The Debt Relief (Developing Countries Act) 2010, passed in the House of Commons today will stop creditors, especially ‘Vulture Funds’ from using the British Courts to force poor countries to repay colossal amounts of money to companies who bought the debts for a fraction of what they try to recover.
HM Treasury estimates that the new law could potentially save poor countries around £145m over six years.
In 2009, The High Court in London awarded $20 million to two Vulture Funds – Wall Capital Ltd and Hamsah Investments for Liberian debts dating back to the 1970s. But Liberia, which was in the process of going through the Highly Indebted Poor Countries Initiative, could not repay this amount.
Campaigners such as Jubilee Debt Campaign argued that the Vulture Funds were “immoral.”
Liberia, was just one of many poor countries heavily targeted by exploitative Vulture Funds and at one point had $357 million awarded against it – half the country’s GDP at the time.
The Debt Relief (Developing Countries Act) 2010 was originally passed in April 2010 as a temporary initiative with a clause that was due to expire on June 7. Today’s legislation makes the act permanent.
Commenting on the new law, Danny Alexander, the Chief Secretary to the Treasury said:
"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.”
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