Debt 'vultures' win right to pursue $100m claim
Sunday 17 July 2011
Britain's effort to protect the world's poorest countries from international debt "vultures" appeared to be in tatters last night, after a US firm won a court ruling allowing it to pursue a $100m debt claim against the Democratic Republic of Congo.
Judges in Jersey upheld a judgment in favour of FG Hemisphere, a New York-based financial firm, which is pursuing claims against the impoverished African state dating back to the rule of dictator Mobutu Sese Seko in the 1980s.
Campaigners told The Independent on Sunday that the decision was indicative of "ineffectual legislation that is perpetuating unethical behaviour" in Jersey. The original debt, which FG Hemisphere bought in 2003, was $37m. It has now risen to more than $100m and is growing by around $27,500 a day, according to Jersey Court of Appeal documents.
The judgment comes 15 months after the UK was lauded for a landmark move to restrict the ability of so-called "vulture funds" to sue developing countries for historical debts and make massive profits. These firms buy up defaulted third-world debt and sue for immediate repayment. The Debt Relief (Developing Countries) Act, passed last year, was designed to curb the firms' activities, ensuring that creditors cannot pursue debt repayment beyond a level assessed as fair and sustainable by the World Bank.
Nick Dearden, of the Jubilee Debt Campaign, said of the latest ruling: "This absolutely reinforces the need for a change of law in Jersey."
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