Mp's demand an end to vulture debt
Labour MP Sally Keeble will tomorrow lead a group of 12 cross-party MPs in seeking to outlaw the activities of so-called 'Vulture Funds'.
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.
The Ten Minute Rule bill will be presented by Sally Keeble MP after Prime Minister's Questions on Wednesday. It is backed by anti-poverty group Jubilee Debt Campaign, which is leading a campaign against the funds.
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 Ten Minute Rule bill provides for:
• An end to hedge funds and other investors buying up Third World debt at cut-rate prices and then suing developing country governments 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.
Legislators 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.
Sally Keeble, MP for Northampton North, said:
"These vulture funds have been engaged in completely unregulated profiteering in Third World debt. This bill puts forward some basic measures to clip their wings. We hope that co-ordinated legislation in the US and UK would not only severely reduce scope for vulture litigation, but will also inspire other countries to follow our lead."
Nick Dearden, Director of Jubilee Debt Campaign, said:
"This Bill would represent a major step forward in tackling these odious funds. It cannot be right that companies are allowed, in British courts, to make enormous profits out of the suffering of millions of the world's poorest people. At a time when Western governments are pledged to clean up the global financial sector, tackling vulture funds should be an urgent priority."
Nick Dearden, Director, Jubilee Debt Campaign, 07932 335464
Jubilee Debt Campaign Media Office, 020 7324 4726, 07818 651124