* OVER DREADED VULTURE FUNDS*
* *Cognizant of* *NDC’s notoriety of contracting bad loans for political
expediency detrimental to national interest, evident in the vehemently
criticized STX Housing deal, it is prudent we proactively caution it to
avoid the much touted detestable and ill famed Vulture Funds. The
discredited STX Housing deal has been criticized and condemned by
Ghanaians as well as some NDC party functionaries including Nana Konadu
Agyeman Rawlings who has indicated her intentions of investigating the
controversial STX housing deal thoroughly if she becomes president in
2012.Despite the suspicions
of fishy deals and consequential condemnations of the STX housing deals,
NDC is adamant and bent on foisting the deal on Ghanaians at all cost for
parochial political and personal gains at the expense of the concerns and
interests of Ghanaians. We are apprehensive the NDC, in their desperation
to satisfy their selfish political and personal goals, may obtain loans from
the much dreaded Vulture Funds that have run down the economies of most
third world countries.
Vulture Funds are profit oriented financial organizations that buy
distressed debts of poor countries from their creditors at a huge discount
and later sue the poor indebted countries in court once the poor country
has some money (often after debt cancellation) to obtain multiples of the
price they paid for the debt. Vulture Funds recover the original face value
of the debt literally rejecting international debt reduction agreements and
initiatives.
Donor Countries, through The Heavily Indebted Poor Countries (HIPC)
Initiative in 1996, have cancelled over $90 billion debts owed by many
debt-ridden poor third world countries to promote economic development and
poverty reduction in the developing world. In addition, members of the Paris
Club and London Club are also actively involved in debt relief and
restructuring. The objective is to assist these poor countries to use the
money formerly earmarked for debt repayment for development. However, the
activities of Vulture Funds have corrupted, threatened and undermined these
progressive initiatives to emancipate impoverished countries from the
clutches of poverty and underdevelopment. Poor countries across the
developing world are facing Vulture lawsuits.
A 2008 report by the IMF stated that Vulture Funds were engaged in claims
seeking a total of $1.47 billion from HIPCs. The Vulture Fund Donegal
International claimed $55 million from Zambia for a debt it purchased for $3
million. The vulture fund Red Mountain Finance, between 1998 and 2003, sued
the Democratic Republic of Congo in a U. K. High Court and received $ 40
million in judgments and obtained settlements at great expense to
conflict-ridden DRC’s efforts to reconstruct its social and economic
infrastructure. Other Vulture Funds targets include Nigeria, Liberia,
Cameroon, Ethiopia, the Republic of Congo, Honduras, Nicaragua, Sierra
Leone, and Uganda.
Vulture Funds litigations also increase risk levels of companies doing
business with poor countries targeted by Vulture Funds. Vulture Funds,
usually using US and UK courts, attempt to seize the debtor country’s assets
worldwide, interfere with and threaten established trade relationships
between the debtor country and private companies. These actions adversely
affect the capacities of impoverished countries to attract potential trading
partners and investors thereby undermining their development strategies and
provision of the basic needs of their people.
There is a global crusade to outlaw the diabolical exploitation of
impoverished third world countries by Vulture Funds. In the United States,
The Stop VULTURE Funds Act (H.R. 2932),* *introduced in Congress on June
18, 2009, aimed to outlaw profiteering by Vulture Funds on debts held by
countries eligible for debt relief. The Act does this by capping the amount
of profit that a secondary creditor can reap through litigation based on
those debts. The Bill requires, prior to litigations in US Courts, public
disclosure of the names of persons interested in the sovereign debt claim,
how and where the claim was acquired and the purchase price. The bill also
requires certification by Vulture Funds that they have not bribed anybody
while pursuing collection of the defaulted debt claim. The legislation is
supported by numerous non-profit and faith-based organizations including
Jubilee USA Network, TransAfrica Forum, Africa Action, the United Church of
Christ, the Center for Economic and Policy Research and the Quixote Center,
all of which agitate for debt cancellation and a more just international
financial system for the world’s impoverished countries.
Vulture Funds have also garnered concerns among World leaders and financial
institutions that recognize the threat posed by Vulture Funds. In 2007, the
G-7 Finance Ministers voiced their concerns about “the problem of aggressive
litigation against HIPC countries.” UK Prime Minister Gordon Brown condemned
“the perversity where Vulture Funds purchase debt at a reduced price and
make a profit from suing the debtor country to recover the full amount owed
- a morally outrageous outcome." The World Bank called Vulture Funds “a
threat to debt relief efforts.”
It is evident that Vulture Funds have exploitative agenda and governments
that deal with these funds equally have hidden diabolical agenda of
obtaining political and financial gains. As articulated by numerous world
leaders and financial institutions, all purposeful governments that purport
to place their citizenry interests above parochial political and personal
gains must avoid Vulture Funds. We therefore advise the NDC to avoid at all
cost the fearful Vulture Funds and their catastrophic consequences.
