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