From: Biniam Tekle (biniamt@dehai.org)
Date: Mon Apr 12 2010 - 11:47:36 EDT
http://news.bbc.co.uk/2/hi/programmes/newsnight/8610062.stm
Page last updated at 16:39 GMT, Thursday, 8 April 2010 17:39 UK
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UK stops 'vulture funds' picking on poor
By Meirion Jones
BBC Newsnight
Liberians will no longer have to pay out over a debt dating from 1978
In one of its last acts before the election, Britain's parliament has voted
to ban so-called "vulture funds" which profiteer from third world debts.
Vulture funds buy up a poor nation's debt at knockdown prices, before going
to court to recover the full amount.
The law comes into force later this year and one of its first effects will
be to block a fund collecting £12m from Liberia for a debt dating from 1978.
The law was inspired by a BBC Newsnight investigation into vulture funds.
Nick Dearden of the Jubilee Debt Campaign said of the change: "It will mean
the poorest countries in the world can no longer be attacked by these
reprehensible investment funds who grow fat from the misery of others."
'Goldfinger'
After Bob Geldof's Make Poverty History campaign, Western governments - with
Britain leading the way - spent billions writing off the debts of the
poorest countries so that they could spend that money on health and
education for their citizens.
But in 2007, a BBC investigation revealed that an American, Michael Sheehan,
who calls himself "Goldfinger", after the James Bond villain, was
profiteering from the deal to write off third world debt.
Watch Newsnight's 2007 vulture fund investigation
Mr Sheehan bought a Zambian debt dating from the 1970s for $3m, just before
it was due to be written off and then threatened to close down Zambia's
entire economy by suing anyone who had dealings with Zambia unless they paid
him $55m - the equivalent of the Zambian education budget.
He then sued Zambia in the British courts and won $15m.
Other speculators like "Goldfinger" were threatening to sue additional poor
countries for billions for debts which they had bought for much lower
amounts.
If they refused to pay, the vultures would sue anyone who dealt with that
country - effectively shutting down all of a nation's foreign trade and
putting them out of business unless they paid up.
The Newsnight investigation was brought to the attention of the-then US
President George W Bush and UK Prime Minister Gordon Brown also promised to
take action.
The Northampton North MP, Sally Keeble, launched a bill to ban the vultures
and similar legislation was launched in the US but none of it made it into
law.
Last year a new Debt Relief Bill was launched in the Commons - a private
members bill, but written by the Treasury.
Reversal of fortune
The need for legislation became more urgent after another vulture fund was
awarded £12m by a British court late last year for a debt which they had
acquired for less than 1% of that sum.
Newsnight investigates the Liberia vulture fund in 2010
Liberia, which is recovering from a 14-year civil war that ended in 2003,
said it had no money to pay the debt back, which dates from 1978.
On the eve of the Second Reading of the bill in February this year the
Liberian President Ellen Sirleaf Johnson appeared on BBC Newsnight to say
"have a conscience and give this country a break".
Until now British courts have been the most favourable to the vultures but
Ms Keeble says other countries will also have to bring in legislation if the
practice is to be stopped:
"These are international predators and they have to be stopped. We are
working with the Americans and next stop is Europe."
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