16 November 2011

Vulture Fund Vermin Again

I have posted on vulture funds before. Although speculators are happy to plumb the depths in pursuit of another bulion dollars, even thse people are like angels to the bastards who deal in vulture funds. One of the final acts of the last Labour government was to support a private member's bill to outlaw vulture funds in the UK. I am glad that this act was ratified by the current government earlier this year. But cases can still go forward in Jersey as the Guardian reported yesterday.

Basically these traders buy up debts where a third world country has defaulted at a significant discount, then pursue the defaulting country through overseas courts, claiming an obscene markup (in the form of accumulated interest).

Needless to say the money the countries are forced to pay means there is less left for vital services (although in the case of some leaders like the King of Swaziland it would mean less money for bling and other shit, the disgusting excuse for a human being covets)

The Democratic Republic of Congo is a country emerging from a brutal, and largely unreported civil war which left millions dead. Despite its abundant mineral wealth the country is desperately poor (in no small part due to the kleptocratic reign Mobutu Sese Seko from the 1960 to 1997).

The country  has huge deposits of cobalt, diamonds, gold, copper, oil and 80% of the world's supplies of coltan ore – a valuable mineral which yields Niobium and Tantalum (the latter having much use in computers and mobile phones), yet 100 women a week are still die in childbirth and 16,000 children under the age of five die every year. One in three children in the DRC will never get anything more than primary education.

It certainly doesn't help that the DRC is pursued by vulture fund speculators through offshore tax havens such as Jersey, for debts that were run up during 30 years of war and civil war.

Now New York vulture fund FG Hemisphere has gone to Jersey to claim $100m from the DRC because a legal loophole means that the island remains free of anti-vulture laws that were passed in the UK last year. Jersey will decide next month whether to allow its courts to let the $100m go to FG Hemisphere.

So far, according to the World Bank, the top 26 vultures have managed to collect $1bn from the world's poorest countries and still have a further $1.3bn to collect. Gordon Brown has described the payouts as "morally outrageous".
 The World Bank has described vulture funds as "a threat to debt relief efforts" and the former, Bush-era US treasury secretary Henry Paulson said: "I deplore what the vulture funds are doing" in testimony before the House of Representatives' financial committee in 2007.

In terms of public donations, the impact of the vulture funds is huge. The $1bn collected by the funds is equivalent to more than double the International Committee of the Red Cross's entire budget for Africa in 2011. $1bn could fund the entire UN appeal for the famine in Somalia and is more than twice the amount of money raised by Save the Children last year.
Vulture funds also scare off new investors, who the vultures will target their investment, from a country. In the DRC, a large US company with plans to invest millions in mining pulled out last year after one vulture sued it as a result of its business with the DRC government.

It is thought FG Hemisphere bought the debt for which it is claiming $100m in the Jersey court for $3.3m, with the help of another vulture fund, Debt Advisory International (DAI).

FG Hemisphere, headed by Peter Grossman and DAI, run by Michael Sheehan – both men were former Morgan Stanley consultants – have attempted to collect on the debt by suing DRC state companies and their foreign investors.

When interviewed as part of a joint investigation between Newsnight and the Guardian, Grossman defending his involvement in the DRC, saying "he wasn't beating up on the Congo but collecting on a legitimate debt". The last decade has seen FG and DAI chase the DRC, for the same debt, in the United States, Jersey, Hong Kong and Australia.

Grossman also denied having any knowledge that, as alleged by the Bosnian police, the debt was acquired illegally in the first place.

Sheehan, who is nicknamed Goldfinger, brokered the original deal with Bosnian state company EnergoInvest and owns some of the debt. The DRC originally owed the money to EnergoInvest for a contract to build power lines.

But as Grossman looks for payment from DRC through the Jersey legal system, the world's biggest charities are appealing to Jersey to close the loophole.

Jubilee Debt Campaign UK, which has been campaigning for debt relief for over a decade, is sending a representative to Jersey next week to put the case directly to the island's government to close the vulture funds' loophole.
Tim Jones, of Jubilee Debt Campaign, said: "The DRC is the second poorest country in the world. The country desperately needs to be able to use its rich resources to alleviate poverty, not squander them on paying unjust debts to vulture funds left by the dictator  Mobutu. Jersey has to shut vulture funds down."

UK legislation on vulture funds has already had an impact, when Liberia last year reached agreement to repay just over 3% of the face value of a $43m debt.

That case was originally brought by two Caribbean-based vulture funds, Hamsah Investments and Wall Capital Ltd, over a debt dating back to the 1970s and it sparked a furore when the high court ordered Liberia to repay the full debt in 2009. Liberia mobilised debt campaigners, who pushed for a change in the law, resulting in the Debt Relief (Developing Countries) Act 2010 being passed.

The law, a world first, requires commercial creditors to comply with the terms of international debt cancellation schemes, which specify a single discount rate for creditors to ensure equal treatment.

The law applies to the UK courts and ensures that public money given towards debt cancellation is not diverted to private investors.

The World Bank estimates that more than one-third of the countries which have qualified for Heavily Indebted Poor Countries (HIPC) debt relief have been targeted by vulture funds. HIPC countries are those whose debt is unsustainable and qualify for loans from the World Bank's International Development Association or the IMF's poverty reduction and growth facility.

Yes many african countries have been ravaged by corruption and mismanagement but still that the likes of vulture funds exists serves only to kick many of the world's poorest while they are on the floor.

Yes, vulture funds are legal but then there is no law against sticking a fork up your rectum either. The likes of Grossman and Sheehan are  plainly greedy scum.  The world would be a slightly better place if they and their fellow vulture fund speculators were to drop dead tomorrow


Syncopated Eyeball said...

I think vulture is too good a description for these people. Vultures are scavengers but these funds are predatory. I can barely understand such greed amd cruelty.

jams o donnell said...

How about a bunch of evil fucks over which who no one would shed a tear if they were strung up from lam posts Syncy?

jams o donnell said...

better still, strung up from lamp posts