Monday 25 January 2010

End the Vulture Culture

Vulture funds are private companies that try to scavenge profit from some of the world's poorest countries, by buying up their debts at a cheap price and then trying to recover the full amount, often by suing through the courts.

At least 54 companies, many based in tax havens, are known to have taken legal action against 12 of the world's poorest countires in recent years, for claims amounting to $1.5 billion. This means money released by debt relief is going into the pockets of wealthy investors, not spent on health and education.

Just this month, US courts ruled in favour of vulture funds, giving authorization to freeze Argentinean assets in New York. The dispute is over debts dating back to 2002 when severe economic problems forced Argentina to default. Despite the fact that an agreement was reached over the debts in 2004, with the majority of bondholders agreeing to accept around one third of the price, some of the remainder was sold at a discount to the vulture funds. An increase in the debt burden would have serious impacts on the Argentinean economy and its citizens’ welfare.

Support the Vulture Funds Bill

Tomorrow, Andrew Gwynne MP's Private Members Bill to tackle vulture funds has its second reading in Parliament. If passed, the Debt Relief (Developing Countries) Bill would limit the ability of vulture funds to use UK law to prey on the poorest countries in the world. It needs 100 MPs to vote for the bill in order for it to pass and no objections. Although the government and the Liberal Democrats have already stated their support for the bill, it needs the vote of as many individual MPs as possible to ensure there is a good chance the bill will become law. Otherwise, campaigners will have to begin again after the general election.

Although not perfect, the bill is currently the best chance of curbing vulture activity - and that could mean tens of millions of pounds is protected for development.

For more information, visit the Jubilee Debt Campaign.

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