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The Bill seeks to cap the returns on trading in defaulted sovereign debt of developing countries
Sally Keeble
It is time to "clip the wings" of 'vulture funds', writes Labour MP Sally Keeble.
My Developing Country Debt (Restriction of Recovery) Bill aims to clip the wings of the vulture funds which profiteer out of developing country debt.
The Bill seeks to cap the returns on trading in defaulted sovereign debt of developing countries.
It follows similar legislative moves in the US and proposals in Europe for greater regulation of hedge funds.
Jubilee Debt Campaign has been leading the calls for more controls on the funds' activities in developing countries. It estimates that at least 54 companies are known to have taken legal action against 12 of the world's poorest countries, with claims amounting to £1.5bn. About 20 per cent of the cases are heard in the UK courts.
So my Bill, which has cross-party support, proposes to:
Require court consent for any recovering proceedings.
Introduce reporting procedures to the UK government.
Limit profits of sale of developing country defaulted debt to an interest only formula.
Force disclosure of participants in the transactions, and the beneficiaries.
Ban corrupt payments.
In one case, Donegal International Ltd, registered in the British Virgin Islands, sued Zambia for $55m after it paid $3.3m for the outstanding balance of a £15m loan made by Romania to help Zambia purchase tractors and other farming machinery. The court awarded the company $15.5m.
Under my proposals, Donegal would only have been entitled to $3.3m with interest specified in the law.
The global economic crisis has focused attention on the activities of financial institutions.
'Vulture funds', which profiteer out of developing country debt, are among the most unacceptable. Their profits are made on the backs of some of the poorest countries in the world, and divert money meant for economic development.
This Bill proposes some basic regulation of their activities.
Dods Parliamentary Communications Ltd