The vulture fund targeting Zambia has been told it will get around $15.5 million - far short of the $55 million it was claiming, but still a huge sum for a country where 80% of people live on less than $1 a day.

The company, Donegal International, had bought up an old Zambian debt to Romania, with a face value of about $15 million, for just over $3 million in 1999. It subsequently sued Zambia in the London courts for what it claimed was the full value of the debt, including compound interest: a staggering total of $55 million.

The judge in the case found in February 2007 that Donegal's full claim was not justifiable, but that it was entitled to something. Today, that award was settled as being $15.4 million. Donegal then claimed that it had won the case, and that Zambia should pay most of its legal costs.

The judge, however, is restricting the proportion of the costs that Zambia has to pay, on the grounds that Donegal's key witnesses - including its Director Michael Sheehan - were dishonest in their evidence before the court. He commented this morning that, "I do regard the dishonesty with which I was confronted as quite serious.... It is not what you might call individual fibs popping up in the witness box here and there."

However, the fact that Zambia still has to pay anything to this company is a serious matter for a country that is struggling with severe poverty and trying to invest the proceeds of debt relief in much-needed healthcare and education. An official in the Zambian Ministry of Finance testified that if Zambia had to pay the full award immediately it is "inevitable that health and education programmes would be seriously adversely affected."

Jubilee Debt Campaign, Oxfam, Jubilee USA, Jubilee Germany and many other organisations are therefore calling on the G8 to do what they can to prevent these companies from targeting poor countries in future - through supporting the establishment of a fair, comprehensive framework for dealing with poor country debt, and in the meantime funding legal assistance for countries targeted in this way.

In this case, the UK and other donor countries funded Zambia's legal fees, which was crucial in enabling them to fight the case - and get their losses reduced - in the High Court. But systemic changes are still needed to prevent such cases in future.

http://www.jubileedebtcampaign.org.uk/?lid=3210

Origianl news article on the Zambia Vulture funds here