Interview with Stephen Karangizi, Director, African Legal Support Facility

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As the African Legal Support Facility’s Board holds a major meeting in the Ivorian capital, its Director, Stephen Karangizi, discusses the institution’s activities and outlook. “African Legal Support Facility’s work has benefited tremendously to RMCs and contributed to their development,” says Karangizi.

What are the key objectives and expectations of the African Legal Support Facility’s (ALSF) Board meeting on November 26 and 27 in Abidjan?

Stephen Karangizi: The Facility has continued to grow and deliver on its mandate of supporting African States to negotiate better agreements especially in the natural resource sector and major infrastructure projects. The main objective of the Board meeting will be to review the progress made by the Facility in 2014  and plan how those achievements can be sustained in 2015 through a robust work plan and accompanying budget. Apart from their virtual meetings, the Board of the Facility meets three times a year and this will be their last meeting in 2014.

Four years have passed since the ALSF’s creation in 2010. Since that time, how many projects has the Facility approved and implemented in line with its objectives and to what extent would you say the Facility has helped AfDB’s regional member countries (RMCs) to clamp down on vulture funds across the continent?

SK: The Facility has now approved over 45 projects and supported more than 30 RMCs directly in its mandated area. However all RMCs have benefitted from the capacity building efforts of the Facility in negotiation of complex commercial agreements with external investors. With respect to vulture funds, this has been a mixed picture. On the success side, the Facility successfully defended the DRC against a major vulture fund (FG Hemisphere) before the US Courts. The victory by the DRC in the case meant huge savings for the DRC in a suit for which they would have been required to pay over US $100 million claimed by the vulture fund. But there was also the loss by the DRC of one vulture fund case, Themis Capital and Des Moines Investment Ltd. We believe there may be many more cases out there and the Facility has continued its work of highlighting the dangers of vulture funds to the RMCs.

Above all, the Facility has provided direct capacity needs in commercial legal issues to over 500 African experts from more than 45 RMCs, which has raised awareness on the need to enhance negotiations capacity.

What is the role of ALSF in terms of the Africa’s mining and natural resource sector? How does the work of the ALSF benefit the RMCs and contribute to their development?

SK: Through provision of support to their defence against vulture funds, the Facility ensures that resources of the RMCs are saved and retained for development efforts. The Facility has also supported and is facilitating at least 15 RMCs in negotiating major natural resource contracts. In addition the Facility has been supporting negotiation of many infrastructure deals thereby facilitating investment. By providing high-level advisory services, the Facility ensures that the asymmetry between the RMCs and the investing partners is addressed and the RMCs are well positioned to maximize their resources. Our rough estimates indicate that the Facility has already supported deals worth over US $14 billion in the sectors mentioned.

Please share an example of a success story of the Facility.

SK: A major success story for the Facility in 2014 was the support provided to Niger who successfully negotiated a new mining concession with Areva following the end of the existing concession at the end of 2013. In August 2013, the ALSF was approached to provide legal and financial assistance to the Niger in relation to the negotiation of uranium mining concessions with the Areva Group. The main concern of Niger was how to negotiate the new mining concessions taking account of the 2006 mining law. With the support of the Facility and through the work carried out by the legal counsel and financial advisors, Niger and Areva agreed on several key issues going forward. Niger and Areva agreed on the application of the 2006 mining law while ensuring the continuation of the mining operations. The parties also agreed on increased royalties for Niger thus raising expected revenue for Niger. Niger will also be able to increase their involvement in the top-level management of the mining subsidiaries. In addition, Areva agreed on increasing their investment in local infrastructure. The parties also avoided a potential dispute that could have been very damaging.

The second major success story in 2014 was victory by the DRC government against a vulture fund (FG Hemisphere) before the courts in the US which meant a saving of over US $100 million, an amount that the vulture fund was claiming. The DRC has been sued by FG Hemisphere in an attempt to enforce two ICC arbitration awards relating to debt for the construction of a power generation and transmission project from the 1980s. FG Hemisphere has aggressively been trying to enforce this judgment around the world.  After key losses in Hong Kong and Jersey, the last active litigation where FG Hemisphere seemed to have an advantage was the case in California.  In the lower court, the judge found in favour of FG Hemisphere; however, the judgment delivered in February 2014, overturned that decision. While it is possible for FG Hemisphere to continue appealing, this case showed that RMCs can successfully defend themselves in such suits with the assistance of the Facility.