A/HRC/14/21 with the sole aim of pursuing a debt owed by Zambia to Romania. As at the time of its litigation against Zambia, Donegal was owned by Select Capital Limited, a company registered in the British Virgin Islands on 27 June 1997. In the Donegal International case, the court found that the “ultimate ownership of Select Capital (was) rather obscure” and in his testimony before the court, Mr. Sheehan said that Select Capital had been set up offshore because “many of the investors were European and did not want to be subject to US tax”.12 14. The independent expert supports the view that tax havens facilitate the secretive manner in which vulture funds operate as well as the flight of much-needed capital from developing countries.13 Consequently, he considers that a key priority for the international community should be to end this secrecy and lack of transparency. In his estimation, tackling tax havens would also help address money laundering, tax evasion and capital flight. B. Case studies Liberia 15. In 1978 Liberia borrowed US$ 6.5 million from Chemical Bank, a company based in the United States.14 The bank sold the debt to FH International Financial Services Inc. and Sifida Investment Company S.A., which later brought an action for its recovery before a court in New York. On 19 June 2002, the court entered a default judgement against Liberia for approximately US$ 18.4 million. Following the judgement, the debt was assigned several times by FH International Financial Services and Sifida to third parties and back to the two judgement creditors. The debt was subsequently assigned to Hamsah Investments Ltd. (registered in the British Virgin Islands) and Wall Capital Ltd. (registered in the Cayman Islands). 16. In June 2008, Hamsah Investments and Wall Capital commenced proceedings in the High Court in London to register, as an English judgement, the judgement of the New York court.15 On 26 November 2009, the High Court ordered Liberia to pay the claimants more than US$ 20 million including interest. While it accepted that Liberia was “short of money” and that the judgement debt was “a substantial sum”, the court stated that Liberia “must do the best they can”.16 The court rejected the submission of Liberia that it had been unable to respond to the claim before the New York court because of the financial difficulties which it faced, particularly during the period of the country’s civil war.17 The court also held that 12 13 14 15 16 17 GE.10-13156 Donegal International Ltd. v. Republic of Zambia & Another [2007] EWHC 197 (Comm.), para. 27. See Jubilee Debt Campaign, “Time to stop the debt vultures” (June 2009). The flow of financial resources from developing to developed countries is estimated at US$ 500 billion – US$ 800 billion each year (Eurodad, “Addressing development’s black hole”, p. 4). See also L. Ndikumana and J.K. Boyce, “New estimates of capital flight from sub-Saharan Africa: linkages with external borrowing and policy options”, Working Paper No. 166 (Political Economy Research Institute, University of Massachusetts, April 2008). See H. Stewart, “Vulture funds sue Liberia for £12m in high court”, 25 November 2009. Available from www.guardian.co.uk/business/2009/nov/25/vulture-funds-sue-liberia. See Hamsah Investments Ltd. & Anor v. The Republic of Liberia, Case No. 2008/587 (High Court of Justice, London), judgement of 26 November 2009. Ibid., para. 29. Ibid., paras. 4 and 17. 7