MPs demand an end to debt 'vultures'
The Developing Country Debt (Restriction of Recovery) Bill seeks to ban hedge funds and other creditors from taking legal action to make large profits out of the debts of some of the poorest countries in the world.
Yesterday supportive MPs joined Jubilee Debt Campaign and a live vulture opposite the Houses of Parliament to show their support for the campaign to crack down on the funds. A new Early Day Motion, no 1440, has been tabled in support of the Bill.
Vulture funds are private companies which buy up poor country debts for a reduced price and then try to claim the full amount through the courts.
At least 54 companies are known to have taken legal action against 12 of the world's poorest countries in recent years, for claims amounting to $1.5 billion. Vulture action is currently ongoing against Ethiopia, Cameroon, Argentina, Democratic Republic of Congo and others.
Most famously, the vulture fund Donegal International, based in the British Virgin Islands, won $15.5 million repayment in the High Court in 2007 for Zambian debt it had bought for $3.3 million. Two-thirds of Zambians live on less than $1 a day, and debt relief was intended to free up vital resources for healthcare and education.
The Developing Country Debt (Restriction of Recovery) Bill was introduced as a Ten Minute Rule Bill, which allows a backbench MP to propose legislation in Parliament. It provides for:
- An end to hedge funds and other investors buying up developing country debt at cut-rate prices and then suing those countries through the UK courts for huge profits.
- Reporting arrangements to the UK and developing country governments.
- More transparency in the work of the funds.
- Anti-corruption measures.
International Development Minister Gareth Thomas told a parliamentary reception yesterday that vulture funds were “the unacceptable face of capitalism”. But he didn’t immediately commit to supporting the bill – instead indicating that the Government would consider the issue as part of its current White Paper consultation.
UK campaigners are working in conjunction with counterparts in the United States, where similar legislation, the Stop VULTURES Act, is being introduced to the US House of Representatives later this month by Congresswoman Maxine Waters.
The US and UK are the two most popular jurisdictions for vulture funds to take legal action, with the UK alone accounting for around one-fifth of global vulture cases.
The Bill was introduced by Sally Keeble MP and the sponsors are: Rt Hon Hilary Armstrong MP, John Austin MP, John Bercow MP, David Borrow MP, Tom Brake MP, David Drew MP, Rt Hon Sir Gerald Kaufman MP, Mark Lazarowicz MP, Rt Hon Peter Lilley MP, Andy Reed MP and Andrew Stunell MP.