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AFRICAN LEGAL SUPPORT FACILITY

AFRICAN LEGAL SUPPORT FACILITY. Kalidou GADIO Acting 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?

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AFRICAN LEGAL SUPPORT FACILITY

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  1. AFRICAN LEGAL SUPPORT FACILITY Kalidou GADIO Acting General Counsel African Development Bank Doha, 18 February 2009

  2. 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

  3. 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. 1. WHAT IS THE ALSF

  4. 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

  5. 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

  6. 2. WHY: CREATION OF ALSF #2/3 1.1.vulture funds = outrageous Frequently 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.

  7. 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

  8. 3. ALSF EXPECTED BENEFITS

  9. 4. ALSF DOMICILE AND STRUCTURE • ALSF will have 3 bodies • AfDB • House ALSF • Provision of initial allocation • of 10million UA • AfDB Member Countries • Non-AfDB Member Countries • Other Multilaterals/Bilaterals • Multinational (Oil, Gas, Mining)

  10. 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

  11. 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

  12. AFRICAN LEGAL SUPPORT FACILITY Kalidou GADIO Acting General Counsel African Development Bank Thank you for your attention

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