Stop debt vultures
Vulture funds are private investment firms that prey on the world’s poorest countries. These commercial bankers circle developing countries on the lookout for debts that a country is struggling to repay. Then they swoop down, purchase the debt on the secondary market for a cheap price, and sue the poor country to recover the full value of the debt – plus interest, penalties and legal fees.
Caritas Australia has joined the Stop Debt Vultures campaign. This campaign aims to bring an end to the exploitation of developing countries by opportunistic and unethical ‘vulture’ financiers.
How do vulture funds operate?
Here’s a good example: In November 2010, for the first time the Australian legal system was exploited by a vulture fund. A US investment firm came to the NSW Supreme Court to pursue a debt claim against the Democratic Republic of Congo (DRC).
The DRC, a heavily indebted poor country, had finally completed the long and tough process required to receive debt relief. The International Monetary Fund (IMF), World Bank and African Development Bank had agreed to cancel 100% of pre-2004 debts (a whopping $7,000 million) when a Vulture Fund swooped.
This US firm refused to participate in DRC’s debt relief program. Instead, it began pursuing repayment of $100 million for this debt – $80 million more than the country would have been expected to pay for the debt under the debt relief scheme.
Vulture funds can stop a poor country freeing itself from the burden of debt. Wealthy companies gain, poor communities suffer.
Debt must not become a form of oppression, blocking development and survival.” Archbishop Silvano Tomasi, the Holy See's permanent observer at the UN
Why does Caritas Australia support this campaign?
Caritas Australia works with communities to ensure their human dignity endures despite the poverty, hunger, oppression and injustice they face. The work of Debt Vultures undermines human value, dignity and worth.
We are also committed to advocacy and engagement with government and civil society to ensure marginalised people receive economic justice.
What can be done?
The United Kingdom has introduced legislation to stop Debt Vultures swooping on a country that have been accepted into a debt relief program.
Australia should do the same.