THE High Court in London was due to rule yesterday in the case of an American-owned investment fund suing the Zambian government to repay, in full, an old debt.
Donegal International, a company incorporated in the British Virgin Islands, is seeking to get Zambia to pay up the original $42m (£21.6m) debt, incurred in 1979.
Donegal bought the debt for just $4m (£3m) in 1999. It is part-owned and run by the Washington-based financial group Debt Advisory International (DAI), headed by billionaire lawyer Michael Sheehan.
So Donegal is suing the government of one of the poorest African countries to pay up $42m over a debt for which it paid just $4m!
This kind of activity has earned these financial groups the title of ‘vulture fund’.
The history of the original loan shows just how imperialist finance capital is plundering Africa today, from plush glass-plated offices in New York, London and Paris, using capitalism’s laws protecting private property.
In 1979, the Romanian government lent Zambia the money to buy Romanian tractors, but Zambia was unable to make the repayments on the loan.
In 1999, the two countries negotiated a deal in which Zambia would pay 12 cents for every dollar of debt, a payment of $3m in total. But Donegal stepped in to buy the debt before that agreement was signed.
At that time, under President Frederick Chiluba who ruled from 1991-2001, a Donegal representative put in a $4m bid for the debt. He promised a substantial donation to ‘the President’s favourite charity’ and took ownership of the debt. After leaving office, Chiluba faced corruption charges in 2003.
Commenting on the case in London, a spokesman for the present Zambian President said: ‘That $40m is equal to the value of all the debt relief we received last year.’
Caroline Pearce of the Jubilee Debt Campaign said: ‘Zambia has struggled hard to achieve debt cancellation, and its people now expect to see the results of that cancellation spent on much-needed health, education and infrastructure. It shouldn’t have to be paying huge sums instead to a vulture like this.’
There are several cases like that of Zambia going through the courts, especially in the US. The ‘vulture fund’, headed by US billionaire Paul Singer, is suing Congo Brazzaville for $400m for a debt bought for $10m.
What the operations of these ‘vulture funds’ expose is that imperialist finance capital is grabbing the wealth of poor former colonial countries, especially in Africa, and using the capitalist law courts in the rich countries to act as debt collectors.
Two years after the Make Poverty History campaign, when there were pious speeches from the likes of Blair and Brown about cancelling the debts of the countries of Sub-Saharan Africa, imperialist finance capital is profiteering even more from the debts of poor countries and bleeding them dry.
The Zambian case shows the working class and labouring masses of Africa that they have no future under capitalism, dominated today by major imperialist powers like the US, Germany, France and Britain.
The African masses can see that the corrupt bourgeois regimes in their countries are partners in crime with the imperialists.
Only the overthrow of the lackeys of these ‘Great Powers’ and the smashing of imperialism all over the world, can liberate them from increasing exploitation, grinding poverty and oppression.
The key task of the workers and youth in the countries of Sub-Saharan Africa is to build sections of the Trotskyist International Committee of the Fourth International to lead their revolutionary struggle to overthrow corrupt bourgeois regimes and replace them with workers’ and farmers’ governments.
These governments must repudiate all foreign debts and expropriate imperialist-owned mines, factories and large farms to lay the foundations for building a socialist future.
The working class, in countries like the US and Britain, must act to ensure the success of this struggle to free Africa from imperialist exploitation, through organising the overthrow of imperialism in its centres and by establishing workers’ governments that will hand over assets owned by all US and British companies back to the peoples of Africa.