News
Anti-vulture fund legislation in UK Parliament
25 February 2010
Nick Dearden, Director of Jubilee Debt Campaign provides an update on anti-vulture funds legislation which will have its 2nd reading in Parliament on Friday 26 February 2010
After a year of campaigning against vulture funds - investment companies that buy-up defaulted developing country debts for bargain prices and then sue the country in question for full immediate repayment - the British Government has said it supports legislation to stop this appalling behaviour.
The Government has published its response to a consultation on vulture funds which it launched in July 2009. Despite a number of submissions from the financial services industry opposing legislation, the Government has come out clearly supporting a new law.
During the consultation process, Jubilee Debt Campaign and many Bond members argued for legislation which attacks the vulture model across all developing world countries, by limiting the amount a vulture can claim through litigation and thus putting an end to the extortionate profits which make vulture activity a viable business model.
Read submissions by Jubilee Debt Campaign and Bond members
The Government has not gone that far but it would support legislation which would ensure that any creditor litigating against a Heavily Indebted Poor Country (HIPC) would be forced to accept a HIPC-style write down on its claim. This would often wipe 90% off the claim and make it much more unlikely that vultures will bother to buy-up the debts in the first place.
Moreover, the bill will have a retroactive element - it will apply to awards which have already been made but not enforced. This is good news for Liberia which had an award of $20 million made against it in the High Court in London last November, and is now preparing to fight off enforcement cases. Moreover, the law will apply to foreign cases seeking claims in UK courts and will discourage the enforcement of cases brought under UK law in foreign courts.
The British Government estimates that legislation could potentially save £145 million for some of the poorest countries in the world and, just as important they believe, would stop particularly unscrupulous investors from free-riding on debt cancellation schemes provided by other creditors.
Even more exciting, these principles have been incorporated into a Private Member's Bill tabled by Greater Manchester MP Andrew Gwynne. The bill will receive its second reading in Parliament on Friday 26 February 2010 and, if successful, could become law within the next two months. This would be a great step forward in stopping vulture funds preying on the poverty of developing world countries.
If you want to take action on this legislation and find out more go to the JDC website.
