB,
other donors and MNCs
Creation of a knowledge database
Training for a core group
of negotiators in debtor countries
Enhancement of the fiscal visibility of
projects especially in EIs
4. ALSF DOMICILE AND STRUCTURE
Governing Council(12 members)
Management Board(5 managers)
Director
AfDB• House ALSF
• Provision of initial allocationof 10million UA
•AfDB Member Countries•Non-AfDB Member Countries•Other Multilaterals/Bilaterals
• Multinational (Oil, Gas, Mining)
ALSF will have 3 bodies
5. HOW WILL ALSF OPERATE?
Defense against Vulture Fund Litigation •Minimization of the diversion of debt relief gains•Strengthening of the assistance to HIPCs and Fragile States•Provision of funding assistance for hiring qualified law firms in defense of debtor interests•Such funding assistance will be on terms suitable for each candidate debtor nation
Commercial Transactions (e.g. mining concessions)
•Provision of legal support in negotiation•Hiring highly qualified lawyers to assist/train•Use of precedents created to build knowledge and expertise for Government negotiators
6. NEXT STEPS: TABLE OF IMPLEMENTATION
Launching Summit April/May(Tunis/Elsewhere)
Election of Governing
Council
Election of Management
Board
Appointment of Director
Beginning of the Facility’s operations & activities by the adoption of:•General Regulations And Bye-Laws•Operational Guidelines
AFRICAN LEGAL SUPPORT FACILITY
Kalidou GADIOActing General CounselAfrican Development Bank
Thank you for your attention
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