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    Call for Jersey to block $100m DR Congo 'vulture' debt

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    Mr007

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    Call for Jersey to block $100m DR Congo 'vulture' debt

    Post by Mr007 on Tue Nov 15, 2011 9:31 pm


    By Meirion Jones BBC Newsnight
    Jersey bank notes The law clamping down on vulture funds does not currently apply to Jersey

    Charities are calling for Britain's Privy Council to block an American speculator from taking $100m (£62.86m) from the Democratic Republic of Congo.

    Peter Grossman runs a so-called vulture fund which buys up the debts of poor nations cheaply and then sues for 10 or 100 times what they paid for them.

    Such funds were in effect made illegal in the UK last year.

    But Mr Grossman exploited a loophole to sue in Jersey, which is currently not covered by the law.

    Vulture funds, also known as "distressed debt" investors, buy up the debt of poor nations cheaply when it is about to be written off and then sue for the full value of the debt plus interest.

    They pursue any companies which do business with their target country in courts around the world and try to force them to pay money to the fund instead of the country.

    Critics say this holds poor countries to ransom and prevents them trading their way out of poverty rather than relying on aid.

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