Tuesday, 16 March 2010

End the vulture culture

"Vulture fund" is a name given to a company that seeks to make profit by buying up "bad" debt at a cheap price, then trying to recover the full amount, often by suing through the courts.

Such companies often describe themselves as "distressed debt funds". Some target failing companies, but debt campaigners are concerned about those that target poor countries. Despite its poverty, Liberia has been one of the countries most heavily targeted. $357m , equivalent to 49% of its GDP, has been awarded against the country in recent years. Zambia is another sufferer. (There is more  explanation in this pdf file, and Private Eye is worth reading to keep up to date with the latest depradations.)

This was the background to a fringe meeting, arranged by the Jubilee Debt Campaign, at the Liberal Democrats Spring Conference in Birmingham last weekend. The sixty or more party activists (it was difficult to count how many had crammed into a too-small meeting room) were given both a brief history of the campaign (it was inspired by the ancient concept of one year in fifty in which sins were pardoned and debts remitted) and an authoritative overview of the current situation by guest speaker Vince Cable. Vince knows whereof he speaks, having worked for the Kenyan government, and written, or co-written, books on the subject.

A few myths were dispelled. The chief among them was that countries which had their debts cancelled immediately channelled the funds released to corrupt ministers. Overwhelmingly, the evidence is that tax previously wasted on interest on debt went straight to meet social needs, like schools and health provision.

Conservative shame. Labour's Sally Keeble, with support from all sides of the House of Commons, introduced the Debt Relief (Developing Countries) Bill, designed to curb the activities of vulture funds. It seeks to ensure that creditors cannot pursue debt repayment beyond the level assessed as fair and sustainable by the World Bank. Being a private member's bill, it requires parliamentary time, which was denied it by Christopher Chope, the Conservative MP for Christchurch. There were suggestions at the weekend that there were other Conservative MPs who were interested in seeing the Bill run out of time, and that Chope was just the front man.

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