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Third World Debt Vultures Blocked by new Legislation

Liberia President: Ellen Johnson Sirleaf

The UK has become the first country in the world to ban private investment companies profiting from Third World debt.
The Debt Relief (Developing Countries) Bill was successfully passed in the ‘washing up’ period yesterday at the end of the Parliamentary session.
The new law would restrict the ability of private investment companies, so called Vulture Funds, to sue some of the world’s poorest countries for full repayment of debts that they have bought up cheaply.

By taking advantage of relaxed laws in the British courts, these private investment companies have been able to buy up Third World debt at dramatically reduced prices and sue poor countries for their full value plus costs. In the process, the private investment companies make excessive rates of profit.
Last November, two Vulture Funds were awarded $20 million in the High Court from Liberia – the second poorest country in the world – for a debt dating back to the 1970s. This law is expected to make that verdict unenforceable.

The bill was blocked at its third reading last month, but the Government made time for the bill in the wash-up, after securing cross-party agreement with a sunset clause which will mean the law has to be reassessed to be made permanent in a year’s time.

The campaign to see the bill passed has won strong international support, including from Archbishop Desmond Tutu, President Ellen Johnson Sirleaf of Liberia, and President Bharrat Jagdeo of Guyana.

Nick Dearden, Director of Jubilee Debt Campaign, said: “This is a landmark law. With this act, the UK has become the first country in the world to stop vulture funds using its courts to profiteer from poverty. It will mean the poorest countries in the world can no longer be attacked by these reprehensible investment funds who grow fat from the misery of others. We now call on other governments, particularly the US administration, to take similar steps to outlaw vulture practices. We hope this is the first step towards creating a more just financial system, which operates for the great majority of people, not a tiny minority of unethical investors.”

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