Dear friends
In the last few weeks Jubilee 2000 has uncovered a previously hidden,
contemptible aspect of the debt crisis: the unregulated greed of Vulture
funds? which make a killing from the debts of the poorest countries. I m
writing to ask you to take action against this trade in human misery, nd to
call for a change in the law to prevent it.>
Best wishes
Marlene Barrett
ead of Campaigns
Jubilee 2000 Coalition UK
Take action against vulture funds which prey on the poorest countries Vulture
funds?buy up the debt of impoverished countries at bargain ates on the
secondary market, and then sue for full repayment plus interet, even from
countries which are getting debt relief from other creditors. ubilee 2000 is
calling for tougher controls to prevent private investors from using 'vulture
funds' to make millions out of the debt crisis in developing countries.
New York-based hedge fund Elliott Associates L.P. bought $20 million worth of
Peru's debt for just $11 million in 1996. Their intention was clear: Paul
Singer, a general partner at Elliott Associates, said Peru would either...
pay us in full or be sued.?Elliott Associates then pursued the
Peruvian government through the courts for full payment of the debt plus
capitalised interest, finally receiving a payment of $58 million on Oct 7
2000. In the process, Elliott Associates blocked Peru from paying other
creditors first, nearly forcing a default on its debt payments, which
would have thrown the country further into economic chaos.
The hedge fund was the only one of Peru's creditors to operate outside a
package designed to help Peru manage its $3.7 billion Prady bond?debt (a
mechanism for restructuring unpayable commercial debt). If the New York hedge
fund had opted to participate with all the other Brady bond holders, it still
would have made a hefty profit, realising about $10 million. But Elliott
Associates L.P. sued the Peruvian government for full payment and pushed
through a change in New York law to claim capitalised interest on the
repayments. The hedge fund then used court injunctions in Canada,
Belgium, Luxembourg, Holland, Germany and the UK to prevent the Peruvian
government from repaying other creditors until the hedge fund had eceived
payment in full. Had Peru not paid the $58 million to Elliott Associates
L.P., they would have been forced to default on their Brady plan, rocking
market confidence.
The individuals involved in the Peru case, Singer, adviser Jay Newman and
attorney Michael Straus, have amongst them carried out similar practices
concerning debt from Panama, Ecuador, Poland, C?e d'Ivoire, urkmenistan, and
the Democratic Republic of Congo.
Jubilee 2000 has helped to put the spotlight on these ruthless practices and
is calling for tough controls to prevent them. Elliott Associates
responded by calling Jubilee 2000
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