Government moves to take on vulture funds
Jubilee Debt Campaign (1) welcomes the Government’s announcement (2) today of a consultation on a new law that would prevent creditors from profiting from the debts of developing countries.
The proposed legislation would cap the amount UK courts could award to creditors who sue countries that qualify for debt relief under the international Heavily Indebted Poor Countries (HIPC) initiative.
Jubilee Debt Campaign has been calling for a change in the law to prevent the activities of so-called ‘Vulture Funds’ which buy up the defaulted debts of poor countries and then sue those countries for full repayment plus costs, often in UK or US courts. So far some $1.2 billion has been awarded to unscrupulous creditors who have refused to take part in HIPC, a scheme that channels debt relief proceeds into efforts to tackle poverty in some of the world’s poorest countries.
Labour MP Sally Keeble introduced a Ten Minute Rule bill (3) on the issue in May, with cross-party support, which sought to cap the amount that Vulture Funds could claim against developing countries.
The Government’s proposal is that awards would only be made on ‘HIPC terms’ –meaning up to a 90% reduction, but only for the 40 HIPC-eligible countries and only on those debts they had contracted before they qualified for debt relief. Jubilee is calling on the Government to allow the measure to apply to all developing countries.
Sarah Edwards of Jubilee Debt Campaign commented:
“We are delighted that the Government is taking seriously the issue of Vulture Funds. Companies which exist purely to profit from the suffering of some of the poorest countries in the world are surely one of the most repellent aspects of the financial system, and we need to take all possible action to stop these operations.
“We hope, over the course of the consultation, that the Government will go further and apply the law to all developing countries and all debts, not just those contracted before the country qualified for debt relief. It can’t be right that countries with high levels of poverty like Ecuador, Bangladesh and South Africa still fall foul of these Vulture Funds.”
The consultation opens today and the Government is seeking comments until 9 October.
Nick Dearden on 07932 335464