Vulture funds
Campaigners are trying to get vulture funds on the G8 agenda in June. These operate through shell companies generally based in the Caribbean and buy cheap African debt at a fraction of its face value and then try to get full payment through the courts. Michael Sheehan's Debt Advisory International hit the headlines with this dubious practice last month when his fund took Zambia to court in London, seeking over $55m in payment for a sovereign debt which the fund had bought in 1999 for $3.2m. The high court awarded them $15.5m which is about a third of Zambia's total debt relief savings for 2007.
Over 40 more vulture funds are in the process of pursuing $1bn claims from around 12 other heavily indebted countries. Bush doesn't want to raise the issue. Gordon Brown has promised to act against the possibility of these trades in the past but he won't be there as it will be Tony's final swansong. We'll see if the campaigners succeed.
posted by Whispering Walls at 10:49 am
2 Comments:
I have a serious problem with debt relief.There was a time not so long ago when there was a menu, from which indebted countries could decide to sell part of their infrastructure for debt.
Why should we forgive contries where rampant greed has taken our money and squirrelled it away? If you owed even a large sum, I don't see our lending institutions saying, " Nah, don't worry, we'll just scrub it."
What SHOULD happen is that the debt relief being offered has strings attached as in the forgiving countries buy up the debt. Noone wanted to do this when the problem was there was no value in the debt. The vulture funds enabled lots of people to get out and redeploy the money in a useful fashion. Of course, banks always screw up. First they lend the money because " no country can go bust". Then when the countries go bust they flog the debt off at a fraction of what it's worth and take a big write off.Then they lend it to Eurotunnel and end up writing that off as well. Goes to show how much we ordinary citizens are getting ripped off.
Several African countries have refused to take the debt relief. They have worked their way through the problems and have emerged stronger and prouder. What is happening is effectively penalising the righteous. NO!
We can only hope that during his swans song he doesn't drown.
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