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? 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 = 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.

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 countries wishing to negotiate complex development contracts with 3 rd 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 allocation of 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 GADIO Acting General Counsel African Development Bank Thank you for your attention