Through the Stop the Vulture Culture Campaign, Africa Action, Jubilee USA Network, and TransAfrica Forum are working to halt the usurious practices of Vulture Funds.
Vulture Fund is a name given to a company that seeks to make profit by buying up debt in default on the secondary market for pennies on the dollar, then trying to recover up to ten times the purchase price, often by suing impoverished countries in U.S. or European courts.
Some Vulture Funds target failing companies, but Africa Action, Jubilee USA Network and TransAfrica Forum are focused on those that target the sovereign debts of impoverished countries. These companies operate with little transparency; as shell companies (a company set up exclusively to pursue one goal – in this case, poor country debt), Vulture Funds are set up tax havens such as the British Virgin Islands to avoid financial constraints and oversight. Because of this, most funds have limited or no information on who manages them and their actions.
Poor countries that are eligible for debt cancellation are especially vulnerable to Vulture Funds, as the companies often track the debt relief process and then sue a poor country after it has received a windfall of resources thanks to debt cancellation. As of late 2007, 11 of 24 Heavily Indebted Poor Countries (HIPCs) surveyed by the International Monetary Fund were facing litigation from 46 different commercial creditors. Of these, 25 creditors had received court judgments against HIPCs amounting to about $1 billion on original claims of $427 million. Without the capacity to properly fight lawsuits in the U.S. and Europe, poor country governments almost always lose out big to the Vultures, which legally profiteer off of debt cancellation resources intended for the world’s poorest citizens.
Read on to learn more about the lastest news and advocacy efforts and to stop Vulture Funds.
