Isle of Man to ban Vulture Funds

IOM Today reported on Tuesday that the government of the Isle of Man has  banned Vulture Funds from pursuing claims through the island's courts (or should that "to be banned', I am not sure).

The Council of Ministers has agreed that the island should introduce its own legislation equivalent to the UK's Debt Relief (Developing Countries) Act 2010.

Treasury Minister Eddie Teare said: ‘We have no evidence of vulture fund activity in the Isle of Man and, as an internationally responsible country, we do not want it here. The Manx government is happy to introduce legislation to ensure that our island is not used for the disreputable business of exploiting heavily indebted poor countries.’

Excellent news! The more countries that tell the Vermin Funds to fuck off, the happier I am!

Jersey to ban vulture frunds from its courts... we hope

I have written about vulture funds at length before, using a lot of intemperate language in the process.From now on they will be called Vermin Funds

To recap, Vulture funds buy up distressed debt owed by developing countries for a greatly reduced price, often because it is seen as high risk due to war or natural disasters. Once the country in question stabilises, payment can be sought wherever state-backed entities are registered. This sounds reasonable but it the Vermin Funds, not only press for the full debt (even if purchased at a small fraction of price) they also seek massive interest payments as well. A debt purchased for a few million dollars can reap rewards in the tens and somethings hundreds of millions, invariably to the great detriment to many of the world's poorest people.

Personally I consider the people who deal in such misery to be among the lowest of the low.

In the last days of Gordon Brown's government a private member's bill forbidding Vermin Funds from pursuing claims in British courts was passed (despite an attempt by the vile scumbag and bastard Christopher Chope,  the shit stain who represents Christchurch for the tories, to derail the bill). To their credit the bill was ratified fully the following year by the current government. However laws affecting the UK do not cover the Crown Dependencies (Isle of Man and Chanel Islands) so Vermin Funds were still able to pursue claims thrugh their courts.

A few days ago the Guardian reported that Jersey has proposed introducing legislation designed to stop Vermin Funds from pursuing their disgusting claims through their courts.

ALast year a Guardian/Newsnight investigation revealed that one Vermin Fund, New York-based FG Hemisphere, was using Jersey to pursue the Democratic Republic of Congo for a payment of up to $100m (£63m). FG Hemisphere had bought the original debt for less than $3m.

The decision to propose a new law was taken following a public consultation on the subject, which closed in December 2011. The chief minister of Jersey, Senator Ian Gorst, has said of the proposed new bill: "By bringing forward a law to discourage so-called vulture funds from using our courts, Jersey will be sending a clear and positive message that ours is a well-regulated, co-operative and transparent jurisdiction."

This is good news, I hope that the legislation is strong and sweeps the scum away from all of the British Isles and its crown dependencies.

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

Vulture Funds Act made permanent

It seems to have gathered little or no coverage at the time but it very leasing to see that The Debt Relief (Developing Countries) Act 2010 was made permanent last month.

The main effect of the act was to prevent creditors from using British courts to seek harsh payments from some of the poorest and most vulnerable countries for debts that the likes of vulture funds may have bought for a fraction of the cost.

Paul Singer - a face of evil

It means that human excrement like Paul Singer, the CEO of the Elliott Management Corporation cannot use British courts to screw over poor countries.

The act was originally a private member's bill that gained government support at the very end of the last Labour administration. Despite the efforts of Christopher Chope, the slimebag who sits as a Tory MP for Christchurch, the bill became law. However there was a "sunsetting clause" which meant that the act would fall into abeyance unless it was supported by the new Tory/Lib Dem administration. It is to their credit that support was given and the act is now permanently on the statute books.

Vulture Funds outlawed... for a year anyway

At the last gasp before Parliament is dissolved prior to next month’s election our politicians did something to make this country proud. By passing Debt Relief (Developing Countries) Bill the UK became first country to ban ‘Third World Debt’ profiteering by the scum who deal in Vulture Funds

This is how the Jubilee Debt campaign’s press release described what is truly a momentous act.

“A landmark bill to protect the poorest countries in the world from profiteering by so-called vulture funds became law today after passing in the House of Lords during the ‘wash-up’ at the end of the Parliamentary session.

Jubilee Debt Campaign welcomed the successful passage of the Debt Relief (Developing Countries) Bill, which is the world’s first law to restrict the ability of Vulture Funds to sue some of the world’s poorest countries for full repayment of debts that they have bought up cheaply.

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.

There was an outcry last month after the bill was blocked at third reading by an unidentified Conservative MP – thought to be backbencher Christopher Chope. 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.

Andrew Gwynne MP, Sponsor of the bill said:
“I am absolutely thrilled that my bill has been passed into law. It was completely unacceptable that a small number of companies were ever allowed in the UK courts to profiteer off the third world debt market. These “vulture funds” were completely unjust and it is to the credit of this parliament, and the efforts of the Jubilee Debt Campaign that we have finally managed to pass this law. I said I would put a stop to these vulture funds, and I did.”

Whoever wins the next election had better reassess the bill and ensure this law becomes permanent, In the meantime it is one huge FUCK YOU to the scumbag Christopher Chope who tried to derail the bill. More importantly it is an even bigger FUCK You to shit stains like Michael Sheehan and Paul Singer who have made millions feeding off the very poorest.

Vulture Funds bill passes the Commons

I received this piece of excellent news from the "Shame on you Christopher Chope" Facebook group

"Today history was made when the Government pushed the Debt Relief Bill forward as part of their ‘wash-up' package of legislation before the General Election, and all major parties supported its passage.

