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Tory MP blocks bill targeting 'vulture funds'

Lone objector halts move to curb debt shark activity in world's poorest countries

Nigel Morris,Andy McSmith,Kunal Dutta
Saturday 13 March 2010 01:00 GMT

A landmark move to protect the world's poorest countries from debt sharks was blocked yesterday by a single Conservative MP during extraordinary scenes in the House of Commons.

"Vulture fund" investment companies buy up defaulted third world debt and sue for immediate repayment. The Debt Relief (Developing Countries) Bill was designed to curb their activities, ensuring that creditors cannot pursue debt repayment beyond the level assessed as fair and sustainable by the World Bank. Liberia lost a £20m lawsuit against two vulture funds in a London court late last year.

Because of the lack of time before the general election, the Bill's only chance of making it on to the statute book was if there were no protests in the Commons. But to the fury of Labour MPs, one lone voice piped up: "Object!" Three Conservatives were in the chamber – Christopher Chope, Andrew Robathan and Simon Burns – but it was not clear at the time who had intervened.

The Labour MP Sally Keeble, who was steering the Bill through the Commons, demanded to know who had objected. But Sylvia Heal, the Deputy Speaker, told her: "That is not for me to identify." A furious Ms Keeble said afterwards: "They are abject cowards who sat and hung their heads as one of them objected to a measure to help combat world poverty."

Last night it emerged that Mr Chope had been the backbencher to raise his objection. He believes that the proposed legislation has not been properly debated in the Commons. The Tory leadership is known to have been angry and embarrassed.

Charities expressed their dismay at the blocking tactics. Max Lawson, policy advisor, at Oxfam, said: "This was an absolutely vital legislation that needed to be passed. To have it blocked at the last minute like this is terribly disappointing. Vulture funds are part of the same complex and flawed financial infrastructure that has led to the economic mess of the last two years."

Nick Dearden, director at Jubilee Debt Campaign, said: "Significant compromises were made to this bill in order to pass it through. Early indicators suggested that the Tories supported it. To be blocked at the last minute like this is ... very concerning."

He said some finance firms saw the bill as "another step towards further government regulation in the financial services market," adding that the UK could now be "one of the major territories where vulture funds will continue suing third world countries."

In a stinging letter to David Cameron, Douglas Alexander, the International Development Secretary, said: "I find it incredible that Conservative MPs in the chamber, who had pledged their support to the Bill, then objected to it and refused to admit who was responsible."

He claimed the opposition frontbench had covertly supported the move – an allegation fiercely denied by the shadow Treasury minister, David Gauke, who said the Tories had worked "in a co-operative manner at every stage of this Bill."

Mr Chope told The Independent last night: "If you are concerned about this Bill making progress, you should be asking why the Government hasn't given it extra time. As far as today's proceedings are concerned, there's a big Government spin operation to shift the blame to other people."

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