Wednesday, October 10, 2007

Vulture funds prey on debt relief

Imagine gathering up some investors and buying about $3 million dollars in third world debt, from a country that is trying to negotiate debt-relief from the International Monetary Fund or the World Bank. Why would anyone do that? Why buy debt from a country that cannot pay its debt?

Well, if you act quickly enough and can get your debt separated from what's being forgiven, then you can turn around and sue the poor country for failing to pay their debt.

That is what Donegal International, a fund based in the British Virgin Islands has done. They bought $3 million dollars of international debt from Zambia and are now suing that country for $55,ooo,ooo, nearly 12 times the original amount, for non-payment.

This means that the benefits of debt-forgiveness, which was supposed to help pay for basic health care, education, road, and such, could well go into the pockets of a few clever investors. Who have, in case you did not notice, base themselves in another developing country with liberal and sheltered banking laws.

If this is not the definition of sin, I don't know what is.

This practice may be one of the largest impediments to successfully implementing the MDGs and we must bring pressure to bear on our government to work with the G8, the UN, the IMF and other international bodies to put a halt to it.
World Bank and other internat

Read: Ekklesia: "'Vulture funds' exploiting debt cancellation in poor countries."

Here is what Oxfam had to say last February.

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