Clamp down on Third World Debt profiteering to become permanent.
A landmark law to protect the poorest countries in the world from profiteering by so-called vulture funds is to be made permanent by the UK government.
Vulture Funds sue some of the world’s poorest countries for full repayment of debts they buy up cheaply. In April 2010 an Act of Parliament – the Debt Relief (Developing Countries) Act – was passed which restricts the ability of Vulture Funds to sue the poorest countries in UK courts, a favourite jurisdiction of the funds. The Act represents the first of its kind anywhere in the world, and attracted cross-party support in the UK.
The Act was due to expire in June 2011, as a result of a ‘sunset clause’ in the legislation, but the government has now announced it will be made permanent. The law has already saved Liberia $40 million, and successfully kept vulture funds out of UK courts.
Nick Dearden, Director of Jubilee Debt Campaign, said:
“We are thrilled this landmark law has been made permanent. It is a great first step to protect the poorest countries in the world from these reprehensible investment funds who grow fat from the misery of others. But the vultures are still allowed to operate in UK territories such as Jersey.”
Andrew Gwynne MP who sponsored the original bill through parliament said:
“I am delighted that the Debt Relief (Developing Countries) Act will now permanently be on the Statute Book. It was completely unacceptable that a small number of companies were ever allowed in the UK courts to profiteer off the third world debt market. These ‘vulture funds’ are completely unjust and it is to the credit of this parliament, and the efforts of the Jubilee Debt Campaign that we have finally managed to make this law permanent.”
The Act has not yet been extended to cover all UK overseas territories and dependencies. A US vulture fund, FG Hemisphere, is currently suing the Democratic Republic of Congo, the second poorest country in the world, for $100 million in courts in Jersey.
Nick Dearden, Director of Jubilee Debt Campaign, said:
“The UK vulture law is an amazing example which needs to spread across the world. The first place to start is UK overseas territories such as Jersey. The government should use its powers to extended the vulture funds law to all Crown Dependencies and British Overseas Territories as well.
“We see this law as an important first step in putting the fight against poverty and inequality ahead of the excessive profits of a few greedy investors. Ultimately we hope this protection will be afforded to many more developing countries.”
International support for the act has been expressed by Archbishop Desmond Tutu, President Ellen Johnson Sirleaf of Liberia, and President Bharrat Jagdeo of Guyana.
ENDS
For more information contact Jubilee Debt Campaign on +44 (0)20 7324 4722 or 07932 335 464
To speak to Andrew Gwynne MP call +44 (0)20 7219 4652
Notes
(1) Vulture Funds are private investment companies which take advantage of the relaxed laws in British courts to buy up Third World debt at dramatically reduced prices and sue poor countries for their full value plus costs. In the process, companies make excessive rates of profit. More information at: www.jubileedebtcampaign.org.uk/?lid=2893
(2) Jubilee Debt Campaign is a UK coalition demanding 100% cancellation of unpayable and illegitimate developing country debts. For more information see www.jubileedebt.org.uk.
(3) David Gauke MP, Exchequer Secretary to the Treasury, told Parliament the Debt relief (Developing countries) Act “will remain on the books and – I do not think we have announced this formally before – we will put it on a permanent footing.” http://www.publications.parliament.uk/pa/cm201011/cmhansrd/cm110322/debtext/110322-0001.htm#11032282000008
(4) The Debt Relief (Developing countries) Act limits the amount a vulture fund can claim from one of the 40 poorest most indebted countries in UK courts. The forty countries are known as the Heavily Indebted Poor Countries and include countries such as Liberia, Zambia, Tanzania and Nicaragua. The international community has agreed to cancel significant amounts of these countries debts, currently totalling $120 billion for 32 countries. However, private creditors have not had to join in with debt relief. The Debt Relief Act limits the amount a private creditor can claim in a UK court to the amount they would have received if they had taken part in the debt relief scheme.