I wasn’t familiar with this term until CoolAqua posted about it. What are Vulture Funds? Think of the sleaziest, most immoral economic activity you know of — loansharking, blackmail, selling heroin to 3rd graders, etc. Now try to imagine this activity on a global scale, and you just might start to approach the coldblooded amorality of Vulture Funds.
A Vulture Fund is a company which buys up (very cheaply) the debt of a bankrupt third world government when that debt is about to be written off. Then the company will sue that government for the full amount of the debt, plus interest. They might end up collecting ten times the amount they originally paid to buy the debt.
Zambia was a recent victim. The average wage in Zambia is just over a dollar a day. A vulture fund paid $4 million to buy up Zambia’s debt. Now they're suing the Zambian government to extort $40 million from one of the poorest countries in the world.
A spokesperson for Jubilee Debt Campaign said “Profiteering doesn’t get any more cynical than this. Zambia has been planning to spend the money released from debt cancellation on much-needed nurses, teachers and infrastructure: this is what debt cancellation is intended for, not to line the pockets of businessmen based in rich countries.”
According to the Jubilee Debt Campaign’s website, the world’s most impoverished countries are paying over $100 million in debt repayment every day to the world’s richest countries. Is this right?
Gordon Brown of the International Monetary Fund said “We particularly condemn the perversity where Vulture Funds purchase debt at a reduced price and make a profit from suing the debtor country to recover the full amount owed — a morally outrageous outcome.”
Vulture funds were invented by Paul Singer, an American billionaire. His latest venture: he paid $10 million to buy up a debt from the Congolese government. He's now suing the Congo to collect $400 million for that same debt.
Paul Singer has been George W. Bush’s largest contributor. He's donated a total of $1.7 million since Bush’s first presidential campaign. Now, in case Rudy Giuliani is your favorite Republican — he's a “maverick,” he's a “moderate” — Giuliani is now Paul Singer’s favorite project. Singer has pledged at least $15 million for Giuliani’s presidential campaign.
Capitalism — like every “ism” — has some ugly stepchildren. But vulture funds are the ugliest stepchild I’ve ever seen.