Qatar Bank Asks U.S. Court to Order Eritrea to Pay $300 Million Debt
(Bloomberg) -- Qatar National Bank QPSC, the Middle East’s biggest lender, asked a U.S. court to order Eritrea to pay nearly $300 million of debt after the Horn of Africa nation refused to participate in two lawsuits.
The Doha-based bank requested a judgment by default from a federal court in Washington on Friday after Eritrea failed to respond to the bank’s claim seeking to enforce a U.K. ruling in 2019. QNB alleges that President Isaias Afwerki’s government went to drastic lengths to avoid being served with key documents.
A decision in its favor will help the Qatari bank identify and seize Eritrea’s overseas assets, according to the complaint it filed in the U.S. court in February. The legal battle may further discourage investment in the African country, which currently stands second from last among 190 economies in the World Bank’s Ease of Doing Business rankings.
The quarrel centers on $200 million that Eritrea borrowed from QNB in 2009 and 2010. The bank claims Afwerki’s government reneged on the debt in May 2012 after repaying about $45 million. That prompted the lender in 2018 to seek legal recourse in the U.K., as permitted under the loan agreement. The following year a judge directed Eritrea to pay its creditor $253 million plus interest.
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Eritrea ignored the ruling, according to QNB. The bank then turned toward the U.S. court in February in a bid to enforce the judgment. Eritrea has chosen not to defend itself in either case.
Staff at the Eritrean embassy in London “responded with extraordinary efforts to frustrate” the U.K. proceedings, QNB said in its complaint to the U.S. court.
Embassy officials locked one of the bank’s lawyers in the building until he agreed to leave without delivering the court documents, while another representative was “physically assaulted,” according to QNB’s filings.
Documents on the Pavement
On one occasion, “the receptionist physically knocked the documents out of a process server’s hands and threw them on the pavement outside the embassy’s front door,” the complaint said. A British judge eventually allowed the bank to send paperwork by email or post.
In its latest court filing, QNB said Eritrea’s debt has risen to $295.3 million. The amount is equivalent to more than 10% of the nation’s $2.3 billion gross domestic product.
Neither Eritrea’s Information Minister Yemane Gebremeskel nor QNB’s media department responded to phone calls or emails seeking comment. Qatar’s sovereign wealth fund owns 50% of QNB.
Afwerki committed to repaying the loan through tax revenue and income from the Bisha mine, a gold-copper-zinc project currently controlled by China’s Zijin Mining Group Co. that entered production ten years ago, according to a letter sent in March 2009 by the president’s office to QNB, which the lender filed to the court in Washington.
Afwerki has ruled Eritrea since it gained independence in 1993. The country began emerging from decades of international isolation when it signed a peace deal with neighboring Ethiopia three years ago.
The case is Qatar National Bank v. Government of Eritrea, 21-cv-00436, U.S. District Court, District of Columbia
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