Giving Vulture’s a Bad Name
Last month, a High Court judge in London ruled in favor of a vulture fund over a debt the African nation of Zambia owed. This wasn’t a loan from a vulture fund called Donegal International owned by Debt Advisory International to Zambia. It was a loan Zambia had received from Romania to buy tractors back in 1979. Zambia was unable to keep up the payments so in 1999 Romania and Zambia negotiated to liquidate the debt for $3 million. Donegal International bought the debt from Romania for less than $4 million and calculating interest sued Zambia for $40 million. The High Court judge ruled in favor of Donegal International but it’s believed the judge will reward Donegal International half of what it is seeking.
Anti-debt campaigners and charities like Jubilee Debt Campaign and Oxfam were outraged. The money the vulture fund is attempting to get is money Zambia needs to pay for nurses and teachers. This is money Zambia has because of western governments writing off some of the debts of some of the poorest countries like Zambia. Zambia is not the first target of these vulture funds nor will it probably be the last. This tactic has been attempted in Argentina and Peru. Elliott Associates, a New York-based investment fund, forced payment of $55 million from Peru in 2000. It doesn’t always work for these vulture funds. Argentina had the biggest sovereign default in 2001. Argentina settled with most of its bondholders with a huge debt exchange in 2005, the investors who would not settle with Argentina have been ignored. This doesn’t keep the vulture funds from trying new ways to exploit these poor countries.
The UK Chancellor Gordon Brown told the United Nations five years ago: “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.” Activist in Britain are asking him to take action. Here in the U.S., Representative John Conyers has brought the Zambian case to President Bush’s attention. “It’s our position that the Foreign Corrupt Practices Act and the comity doctrine brought from our constitution allows the president to require the courts defer in individual suits against foreign nations. And so, we’re conducting a couple of things,” Mr. Conyers said. “First of all, we want to know where these practices are going on at the present time, and, two, how we can get this information to President Bush so that he can, as he indicated to us, stop it immediately.” Of course Representative Conyers efforts might be futile since these Vulture Funds spend a lot of money on Washington lobbyists. Paul Singer a leading figure in vulture funds has donated over $1.7 million to Bush since his first presidential campaign. He’s now prepared to heavily back Rudi Guiliani’s presidential campaign, pledging to raise $15 million for Guiliani.
I first heard of this practice on Democracy Now back in February after the Zambia verdict had been announced. It’s such a despicable and sleazy act that it sounds like something a supervillian in the comic books would do. Except I couldn’t see Lex Luthor lowering himself to do such an act. Conquering the world yes; exploiting poor countries to beat them out of their meager funds, no. It reminds me of the predatory practices mortgage companies practice against poor people here in the U.S. These vulture funds must be condemned and western nations must work together to end this practice. Allowing companies to pry on poor countries and further endanger the lives of poor desolate people in unconscionable. The United States should lead the charge, if for no other reason than to use it to rebuild our standing in the world community. The vulture funds that sued Zambia and Peru are American companies. These companies illustrate why the rest of the world hates us. It would help if the American media actually covered this. I couldn’t find anything on this story from the mainstream media. I guess they were too busy covering Anna Nicole’s death or Britney’s meltdown. It’ll be hard for us to make positive change on this atrocity if no one knows about it.
Anti-debt campaigners and charities like Jubilee Debt Campaign and Oxfam were outraged. The money the vulture fund is attempting to get is money Zambia needs to pay for nurses and teachers. This is money Zambia has because of western governments writing off some of the debts of some of the poorest countries like Zambia. Zambia is not the first target of these vulture funds nor will it probably be the last. This tactic has been attempted in Argentina and Peru. Elliott Associates, a New York-based investment fund, forced payment of $55 million from Peru in 2000. It doesn’t always work for these vulture funds. Argentina had the biggest sovereign default in 2001. Argentina settled with most of its bondholders with a huge debt exchange in 2005, the investors who would not settle with Argentina have been ignored. This doesn’t keep the vulture funds from trying new ways to exploit these poor countries.
The UK Chancellor Gordon Brown told the United Nations five years ago: “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.” Activist in Britain are asking him to take action. Here in the U.S., Representative John Conyers has brought the Zambian case to President Bush’s attention. “It’s our position that the Foreign Corrupt Practices Act and the comity doctrine brought from our constitution allows the president to require the courts defer in individual suits against foreign nations. And so, we’re conducting a couple of things,” Mr. Conyers said. “First of all, we want to know where these practices are going on at the present time, and, two, how we can get this information to President Bush so that he can, as he indicated to us, stop it immediately.” Of course Representative Conyers efforts might be futile since these Vulture Funds spend a lot of money on Washington lobbyists. Paul Singer a leading figure in vulture funds has donated over $1.7 million to Bush since his first presidential campaign. He’s now prepared to heavily back Rudi Guiliani’s presidential campaign, pledging to raise $15 million for Guiliani.
I first heard of this practice on Democracy Now back in February after the Zambia verdict had been announced. It’s such a despicable and sleazy act that it sounds like something a supervillian in the comic books would do. Except I couldn’t see Lex Luthor lowering himself to do such an act. Conquering the world yes; exploiting poor countries to beat them out of their meager funds, no. It reminds me of the predatory practices mortgage companies practice against poor people here in the U.S. These vulture funds must be condemned and western nations must work together to end this practice. Allowing companies to pry on poor countries and further endanger the lives of poor desolate people in unconscionable. The United States should lead the charge, if for no other reason than to use it to rebuild our standing in the world community. The vulture funds that sued Zambia and Peru are American companies. These companies illustrate why the rest of the world hates us. It would help if the American media actually covered this. I couldn’t find anything on this story from the mainstream media. I guess they were too busy covering Anna Nicole’s death or Britney’s meltdown. It’ll be hard for us to make positive change on this atrocity if no one knows about it.
posted by kbear | 1:14 PM
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