All we need is for the Bill to pass through the House of Lords afternoon and then it will be law. This is a massive accomplishment and it is almost unheard of for a Private Member's Bill to be passed as part of the wash up."

So long as the Lords don't do anything stupid it will become law.

Up Yours Christopher Chope!

Good news on Vulture Funds legislation?

This is on the Jubilee Debt Campaign website

The Government has just announced that the vultures bill - the Debt Relief (Developing Countries) Bill - will be included in the 'wash-up' which takes place before the General Election. The 'wash up' is a mechanism through which the party whips agree to take forward bills in the final days before a Parliament is dissolved for a General Election.

This means there is cross-party support for taking the bill forward and means it has a real chance of becoming law this week. We will keep reporting on proceedings in Parliament in coming days.

This is heartening. Here's hoping the Bill becomes law despite the actions of the bastard Christopher Chope

A moral and a pyrrhic victory?

Following on from my earlier post today about vulture bonds, the Lawyer.com reports that law firm DLA Piper won a moral victory for the Zambian Government today as the High Court delivered a scathing attack on the claimants Donegall International.

Investment funds company Donegal International (part of Debt Advisory International?) brought proceedings in the Commercial Court to enforce a claim again the Republic of Zambia in respect of a debt which it bought from Romania eight years ago for just $3.2 million (£1.6m). But key payment terms that Donegal were relying on were struck out drastically reducing Zambia’s liability, which will be determined at a later date. Mr Justice Andrew Smith in his judgement also found that Donegal's injunction over Zambia's assets should also be discharged because of the misleading nature of the evidence with which it was secured.

Smith J said that Michael Sheehan of Donegal had lied to or misled the courts of three different jurisdictions in relation to the debt, while his consultants were “dishonest and thoroughly unreliable”. The judgment comes as fears continue to increase over whether “vulture funds” hold up or undermine debt restructuring efforts. On this point Smith J said: “The proceedings arouse strong feelings. Zambia is a poor country and sees itself as being vulnerable to 'vulture funds'. I am concerned, of course, with the legal questions that are raised by the applications before me and not with questions of morality or humanity.”

It’s a shame That Donegall wasn’t told to go and reproduce with itself but the law and justice do not intersect as often as one would like.

UPDATE: Tony Barclay, the CEO of Development Alternatives inc has left a comment on this post rightly seeking to distance the work of his company from those of Debt Advisory International. Click here for further details.

Vulture Funds? More like vermin funds

I am not particularly acquainted with the world of high finance. Until I watched a Newsnight report last night I had not heard of Vulture Funds To be honest I wish I hadn’t. Some news items revolt even this jaded soul – this was one of them.

A Vulture Fund is a financial organisation that specialises in buying securities in “distressed environments”, such as equities that are near bankruptcy. Companies are not their only target: they also buy up public debt at very low prices. Then seek to recoup the whole of the original debt plus interest. They are not averse to suing governments in order to freeze their assets. International courts have at times prevented countries from paying to other debtors because one of these funds had requested an embargo.

Today a high court judge in London will rule whether a vulture fund can extract more than $40m from Zambia for a debt which it bought for less than $4m. Martin Kalunga-Banda, Zambian presidential adviser and a consultant to Oxfam told Newsnight, "That $40m is equal to the value of all the debt relief we received last year."

Caroline Pearce from the Jubilee Debt campaign told Newsnight last night. "Profiteering doesn't get any more cynical than this. Zambia has been planning to spend the money released from debt cancellation on much-needed nurses, teachers and infrastructure: this is what debt cancellation is intended for not to line the pockets of businessmen based in rich countries."

Debt Advisory International (DAI) manages a number of vulture funds which buy up the debts of highly indebted poor countries cheaply and then sue for the original value of the debt plus interest. Zambia. In 1979 the Romanian government lent Zambia money to buy Romanian tractors. Zambia was unable to keep up the payments and in 1999 Romania and Zambia negotiated to liquidate the debt for $3m. Before the deal could be finalised one of DAI's vulture funds stepped in and bought the debt from Romania for less than $4m. They are now suing the Zambian government for the original debt plus interest which they calculate at over $40m and they expect to win.

Five years ago Gordon Brown told the United Nations that the vulture funds were perverse and immoral: "We particularly condemn 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". But the vulture funds are still operating.

DAI is not alone. In 1986 Paul Singer’s firm Elliot Asociates paid $11m for some discounted Peruvian debt and then threatened to bankrupt the country unless they paid $58m. They got their $58m. The company is now suing the Republic of the Congo (Congo Brazzaville) for $400m for a debt they bought for $10m.

Back in Britain the Zambian case has seen much legal discussion about allegations of bribery. The Zambian legal team - led by William Blair QC - Tony Blair's brother, has argued that a $2m bribe was offered to the former Zambian President to make it easier for the vulture funds to claim their money. They showed the court an email disclosed in the Zambia case saying that a payment to the "President's favourite charity" had allowed them to do a more favourable deal. ".
The Jubilee Debt Campaign told Newsnight that they are calling on Gordon Brown to turn his moral outrage about vulture funds into action if he becomes Prime Minister and change the law to make the Zambian case the last to appear in a British court.

Vermin seems to be more appropriate a description than vulture for these people.

UPDATE: Tony Barclay, the CEO of Development Alternatives inc has left a comment on this blogy seeking to distance the work of his company from those of Debt Advisory International. Click here for further details.