When Labour were in power, Liberal Democrats regularly attacked the government for its inaction over so-called vulture funds (that is, in this context, financial funds who buy up debt from poor countries and try to make a profit out of it).
For example, then International Development spokesperson Lynne Featherstone said,
Gordon Brown has said this is immoral but so far it’s been all talk and no action.
The Government needs to take a stand and use its influence in the IMF to help devise an internationally binding system to ensure companies can’t prey on heavily indebted developing countries in this way.
The Government claims they advise countries to help them avoid being used by vulture funds. That is all well and good – but they must take stronger action to help the countries that are already in this horrible and immoral financial prison.
Temporary action was eventually taken by Labour. The coalition agreement itself was fairly tepid on the topic, promising a review, but breaking the cliche that a review is an excuse for pausing pending further inaction, the review turned into action.
The Treasury’s press release says,
Legislation to make permanent The Debt Relief (Developing Countries) Act 2010 was passed in the House of Commons today. The legislation will stop creditors, including so-called “Vulture Funds”, from using the UK courts to extract harsh and inequitable payments from poor countries for debts that the companies may in some cases have bought for a fraction of the cost.
The Act could save poor countries an estimated £145m over six years.
The original Debt Relief (Developing Countries) Act 2010 was passed in April 2010, temporarily restricting the actions of “Vulture Funds” in the UK. This act had a sunset clause meaning that it was due to expire on 7 June. To prevent Vulture Funds returning to the UK, the Government has passed legislation to make the law permanent.
Danny Alexander said of this,
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.
Co-Chair of the Liberal Democrat Parliamentary Committee on International Affairs, Martin Horwood said:
It will save poor countries nearly £150m over the coming years by preventing ‘vulture funds’ from using the UK courts to sue poor countries for the full repayment of debts that they have bought cheaply.
Vulture funds are effectively wiping out the benefits which international debt relief was supposed to bring the poorest countries in the world.
The Liberal Democrats have long fought on this issue and that is why I’m delighted that the UK is achieving a world first by making this law permanent. This shows the Coalition has a real commitment to helping the poorest countries with this unfair and crippling debt.
I urge the Government to continue the fight against these vulture funds and ensure that the members of the G8 follow suit at their meeting later this month.