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CONTACT: Africa Action
Michael Stulman (202) 546-7961
Allow Africa to Seize Control of Its Destiny; Prohibit Vulture Fund Profiteering in US Courts
Civil Society Urges Congress to Pass H.R. 2932, the Stop VULTURE Funds Act
WASHINGTON - August 19 - In the wake of Secretary of State Hillary Clinton's visit to the Democratic Republic of Congo (DRC) last week, nearly 50 leading advocacy organizations have asked Congress to limit Vulture Fund profiteering from poor country debts at the expense of impoverished citizens of the world's poorest nations.
The diverse coalition, which included the NAACP, the Jubilee USA Network, TransAfrica Forum, the American Jewish World Service, the United Methodist Church and Africa Action called on members of the U.S. House of Representatives to sponsor legislation to limit the use of U.S. courts by so-called Vulture Funds to generate massive profits from developing countries.
In a joint letter to Congressional leaders the groups cited "unprecedented cooperation," and praised the international effort on debt cancellation, resulting in more than $90 billion in bilateral and multilateral debt cancellation to 30 countries. However, that progress is being jeopardized by Vulture Funds, investors that acquire the sovereign debt of poor countries for pennies on the dollar, only to turn around and sue for huge sums. According to the letter, Vulture Funds refuse to work through the international process on debt cancellation, instead "aggressively pursuing their claims through the seizure of assets, litigation and political pressure, seeking repayments that are far in excess of the amount that they paid for the debt."
In one example, the letter mentions an ongoing case between the Vulture Fund FG Hemisphere and the DRC, stating that "FG Hemisphere is suing the DRC for $105 million, more than three times the amount of the original $30 million loan incurred in 1980 by the brutal and corrupt Mobutu dictatorship."
Michael Stulman, associate director for policy and communications at Africa Action said, "While in the DRC last week, Secretary of State Clinton spoke of the challenges that the country faces: a lack of investment and development, corruption and poor governance and violence against women. But one critical issue did not make her list: Wealthy hedge fund investors making massive profits on the backs of the DRC's citizens, some of the poorest in the world."
Currently, in Washington, a judge has ordered the DRC to pay up to $80,000 a week as the result of a $105 million suit brought by the Vulture Fund FG Hemisphere.
"The DRC is being forced to siphon these desperately needed resources from initiatives like health care, education, combating HIV/AIDS, and access to clean water to its impoverished citizens to pay off wealthy corporations such as FG Hemisphere," said Melinda St. Louis, Deputy Director of Jubilee USA Network, an alliance of 80 religious denominations and faith communities, development agencies, and human rights groups working for debt relief. She adds, "This runs totally counter to the progress made by the U.S. and the international community on debt cancellation, through the World Bank's Highly Indebted Poor Country (HIPC) effort."
Congresswoman Maxine Waters (D-CA) and Congressman Spencer Bachus (R-AL) re-introduced H.R. 2932 in the 111th Congress. The legislation would prevent Vulture Funds from using U.S. courts to garner the profits they have historically pursued. According to last week's letter, "The bill allows recovery of the amount paid for the debt, plus six percent simple interest from the date the debt was acquired from a qualified poor country." Congresswoman Waters' legislation would also increase the disclosure requirement for often-secretive Vulture Funds prior to taking legal action in a U.S. court.
To read the full text of the letter
and view the letter's signatories