08 April 2010
Churches celebrate victory over the vultures
Methodist, Baptist and United Reformed Church leaders are
celebrating after the Debt Relief (Developing Countries) Act was
passed in the final hours of the current Parliament sitting.
Vulture funds allow private companies to purchase debt from creditor companies and countries for knock-down prices. As the debtor countries have long defaulted on these loans, the companies then use UK and international courts to sue for the full debt, plus costs and interest, which means substantial profit for the company.
The Act will prevent private companies that buy up unpayable debts from taking the poorest nations to court in the UK to enforce payment and thereby forcing developing countries into even greater poverty.
Dr Richard Vautrey, Vice President of the Methodist Conference, welcomed the passing of the Act. "This bill clips the wings of the vultures who prey on vulnerable nations and who drive them deeper into debt and poverty," he said. "We are pleased that our politicians have woken up to the injustice of private companies using UK courts to make a profit out of the poorest people in our world."
Donegal International, for example, bought $15 million of Zambia's debt for $3.3 million, and then demanded $55 million in the UK courts, before eventually being awarded $15.5 million. Zambian presidential advisor, Kalunga- Banda, pointed out that paying Donegal meant "the treatment, the Medicare, the medicines that would have been available to in excess of 100,000 people in the country will not be available."
Revd Jonathan Edwards, President of the Baptist Union of Great Britain, saw this as another key moment in the drive to deliver a world free of poverty, saying, "So many Christians and people of goodwill worked hard through Jubilee 2000 and MakePovertyHistory to ensure that politicians took action on debt relief. But this action was undermined by the action of vulture funds in our own courts. This act will bring an end to vulture culture and stands as testament to our belief that no one deserves to live in absolute poverty."
However, the Churches warned that a "sunset clause" contained in the Act could lead to the legislation lapsing after a year unless it is renewed by Parliament. Revd John Marsh, Moderator of the General Assembly of the United Reformed Church, challenged politicians to use this opportunity wisely. "The debt relief granted to Haiti after the recent earthquake shows that debt remains a major challenge to countries that struggle to lift their populations out of poverty," he said. "We'll keep watching and campaigning to ensure the 'sunset clause' is used to appraise the policy, not as a back-door method to scupper a bill that offers real hope to nations trapped in cycles of debt."