Who is behind the Hamilton Reserve Bank lawsuit against Sri Lanka?

COLOMBO (News 1st); The Financial Times says that the US government suddenly and obliquely saying it wanted to get involved a lawsuit against Sri Lanka for defaulting on a $250 million bond, is intriguing.

Hamilton Reserve Bank (HRB) in St. Kitts & Nevis has filed a lawsuit against Sri Lanka for defaulting on a $250 million bond.

What is the lawsuit filed by Hamilton Reserve Bank? 

Sri Lanka was sued in the US by a bondholder after the South Asian nation defaulted on its debt for the first time in history while struggling to stop an economic meltdown.

Hamilton Reserve Bank Ltd., which holds more than $250 million of Sri Lanka’s 5.875% International Sovereign Bonds due July 25, filed the suit in a New York federal court seeking full payment of principal and interest.

HRB owns over $ 250 million in principal amount of the $ 1 billion worth International Sovereign Bonds (ISBs) issued in 2012. The Bonds matured on 25 July 2022.

Hamilton alleged that as a result of Sri Lanka’s default, it is owed $ 250.19 million in principle and $ 7.349 million in accrued interest.

Hamilton Reserve Bank (HRB) is in St Kitts & Nevis and it is a small bank based in a country with 50,000 inhabitants.

St. Kitts & Nevis is potentially one of the best available tax havens in the world.

Why is this lawsuit back in discussion?

The Financial Times says HRB’s stake — and the unusual aggressiveness of its lawsuit against Sri Lanka, which began almost as soon as it defaulted in April 2022 — always smelled a bit fishy.

The US government suddenly and obliquely saying it wanted to get involved made the whole situation even more intriguing. 

The US will occasionally file “amicus briefs” laying out its views on contentious legal cases where it has pressing national interests, but it hardly ever gets involved in something as routine like this.

Sri Lanka’s law firm Clifford Chance for the first time said explicitly who it thinks is driving this: a Chinese-American financier called Benjamin Wey.

Wey has a history of legal and regulatory problems.

He was arrested for fraud in 2015, but the charges were dropped.

The US government's intervention in the lawsuit suggests that it is concerned about Wey's motives and the potential impact of his lawsuit on Sri Lanka.

The Financial Times says that according to the presentations made there is argument from those who filed the lawsuit that they can block the IMF payments until the money is paid off.

It adds that HRB’s $250mn is enough in theory to veto any restructuring proposal Sri Lanka makes,