Grenada fears Taiwan's effort to collect $28M debt

AP News
Posted: Oct 25, 2011 4:43 PM
Grenada fears Taiwan's effort to collect $28M debt

The government of Grenada is warning that Taiwan's aggressive effort to collect a $28 million judgment will hurt the tourism-dependent economy of the Caribbean island.

Cruise lines and airlines may halt operations in Grenada after receiving legal papers filed by American lawyers working for Taiwan in the United States compelling them to turn over any money they owe Grenada in fees or other payments, Finance Minister Nazim Burke said.

Already one cruise line has threatened to cancel its 20 stops in 2011-12 in Grenada as a result of the effort to seize port fees, Burke said in an interview Monday.

"If this was to happen, we stand to lose millions," he said.

The dispute centers around loans provided by Taiwan's Export-Import Bank for a variety of infrastructure projects in Grenada in the 1990s.

Grenada officials have said they could no longer pay the loans because of a number of shocks to its economy, including the devastation from Hurricane Ivan in 2004 and the drop in tourism following the Sept. 11, 2001, terrorist attacks in the United States.

Officials in the Caribbean nation have said Taiwanese officials refused to renegotiate the loans because Grenada had severed diplomatic relations in favor of rival China. Taiwan filed suit in a U.S. District Court for the Southern District of New York and won a summary judgment in 2007 that has grown to about $28 million with interest and penalties. That's a huge sum for Grenada, nearly the total value of its exports of goods in 2009.

Grenada has not paid any of the of the principal or interest on the judgment, according to Paul Summit, a lawyer for the Export-Import Bank.

Summit, based in Boston, Massachusetts, declined to discuss efforts to collect the judgment except to say "we are pursuing a number of lawful avenues to achieve collection."

Burke said the law firm has contacted a number of U.S. and European companies, including Princess Cruises and American Airlines. He said they have been informed that "any monies you have for Grenada, we are going to seize it."

The finance minister said they will challenge the effort in court, arguing that it is a violation of their national sovereignty. Officials have previously argued that the previous government took out the loans and decided to stop paying on them so it should be given more leeway to work out a payment plan.