Wednesday, May 18, 2011

Government takes action over ‘vulture funds’

Legislation to make permanent The Debt Relief (Developing Countries) Act 2010 was passed in the House of Commons last Monday. The legislation will stop creditors, including so-called “Vulture Funds”, from using the UK courts to extract harsh and inequitable payments from poor countries for debts that the companies may in some cases have bought for a fraction of the cost.

The Act could save poor countries an estimated £145m over six years.

The original Debt Relief (Developing Countries) Act 2010 was passed in April 2010, temporarily restricting the actions of “Vulture Funds” in the UK. This act had a sunset clause meaning that it was due to expire on 7 June. To prevent Vulture Funds returning to the UK, the Government has passed legislation to make the law permanent.

Liberal Democrat Danny Alexander, Chief Secretary to the Treasury, said of this:

Today the Government has acted to stop the unjust actions of a few unscrupulous companies having a huge impact upon the futures of some of the poorest countries in the world.

This act will make sure that Vulture Funds will never again be able to exploit the poorest countries in the world within the UK’s courts.

Co-Chair of the Liberal Democrat Parliamentary Committee on International Affairs, Martin Horwood said:

It will save poor countries nearly £150m over the coming years by preventing ‘vulture funds’ from using the UK courts to sue poor countries for the full repayment of debts that they have bought cheaply.

Vulture funds are effectively wiping out the benefits which international debt relief was supposed to bring the poorest countries in the world.

The Liberal Democrats have long fought on this issue and that is why I’m delighted that the UK is achieving a world first by making this law permanent. This shows the Coalition has a real commitment to helping the poorest countries with this unfair and crippling debt.

I urge the Government to continue the fight against these vulture funds and ensure that the members of the G8 follow suit at their meeting later this month.

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