New figures show extent of vulture fund threat

A new report has revealed that vulture funds and other commercial creditors are still chasing a staggering $1.8 billion from some of the world’s poorest countries.

The claims come AFTER the countries have had debts cancelled by rich country governments.

The Status of Implementation report for the Heavily Indebted Poor Countries initiative, released the week before the annual meetings of the World Bank and International Monetary Fund, reveals:

• Of the 24 countries that have received debt cancellation under the Heavily Indebted Poor Countries initiative, 11 have been targeted for legal action by private creditors.
• More than half of these private creditors have already won lawsuits, with a total of $991 million awarded so far.
• Eight new legal actions have been reported in the last year, five against Nicaragua, two against Cameroon, and one against Ethiopia.

The report comes six months after the vulture fund Donegal International was awarded $15.5 million for its claim against the government of Zambia, for a debt it had bought for $3 million.

It shows that there the international debt relief process remains seriously flawed, with vulture funds continuing to exploit loopholes to chase millions of dollars from desperately poor countries. While concern has been expressed by the UK government, the G8, the IMF, the World Bank and the Paris Club about the activities of vulture funds in recent months, so far no concrete proposals for how to tackle them have been produced.

In addition to the countries listed in this report, countries such as Cote D'Ivoire and Liberia, which are preparing to enter the debt cancellation process, have large commercial debt burdens. This leaves them very vulnerable to litigation, in particular from vulture funds who want to buy up their debts in order to sue.

Jubilee Debt Campaign is calling for concerted action from the UK government, the IMF, and the World Bank to tighten up the system and make sure the benefits of debt cancellation go to the people who need them. Funds freed up by debt cancellation are intended for health, education and other social spending, they are not rich pickings for speculators and private banks.

We are calling for national and international regulation to stop vulture funds from operating. In the mean time, the international community must provide poor countries with speedy access to affordable legal advice and support, so they can defend themselves against the vultures.

>> TAKE ACTION: Ask your MP to help stop the vultures

Previous news:

• Vulture's wings clipped by judgment, 24 April 2007
• Vulture still hovering over Zambia, 9 March 2007
• Vulture scavenges millions from Zambia, 15 February 2007