10. April 2024


A lawsuit between the Sri Lankan government and the Hamilton Reserve Bank has been ongoing since June 2022 and was last paused. After the moratorium granted by the court expired at the end of February 2024, Sri Lanka has again applied for the trial to be suspended for a further five months. This request is again supported by the governments of the USA, the UK and France, and more recently also by Canada, Japan, the Netherlands and Spain. The court has yet to decide whether Sri Lanka’s application will be granted. New shady actors have now appeared on the scene.

Jesse Guzman: A shady investor emerges

So far, the dispute has been fought out in court between two parties, Sri Lanka on one side and Hamilton Reserve Bank on the other. At the end of February 2024, however, a third party intervened: US investor Jesse Guzman had, by his own account, invested USD 50 million with Hamilton Reserve Bank at the end of 2021 and has been demanding repayment of just over half of this investment from the bank since May 2022.

Guzman (not related to the former Argentinian Minister of Economy Martín Guzmán) is the 100% owner and manager of the construction company Ultimate Concrete LLC. registered in Texas and the finance company Intercoastal Finance Ltd. registered in Belize – and a man with shady business dealings: His construction company was involved in the construction of the wall between Mexico and the USA, Donald Trump’s prestige project, among other things. In this context, the company was also accused of overestimating construction costs and being involved in smuggling illegally armed Mexican security teams into the USA to guard construction sites. This became known through the statements of two former employees at Ultimate Concrete LLC. Aftert that, according to media reports, Guzman publicly insulted them as “lazy asses” and “parasites”.

Allegation: “Hamilton stole money”

In his letter to the court, Guzman’s lawyers now argue that Guzman is the beneficial owner of the bonds and that his interests are not adequately represented in court by the Hamilton Reserve Bank. Guzman assumes that the money he invested was used against his knowledge by Hamilton Reserve Bank to purchase the Sri Lankan bonds and that the bank is now refusing to repay them because it is unable to do so due to Sri Lanka’s default. He explicitly accuses the bank of having “stolen” and “embezzled” his money.

Hamilton Reserve Bank, on the other hand, points to non-compliance with formalities on Guzman’s part, which would prevent it from repaying the money. In court, it affirmed that these were two different disputes and that it was the rightful owner of the Sri Lankan bonds. The bank also pointed out that Guzman had not entered into the transaction with Hamilton Reserve Bank as a US private individual, but as a director of the Belize-registered finance company Intercoastal Finance Ltd.

Ultimately, it relies on the fact that the contracts between Hamilton Reserve Bank and Intercoastal Finance Ltd. provide that any disputes are to be resolved in St. Kitts and Nevis, where Hamilton Reserve Bank is located, and therefore concludes that there is no reason for the U.S. court to consider Guzman’s intervention in this action.

Guzman’s legal team has requested a court hearing on the matter. A decision by the court is still pending.

One more dubious than the other

For a long time, it was unclear in whose interests the Hamilton Reserve Bank was bringing its claim. This was raised early on in the Sri Lanka trial and Jesse Guzman also referred to it. However, there are now increasing indications that a certain Benjamin Wey is ultimately behind the Hamilton Reserve Bank and the lawsuit. This is at least the argument of Sri Lanka’s legal team, which also refers to the New York Times’ research published here in September 2023.

Wey is at least as shady a person as Jesse Guzman. In 2015, Wey, also a US citizen, was charged with illegal financial transactions and accused of profiting from undisclosed ownership interests in several US companies. He was also ordered to pay millions in damages to a former intern whom he had sexually harassed. In 2016, a defamation suit was also brought against Wey in this context, as an online media blog – apparently also run by Wey – made fun of the former intern and journalists who had reported critically on Wey.

Recruited to sue

With regard to Wey’s involvement in the lawsuit against Sri Lanka, the New York Times has two interesting sources. First, after announcing the suspension of payments in April 2022, Wey sent a direct letter to Gotabaya Rajapaksa, the then President of Sri Lanka. In it, he warned of the dire consequences of such a default and held out the prospect of further investments in the Sri Lankan financial industry, among others, should Sri Lanka decide otherwise. The letter is signed by Wey as Vice Chairman of Fintech Holding Ltd. of which Hamilton Reserve Bank is not a wholly owned subsidiary.

Secondly, Wey lobbied other Sri Lankan creditors to jointly bring a lawsuit against the country before Hamilton Reserve Bank finally sued by itself. In a presentation also obtained by the New York Times, Wey argued to other creditors:

“suing a sovereign for non-debt payment can be a justified and lucrative business”
Document 86 in the legal dispute between Hamilton Reserve Bank and Sri Lanka

Wey was also sure that he could exert pressure on Sri Lanka by filing a lawsuit and refusing to participate in a restructuring:

“Fintech Holdings can block IMF payments to Sri Lanka until it is paid off.”
Same document

The presentation also shows that Wey and Ajith Cabraal, the former head of Sri Lanka’s central bank, were in direct contact with each other.

And what happens next?

The actual process between Sri Lanka and the Hamilton Reserve Bank has now progressed. At the end of February 2024, the temporary moratorium granted by the court in November 2023 expired. Sri Lanka then applied again on March 1, 2024 for a temporary stay of the trial for a further five months. In its arguments before the court, Sri Lanka’s legal team points out that negotiations with the creditors are progressing well, that Sri Lanka is diligently implementing the measures agreed in the IMF program and that an agreement with the majority of creditors is likely by the end of June 2024, latest by July 2024.

