UK must follow US lead on vulture funds
Vulture funds – which seek to make a profit by buying up ‘bad debt’ owed by poor countries and then pursuing the full amount owed, often by going through the courts – are a clear example of the unaccountable and secretive side of international finance.
The meeting discussed the reforms needed, both nationally and globally, to combat the issues of vulture funds and tax havens. It was organised by Jubilee Debt Campaign and the All Party Group on Debt, Aid and Trade. Many came to hear the speakers and join the discussion on how to clean up global finance.
The speakers included John Richards, a lawyer well versed in vulture funds litigation, and Tammi Gaw from TransAfrica Forum, both from Washington DC. Richard Murphy of Tax Justice Network in the UK addressed the issues of tax havens and Jubilee Debt Campaign’s Sarah Edwards discussed the broader context of vulture fund activity and its impact on debt relief.
The link between tax havens and vulture funds was explored, with Richard Murphy making it clear that tax havens provide the lack of transparency and secrecy needed by these funds. He also reiterated the need to tackle tax havens, while the world pays attention to the flaws in the current financial system. The UK government ultimately can and should act to close down tax havens under its jurisdiction.
Much discussion was focused on the proposed US bill to cap the amount of profit attainable by vulture funds and to make the litigation process far clearer and more regulated. Whilst not perfect, it is definitely a step in the right direction that needs to be followed with a similar initiative from the UK government immediately.
Since Jubilee Debt Campaign exposed the problem of vulture funds in 2007, the UK government has been slow to act beyond its existing. Although 124 MPs signed an EDM (Early Day Motion) to raise the issue of vulture funds early in 2007, very little has been done since then. The UK needs to make a stand by following the US initiative. We need to ensure that tax havens cannot try people in UK courts, companies that sell their bad debt on to vulture funds do not get tax relief, and that bad debt cannot be sold on for more than it was bought for.
Vulture funds, equally as opaque and unaccountable as the hedge funds that helped create the current financial crisis, need to be stopped. With the financial architecture that created the crisis under scrutiny, now is the time to raise the issue of vulture funds and make a difference.
