Rich countries express concern at vulture funds
Rich countries meeting in the Paris Club group of creditors have confirmed that they would be cancelling $7.4 billion of debt ‘owed’ by the Democratic Republic of Congo, and expressed concern at the continuing activities of so-called 'vulture funds'. (1)
The Democratic Republic of Congo’s debt originated under the dictator General Mobutu, when western governments supported the Zaire regime with loans in return for the General’s support during the Cold War. It was known at the time the money was not benefiting the Congolese people and much of it was being stolen by Mobutu and his allies.
Jubilee Debt Campaign Director Nick Dearden said:
“The Congolese people should never have paid a penny on Cold War loans supporting the Mobutu regime. We welcome the fact the Democratic Republic of Congo has finally had $7.4 billion of debt cancelled. But the debt should have been declared illegitimate and cancelled many years ago.”
In making their announcement the Paris Club noted that vulture funds are not taking part in debt relief schemes, but suing the Democratic Republic of Congo in courts across the world. For example, vulture fund FG Hemisphere is pursuing a court case in Jersey trying to reclaim a claimed debt of $100 million. FG Hemisphere bought the debt in 2003, when it stood at $37 million.
Nick Dearden added:
“Governments need to make vulture funds cooperate with debt cancellation, not stand by whilst inflated claims are being pursued in courts across the world. The UK’s landmark vulture law – which will expire next June unless George Osborne makes it permanent – has kept the vultures out of the London courts. But it is sickening that they have been able to take their toxic cases to Jersey and swoop in once more.” (2)
The Paris Club said: “The case of the DRC raised the issue of non cooperative behavior from some litigating creditors. The Government of the DRC committed to seek from all its remaining external creditors a treatment comparable to HIPC debt relief.” (3)
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 over $1.8bn. (4)
Tim Jones, Jubilee Debt Campaign, +44 (0)20 7324 4722
(1) 'The Paris Club agrees on a reduction of the debt of the Democratic Republic of the Congo in the framework of the enhanced Heavily Indebted Poor Countries initiative', 17 November 2010, http://www.clubdeparis.org/sections/actualites/rdc/viewLanguage/en
(2) The Debt Relief (Developing Countries) Act, a result of a private members bill by Andrew Gwynne MP, became law on 7 June 2010, following campaigning by Jubilee Debt Campaign and others. See http://www.legislation.gov.uk/ukpga/2010/22
(3) 'The Paris Club agrees on a reduction of the debt of the Democratic Republic of the Congo in the framework of the enhanced heavily indebted poor countries initiative'. Paris Club Press Release. 17 November 2010.
(4) For more information about Jubilee Debt Campaign and vulture funds see www.jubileedebtcampaign.org.uk/vultures