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For Immediate Release

Contact

Sophia Har, Communications Director
sophia@jubileeusa.org / (o) (202) 783-3566 x101 (m) (651) 815-1818
or in Addis Ababa reach Eric LeCompte directly:
eric@jubileeusa.org

Press Release

World Leaders Challenge Predatory Hedge Funds in UN Development Agreement

Addis Ababa, Ethiopia -

At a United Nations development summit, world leaders, the International Monetary Fund and development organizations recommend the elimination of a type of hedge fund that preys on countries in financial crisis. So called “vulture funds” are featured in a global agreement to be signed this week at the Financing for Development Conference.

“These predatory funds undermine development and can destabilize a country’s economy,” said Eric LeCompte, Executive Director of the religious development organization Jubilee USA Network. “From Zambia to Peru, they target, litigate and collect aid monies that should be building schools and hospitals.”

When countries face economic hardship, "vulture funds" buy a country's debt cheaply and then sue for full repayment. After Zambia received international debt relief in 2006, a hedge fund called Donegal International sued Zambia to collect $55 million on a $15 million debt the fund purchased for $3.3 million on the secondary market. NML Capital sued Argentina over debt holdings and refused to participate in Argentina's debt restructuring. The Argentina case put a broader spotlight on this type of litigation.

“World leaders are saying enough is enough,” stated LeCompte who is attending the summit and participated in agreement negotiations. “The final agreement recommends changing contracts to prevent the behavior or legislating the funds out of existence.”

On July 1st, Belgium was the latest country to pass a law restricting this behavior. Three of the ten paragraphs in the United Nations agreement that focus on debt, state concern or recommend ways to stop these hedge funds. Two additional paragraphs promote aspects of global bankruptcy and responsible lending and borrowing which further deter this behavior.

“It’s inspiring to see the global community unified against this behavior,” noted LeCompte.

Read the draft Financing for Development agreement as of July 7th. Relevant Paragraphs are 97 through 101.

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Jubilee USA Network is an interfaith, non-profit alliance of religious, development and advocacy organizations. We are 75 U.S. institutions and more than 750 faith groups working across the United States and around the globe. We address the structural causes of poverty and inequality in our communities and countries around the world.

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