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A push to curb 'vulture fund' profits
The Royal Courts of Justice in London, England
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Tess Vigeland: Today in London, a British high court ordered Liberia to pay millions of dollars to two offshore investment firms. The firms run so-called "vulture funds," and they had sued the impoverished West African country for an unpaid debt dating back to the 1970's. From London, Marketplace's Stephen Beard reports:
Stephen Beard: The two funds are registered in Caribbean tax havens and run by unnamed financiers. They recently bought some debt that Liberia had defaulted on years ago -- and then they sued the country for repayment. They're demanding $20 million including interest and penalties. That's more than three times the original sum borrowed. Today, the British High Court ordered Liberia to pay up.
Jonathan Stevenson of the Jubilee Debt Campaign:
Jonathan Stevenson: Liberia is one of the poorest countries in the world. It doesn't have enough money for health and education for its own people. It's outrageous that $20 million of Liberia's money could be lining the pockets of vulture funds based in tax havens.
"Outrageous," he says, "but not surprising." He claims that over the past five years, vulture funds have extracted almost a billion dollars from poor countries like Liberia, Zambia and Congo.
A member of the British parliament, Sally Keeble, is now pressing for a change in the law. She wants to curb what she calls the vulture funds' extortionate profits:
Sally Keeble: What I'd like to see is very clear restrictions on the amount that the vulture funds can recoup, particularly from the heavily-indebted poor countries, so that they're only allowed to recoup the debt that they've bought.
She says she does not want to restrict the general and legitimate trade in second hand debt. After today's court hearing, the Liberian government denounced the judgement as "patently unjust," and said it may appeal. The lawyer representing the two investment firms refused to comment.
In London, this is Stephen Beard for Marketplace.
While I agree that debtors should expect to repay what they borrow, if a creditor makes no effort to collect for decades there should be a limit to how much interest and penalties can be demanded in addition to the principal.
For that matter, why do British courts have jurisdiction over this case? Why should non-British citizens be able to sue a country that isn't even European in a British court?
This "story" should be labeled an editorial. Why call them vulture funds? Why refer to tax havens as their country of registration? Why refer to unnamed financiers? Someone bought some debt that was not paid and went to court to try to collect it. The court said they had that right under the law. Borrowers should expect to pay back what they borrow.
