Vulture Funds are powerful financial organizations which prey upon companies and countries weakened by debt.
They buy up the debts of struggling nations at bargain prices then use bribery and legal muscle to extort the full debt plus punitive interest and court costs. Vulture Funds have successfully sued governments, frozen country’s assets and made vast profits from the poorest nations on the planet. Reverse Robin Hoods they rob from the poor and make the wealthy even richer.
In 1996 Paul Singer – the reclusive billionaire who is credited with inventing vulture funds – paid $11m for some discounted Peruvian debt and then threatened to bankrupt the country unless they paid $58m… which they did. Now he’s suing Congo Brazzaville for $400m for a debt he bought for $10m.
In 2002 another Vulture Fund claimed $700m from the Argentinean Government in the middle of a financial crisis, further damaging their struggling economy.
A current example – Zambia, one of the world’s neediest nations, bought about $30 million worth of agricultural equipment from Romania. Zambia was unable to repay the debt but after lengthy negotiations Romania was prepared to write it off. At this point a Vulture Fund – Donegal International– swooped in and bought the debt for $3.5 million then sued Zambia for over $50 million – an amount greater than all the aid that Zambia received in 2006.
The UK Royal Court of Justice in London ruled that Zambia would have to pay Donegal $15.4 million plus legal costs – not the full amount, but still a large sum that should have been providing teachers, nurses, schools, clinics and other vital services in Zambia but is now going into the back pocket of an American billionaire – Michael Sheenan.
Gordon Brown – UK Prime Minister – has spoken out strongly against Vulture Funds. “We particularly condemn the perversity where Vulture Funds purchase debt at a reduced price and make a profit from suing the debtor country to recover the full amount owed – a morally outrageous outcome”.
The last USA president on the other hand was silent on the subject; not surprising when we discover that Paul Singer was the biggest donor to George Bush and the Republican cause in New York City – giving $1.7m since Bush started his first presidential campaign.
We can only hope that Barak Obama will be more moral and more active in addressing this ruthless profiteering.
Vulture Funds are clearly immoral and should be made illegal. Numerous organizations are campaigning against this wicked practice and we fair minded kiwis should be doing all we can to oppose such corporate evil. You can make your protest heard on the Jubilee website – www.jubileedebtcampaign.org.uk
FYI
An article in defense of vulture funds going into a lot of detail. The conversation that follows is interesting.
Jubilee offers more information on Vulture Funds and why they campaign against them.
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And we wonder why the poor cannot throw off the chains of poverty! This is an incredible evil that ensures that the poor remain and do not rise.
I think its disgusting the usery and underhanded way countries are dealing with each other but dont let this stop the way each one of us can alleviate poverty by doing our little bit to help the worlds poor!
The odd thing is, that I saw a TV show or film, that dealt with this, months ago, I can’t remember what it was!
I didn’t know it was a common phenomenon but, I didn’t even know it was a real thing outside the scriptwriter’s imagination…
It’s an unmitigated evil!
Deb
While we agree that governmental debt should require higher purchaser standards, we believe that Vulture Funds serve a vital debt service that is not available through traditional financial channels.
This is not the source of the problem. Making laws to stop such practices will only further increase a nation’s burden.
Thank you for an informative post. It’s so important to get the word out about these Vulture Funds which have long been preying on impoverished nations. The citizens of countries facing Vulture Fund lawsuits would be much better served if the money at stake were funneled into social services and infrastructure, like education, health care, HIV/AIDS treatment etc.
We recently wrote on article on Vulture Funds on our blog, “Just Africa,” that also discusses the “Stop VULTURE Funds” Act, introduced into the House of Representatives in June, and will hopefully put a stop to these profiteering organizations. Please take a moment to read our post at: http://tiny.cc/uJaOI
For more information and for ways to support the new bill check out our website at http://africaaction.org/