< April/May 2009
22.06.2009 11:21 Age: 4 yrs
Category: Press Releases
Congress Acts to Tame Prowling Vulture Funds
Today advocacy organizations and debt relief campaigners welcome the reintroduction of the Stop Very Unscrupulous Loan Transfers from Underprivileged Countries to Rich, Exploitative Funds or “Stop VULTURE Funds” Act (H.R. 2932).
* Africa Action * Jubilee USA Network * TransAfrica Forum *
Kristin Sundell, Jubilee USA, (202) 783-3566
Michael Stulman, Africa Action, (202) 546-7961
Joia Jefferson Nuri, TransAfrica Forum, (202) 223-1960
Thursday, June 18, 2009 (Washington, DC) – Today advocacy organizations and debt relief campaigners welcome the reintroduction of the Stop Very Unscrupulous Loan Transfers from Underprivileged Countries to Rich, Exploitive Funds or “Stop VULTURE Funds” Act (H.R. 2932). This bill, introduced in the House of Representatives, is designed to protect developing nations from lawsuits by so-called Vulture Funds.
The Stop VULTURE Funds Act introduced by Rep. Maxine Waters (D-CA) would prevent U.S. companies from buying the debt of impoverished countries at cut-rate prices and then suing to collect exponential profits. The bill would limit the excessive profits that companies and hedge funds collect off the backs of the world’s poorest citizens by capping the interest amounts for which the companies could sue at six percent. The legislation also increases transparency of these funds, requiring full disclosure from any fund that pursues Vulture Fund activity through the U.S. courts.
Vulture Funds are private equity or hedge funds that purchase the defaulted debt of developing countries, many of whom are Heavily Indebted Poor Countries (HIPC), at reduced rates and then sue the debtor nation for greatly inflated sums. Through the seizure of assets, litigation and political pressure, they seek repayments that are far in excess of the amount that the fund paid for the debt.
Led by Rep. Waters, the new legislation builds on the momentum from similar legislation introduced in the House in August 2008. The bill is co-sponsored by Representatives Spencer Bachus (R-AL), John Conyers (D-NJ), Donald Payne (D-NJ), Gregory Meeks (D-NY), Gwen Moore (D-WI), Maurice Hinchey (D-NY), Barbara Lee (D-CA), Eleanor Holmes-Norton (D-DC), Jan Schakowsky (D-IL), Luis Gutierrex (D-IL) and Wasserman Schultz (D-FL).
A coalition of non-governmental organizations working to prevent vulture funds from taking advantage of poor countries praised Rep. Waters’ legislation. “We commend the leadership shown by U.S. congressional representatives. H.R. 2932 is a key step in protecting developing countries from Vulture Funds. Now the legislation needs support by the full House and to move forward for Senate review,” Nicole Lee, Executive Director of TransAfrica Forum says.
The burden of Vulture Funds is being felt throughout Africa. “This year the Democratic Republic of the Congo could accrue fines of up to $80,000 a week as a result of a vulture lawsuit,” said Gerald LeMelle, Executive Director of Africa Action. He added, “This would be a enormous barrier to the DRC’s efforts to reconstruct its social and economic infrastructure amid years of conflict.”
Neil Watkins, Executive Director of Jubilee USA Network, an alliance of 75 religious denominations, development agencies, and human rights groups noted, “Vulture Funds make their profits by deepening the suffering of millions of people in some of the poorest countries in the world. They are stealing the resources that should be invested in education, health and infrastructure improvement.”
Last May, some of the world’s major creditor governments publicly committed not to sell or transfer any of their debt claims on HIPC countries to creditors who do not intend to provide debt relief under HIPC initiative, safeguarding this debt from litigation by Vulture creditors. Many countries, however, continue to sell their debt claims on vulnerable countries.