Skip to content

Liberian Leader Urges MPs to Back Action Against Vulture Funds

An investigation for BBC’s Newsnight has uncovered allegations that speculators subverted the international debt relief process.
And Heather Stewart for The Guardian
Ellen Johnson Sirleaf, the president of Liberia, is urging MPs to back a bill banning vulture funds from using British courts to prey on poor countries when it comes to a vote on Friday. Liberia lost a $20m (£13m) case in London last year against two so-called vultures. Such funds buy up the loans of poor governments, wait for them to win from the international community, and then use courts to pursue the countries for assets.
Sirleaf said: “We’ve been waiting for a parliament or an assembly to take this kind of hard decision. I hope the US Congress and maybe some others in Europe will pick up this gauntlet and will follow the example of Britain.”
An investigation for BBC’s Newsnight, to be broadcast tonight, has uncovered allegations that speculators subverted the international debt relief process for Liberia, in an attempt to gain more money from its government and international donors than 97% of its other creditors accepted.

Liberia received debt relief worth $4bn from the international community in 2007 under the heavily indebted poor countries initiative, including $2bn from private-sector bondholders. Insiders to negotiations allege that two US financiers, Eric Hermann and Michael Straus, allowed other creditors to accept a low payout from Liberia, then quietly transferred their holdings to two other firms, which then sued in Britain for the debt in full.

liberiaBBC cameraman Rick Rowley in Liberia, reporting with Greg Palast from the village of Demeh, Liberia.

One of Liberia’s biggest creditors, Hans Humes, owner of New York’s Greylock Capital, criticised the behaviour of speculators in the negotiations over the country’s debts. “[They were] just sitting there and saying: ‘OK, we’re the last guys and we’re going to hold up any process by which the country can grow unless somebody takes care of us.’ It’s extortion,” he said.
Two others who were involved in the negotiations confirmed that Humes’s criticisms must refer to Hermann and Straus.
The private member’s bill, which will receive its second reading on Friday, would prevent vultures from pursuing any of the 40 countries that have qualified as heavily indebted poor countries. Sponsored by Labour MP Andrew Gwynne, it would prevent assets being seized, even in cases that have already been brought – so campaigners say it should help Liberia.
When a Newsnight crew went to Hermann’s New York office to question the financier, the company’s nameplate had been unbolted from the wall, the suite number removed and the firm’s staff locked inside the office. A security guard said he had been ordered to look out for the BBC crew and keep it out of the building.
In 1998, a US judge found lawyer Straus guilty of “champerty” – buying poor nations’ debts just for the purpose of suing them. An appeals court later reversed the finding.
In February 2002, Straus and Hermann sued Liberia for $18m for debts they had obtained for a fraction of that sum. They filed the suit in the US, the week Liberia’s capital was under siege from rebels, without electricity, water or a functioning government. Straus and Hermann won a judgment for the $18m by default.
Greg Palast, investigative reporter for BBC Newsnight.
Sign up for Palast’s investigative reports at and subscribe to Palast’s podcast.

Greg Palast has written four New York Times bestsellers, including Armed Madhouse, Billionaires & Ballot Bandits, and The Best Democracy Money Can Buy, now a major non-fiction movie, available on Amazon ”” and can be streamed for FREE by Prime members!

Stay informed, get the signed DVD of the updated, post-election edition of The Best Democracy Money Can Buy: The Case of The Stolen Election, a signed copy of the companion book ”” or better still, get the Book & DVD combo.

Support The Palast Investigative Fund  and keep our work alive!  Become a monthly contributor and automatically receive Palast's new films and books when they're released!

Or support us by shopping with Amazon Smile. AmazonSmile will donate 0.5% of your purchases to the Sustainable Markets Foundation which automatically goes to the benefit of The Palast Investigative Fund and you get a tax-deduction! More info .

Subscribe to Palast's Newsletter or his special list for Poems & Stories.

Support the Palast Fund and keep our work alive!
Send this to a friend