Judge: Vulture fund leaked documents to human rights group

A recent UK court battle over press freedom was triggered when a New York-based vulture fund passed copies of financial documents concerning the son of the president of Congo to a London-based human rights group, which then posted them on its web site.

Through a spokesperson, the fund, Kensington International Ltd. — which is affiliated with Paul Singer’s Elliott Associates LLP hedge fund — declined comment.

The case, which I’ve written about previously here and here, arose in July, when Denis Christel Sassou-Nguesso, the Congolese president’s son, asked the London High Court to order Global Witness, a non-governmental organization that seeks to expose corruption relating to natural resources, to take down from its web site Sassou-Nguesso’s private financial records. Global Witness says the documents, which it posted in late June, show that Sassou-Nguesso has been supporting his lavish life-style with funds properly belonging to Congo’s state oil company, Société Nationale des Pétroles du Congo (“SNPC”), whose marketing arm, known as Cotrade, is headed by Sassou-Nguesso.

Though justice Stanley Burnton ruled for Global Witness in mid-July, he did not make his written ruling public until August 15 (while I was on vacation). It’s now available here. In the course of his narrative Burnton explains that Global Witness obtained the financial documents in question on about June 6, 2007, from Kensington International Ltd. Kensington holds debt of the Republic of Congo and, thus, has an interest in tracking down any assets that properly belong to the republic but have been corruptly diverted to private parties. The documents, which are still available on Global Witness’s web site, here, include Sassou-Nguesso’s credit card bills, invoices, and records of an Anguilla-based company called Long Beach that, according to the documents, Sassou-Nguesso owns.

Kensington International, whose senior portfolio manager is Jay Newman, is the same fund that made news in the U.S. in 2004 when it persuaded the federal appeals court in Philadelphia to kick then federal judge Alfred M. Wolin off asbestos bankruptcy cases involving Owens Corning (OC), W.R. Grace (GRA), and U.S. Gypsum (USG), due to an alleged conflict of interest. (Kensington then held Owens Corning debt.) Elliott Associates has also been involved in high-profile battles with Argentina, Peru, Telecom Italia, and Procter & Gamble (PG), as described in an April 2006 Financial Times profile, available here.

Kensington had obtained Sassou-Nguesso’s private financial documents in a court proceeding in Hong Kong, but, according to Burnton, the Hong Kong court had restricted Kensington to using the documents only in efforts to recover on its debt instruments. Kensington gave copies of the documents to Global Witness on June 6, 2007, according to Justice Burnton. “I assume,” he wrote, “its purpose for doing so was to put pressure on the Congo and the Claimants [i.e., Sassou-Nguesso and Long Beach] to satisfy the Congo’s outstanding indebtedness.” Global Witness, in turn, posted the documents on its web site on June 26. (Justice Burnton found that Global Witness had not known of any restrictions imposed by the Hong Kong court on the documents’ use.) Upon learning of their publication, Sassou-Nguesso obtained an order from a Hong Kong judge stating that the documents were still confidential and requiring Global Witness to remove them from its web site. Sassou-Nguesso’s lawyers at Schillings — a British firm that specializes in enforcing privacy rights, and that has represented such celebrities as Naomi Campbell, Cameron Diaz, Keira Knightley and Britney Spears in the past — then wrote Global Witness on July 6, demanding that it obey the Hong Kong court’s order.

Global Witness tartly refused: “You enclose what purports to be an injunction from a Hong Kong Court, which is under the sovereignty of China. Here in the United Kingdom we have the principle of free speech; for all that you are paid to infringe this principle, we nonetheless believe that any English judge will uphold it.”

Global Witness’s prediction proved accurate. In part, Justice Burnton relied on a narrow rationale: the financial documents, though unquestionably confidential at one time, had lost that status, he ruled, when they had been referenced in open court at a hearing in Hong Kong in May 2007.

But Justice Burnton also based his ruling on broader, independent grounds. Though the European Convention on Human Rights protects both privacy rights (in article 8 ) and press freedom (in article 10) Justice Burnton found that press freedom had the trump card here because “there is an important public interest in the publication of the specified documents and the information derived from them.”

Indeed, he all but endorsed Global Witness’s interpretation of the documents. “The specified documents demonstrate that [Sassou-Nguesso] is the concealed beneficial owner of an offshore company, namely Long Beach . . . that has oil dealings with . . . one of the companies found [earlier, in a different published court case] to have entered into sham purchases and resales of Congolese oil which gave an obvious opportunity for personal gain on the part of those controlling those companies.”

The Hong Kong judge who had attempted to bar Global Witness from displaying the documents had extended to Sassou-Nguesso and Long Beach an innocent-till-proven-guilty style benefit of the doubt, explaining that neither had yet been found to have done anything “unsavoury or corrupt.” Justice Burnton rejected that approach, however. “The specified documents, unless explained, frankly suggest that they are [unsavoury and corrupt],” Burnton wrote. “There is no obvious reason why [Sassou-Nguesso] should not publicly explain that the transactions shown by these documents are consistent with his honest performance of his duties as President and Director General of Cotrade and his disclosed personal income. Once there is good reason to doubt the propriety of the financial affairs of a public official, there is a public interest in those affairs being open to public scrutiny.”

A solicitor for Global Witness, Mark Stephens, characterizes the ruling in an interview as “hugely important,” and said it would help put an end to the “pernicious” trend in which elites from autocratic governments try to use the UK’s liberal libel and privacy laws to silence “NGOs who do an enormous amount of good work, reporting in depth, honestly and courageously.”

Jenny Afia, a solicitor at Schillings who helped represent Sassou-Nguesso, says, “It’s not our policy to comment on our clients’ cases.” She said she would pass along my request for comment to the client.

(Incidentally, on August 10, five days before Justice Burnton made his ruling public, an Australian lawyer who reads this blog wrote to me to suggest that a vulture fund had been the human rights group’s likely source for the documents. Since he was dead right, I wanted to salute him in some way. He writes a blog under the name the Stumblng Tumblr, which you can view here.)

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