The African continent is often mentioned as the most exploited place on the Earth, first in humans in the slave trade, then in natural resources that fuelled colonialism. In recent times, through bending laws and taking advantage of weaker people, the African continent has again been given the short straw.
Two recent cases, the Trafigura toxic waste incident in Cote d’Ivoire in 2006, and the various vulture fund claims that have affected governments in Africa.
In the Trafigura case, it is alleged that the oil company had a ship with toxic waste deposited in neighbourhoods in the capital Abidjan. The BBC has been sued for libel by Trafigura for reporting that these deposits of chemicals around the capital caused deaths and injuries to the locals, including 17 deaths, 30 000 injured and 100 000 seeking medical treatment. However what is not disputed is that the ship was prevented from depositing it’s toxic cargo in Amsterdam, and instead had it deposited in Abidjan for €18 500 to a separate firm. Trafigura has denied any wrongdoing, but after a civil lawsuit against the firm in London by 30 000 plaintiffs, Trafigura settled for US$46m, which equated to US$1 546 per person. In between the lawsuit and the deposit of the toxic waste, Trafigura paid the Ivorian government US$198m to assist them in cleaning up the sludge left, but after local media scrutiny, caused mass resignations in the government.
However where there is bound to be some bad feeling, is that the firm that represented the plaintiffs, Leigh Day of London, has now claimed costs of US$157m against Trafigura, over three times as much as was awarded to the plaintiffs. It must be stressed however that there is no link between the settlement and the costs for the legal firm, but to have such a claim when those who were directly affected got a small payout per person will not look proportionate to the plaintiffs. Despite the good work done by Leigh Day, that Trafigura allege they spent only US$18m on their legal costs, and Leigh Day calculate their costs at 8 times more, all at the expense of the Ivorians.
The second example, is the use of vulture funds and their activities in Africa. Vulture funds specialise in purchasing debts at rock bottom prices, then capitalise in claiming for the full amount for it when due. There have been cases where vulture funds purchase sovereign debt at cheap prices, then use litigation to have it paid up in full, through the seizing of assets abroad or having further lines of credit cut. This is a big theme in Africa, governments locked into these hazardous contracts that can severely impact on their GDP. In Zambia, a US$15m debt owed to Romania in 1979 was purchased by a British Virgin Islands vulture fund Donegal in 1999 for US$3m, which then sued the Zambian government for US$55m for not repaying, including penalty fees. A court later awarded the firm US$15m to be repaid. This has also happened in the DR Congo, a debt of US$30m accrued by dictator Mobutu Sese Seko in 1980, left the DR Congo government being sued for US$105m for that debt in 2009 by FG Hemisphere Fund, with a US court ruling the DR Congo government must pay US$80 000 per week towards settling the debt.
This practice of swooping in to claim repayment hurts African countries, nearly 35% of all countries that have qualified under the HIPC scheme in Africa, have had to pay out over US$2bn. Whilst the figures may nominally appear to be small, the amount claimed can run individual ministries within these countries for a whole year, in some cases, the claims can amount to as much as 12% of GDP. For instance, the amount claimed against Zambia of US$55, represents around a months worth of Social Protection in Zambia, such a critical provision that would have seen funds diverted away. Luckily, for African governments, the British government has outlawed vulture funds in the UK, after the case in Liberia, and there is a big lobby against vulture funds in the USA, however the exploitation should not be happening in the first place. In a time where so many have campaigned for debt relief against the poorest countries, it is clear exploitation to capitalise on the misfortune of poor countries.