June, 18 2009, 03:16pm EDT
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, 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.
WASHINGTON
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.
For
more information, see:
Vulture
Funds Backgrounder JubileeUSA
Vulture
Funds Glossary Africa Action
Vulture
Funds Policy Brief JubileeUSA
Spotlight
on Zambia Africa Action
Vulture Funds
Education
Power Point Africa
Action
Africa Action is a national organization that works for political, economic and social justice in Africa. Through the provision of accessible information and analysis combined with the mobilization of public pressure we work to change the policies and policy-making processes of U.S. and multinational institutions toward Africa. The work of Africa Action is grounded in the history and purpose of its predecessor organizations, the American Committee on Africa (ACOA), The Africa Fund, and the Africa Policy Information Center (APIC), which have fought for freedom and justice in Africa since 1953. Continuing this tradition, Africa Action seeks to re-shape U.S. policy toward African countries.
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