As in the late summer of 2023, Sri Lanka is supported in its request for a temporary stay of proceedings by public creditor states. In two statements, the US government and the Paris Club Secretariat have once again asked the court to grant Sri Lanka’s request.In September 2023, the Paris Club Secretariat did so on behalf of the UK and France.In the letter of February 2024, the Paris Club now also represents the interests of Canada, Japan, the Netherlands and Spain.Both the US government and the Paris Club Secretariat reiterate their concerns and arguments from late summer 2023, which we have reproduced here. They also reiterate that Sri Lanka is negotiating in good faith with its public and private creditors.

Hamilton, on the other hand, points out that there has been no significant progress in the negotiations between the island state and its private creditors and has applied to the court for a hearing regarding the dispute over the temporary suspension. The court has yet to decide whether a hearing will be scheduled and/or whether the request for a new suspension will be granted.

Lessons learned

The case proves one thing in exemplary fashion: looking through hundreds of pages of court documents is not always a dull activity. At times, it almost felt like reading an exciting thriller, and the absurdity of the characters can almost make you smile. Almost. If, on the other hand, it weren’t so bitterly serious and if this unscrupulous action by a few didn’t happen at the expense of so many. The following serious conclusions must therefore be drawn from the current state of the process:

  1. The repeated intervention of now seven states shows that they seriously fear that such a lawsuit could make coordinated debt restructuring negotiations considerably more difficult. Instead of such case-by-case intervention, however, it would be more desirable – and would lead to greater legal certainty for both debtor states and private creditors – if national laws were finally passed that make it impossible for private creditors to undermine international restructurings by legal means.
  2. There is every indication that in this case it is once again not small investors and pension funds, but the super-rich with a questionable law record who could benefit from such a lawsuit.
  3. It is completely unacceptable for such actors to be subsidized in any way by public funds. In this sense, it is to be welcomed that Benjamin Wey was apparently mistaken and that the IMF did not turn out to be a vicarious agent of the Hamilton Reserve Bank in this case.
  4. However, it is equally unacceptable that scarce public resources are being tied up in this case. The Sri Lankan government undoubtedly has more important things to do than deal with such a legal process and pay a three-man team from law firm Clifford Chance to defend itself for almost two years now. And every hour that officials in Washington, Paris, London, Madrid, Ottawa, Amsterdam and Tokyo have to spend sifting through the lawsuit documents and formulating letters to the court is one hour too much. This also applies, incidentally, to the time that officials in Berlin may have spent not endorsing the Paris Club’s position for some inexplicable reason. This waste of public resources could be effectively prevented by the adoption of a national law that would prevent lawsuit strategies such as Hamilton’s from the outset.
  5. The presmptous and easily scandalizable appearance of actors such as Guzman and Wey should not obscure the actual structural problems. In a way, the appearance of the two actors even seems amateurish. The keyboard of power cannot (always) be played quite so obviously and public actors such as the IMF cannot be harnessed for their own interests. Success comes to those who are more subtle. This can be seen, for example, in the case of Suriname, where private creditors have once again managed to obtain preferential treatment and significantly reduce the haircut originally calculated by the IMF. The majority of private creditors know that as long as a government plays along in the negotiations and is prepared to subordinate the interests of its own population to the interests of foreign creditors as far as possible (which is undoubtedly the case in Sri Lanka), it is not worth taking the risky and openly confrontational legal action. This must be taken into account when passing national laws. It is therefore not enough to only put a stop to particularly aggressive “vulture funds” such as the Hamilton Reserve Bank or to always make the legal protection of international restructurings dependent on the consent of the majority of private creditors. We have spelled out here how national laws should be designed instead.
  6. Ultimately, the process also demonstrates how the various powers that ensure the comprehensive recovery of creditor claims in the event of a debt crisis are intertwined: both the Sri Lankan government and the Western states repeatedly point out in their statements how conscientiously the Sri Lankan government is implementing the conditions of the IMF program in its own country. The USA also repeatedly referred to the strategic role that Sri Lanka plays with regard to its own geopolitical interests in the region. The court’s ruling in November 2023, which ordered a temporary pause in the trial, shows that these objections were successful. Conversely, however, it can also be assumed that such a lawsuit is likely to lead to more sensitive costs for governments that are more confrontational towards the measures demanded by the IMF – because they will then lack powerful allies. The same applies if the interest in the stability of a country does not coincide with the geopolitical interests of the USA or other powerful states. None of this is new, but it is clear from this process and should be taken into account, for example, when drafting a national anti-holdout law.


  • Houck, R. G. (01.03.2024) “Memorandum of Law in Support of Defendant’s Motion for a Further Stay of Proceedings”. Dokument 86 im Fall 1:22-cv-5199 DLC (Hamilton Reserve Bank Ltd. v. The Democratic Republic of Sri Lanka).
  • Bleichmar, J. (15.03.2024): “Plaintiff’s Memorandum of Law in Opposition to Motion to Intervene”. Dokument 92 im Fall 1:22-cv-5199 DLC (Hamilton Reserve Bank Ltd. v. The Democratic Republic of Sri Lanka).
  • The remainder of the article is based on court documents 79-99 im Fall 1:22-cv-5199 DLC (Hamilton Reserve Bank Ltd. v. The Democratic Republic of Sri Lanka).

All court documents can be viewed here after registration: https://pacer.uscourts.gov