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Vulture Funds Should Be Stopped from Draining Africa Says Rep. Payne

From Volume 6, Issue 22 of EIR Online, Published May 29, 2007
Africa News Digest

Vulture Funds Should Be Stopped from Draining Africa Says Rep. Payne

May 25 (LPAC)—At a hearing of the U.S. House of Representatives subcommittee on Africa and Global Health, the Democratic chairman of that subcommittee, Rep. Donald Payne (D-N.J.) blasted the "vulture funds" that buy up the debts of "distressed" countries for pennies on the dollar, and use legal suits to squeeze the full value, reported Mshale newspaper, the online "newspaper of the African community." At a May 24 hearing entitled "Vulture Funds and the Threat to Debt Relief in Africa: A Call to Action at the G-8 and Beyond," Payne stated, "Instead of servicing millions of dollars in debt annually, these nations could finally begin to service their own people. Schools could be built, teachers and nurses could be hired, life-saving medication could be distributed. Yet, with the threat of vulture funds waiting in the wings to swoop down and prey on struggling, impoverished African nations, poverty reduction programs and plans for economic development could come to a grinding halt.... This is morally reprehensible and exploitative."

Payne singled out one company, Donegal International, which had taken Zambia to court after its $55 million sovereign debt to Romania had been purchased by the company for a mere $3.2 million. The Financial Times covered the hearing, explaining that "vulture funds" are "perceived to prey on the weakest countries" and "usually operate through shell companies in the Caribbean." Payne sent a letter to President Bush, asking him to raise the issue of stopping the vulture funds' practices, at the upcoming meeting of the G-8. But a White House official said that "Bush had no plans to raise vulture funds at the summit," reported the Financial Times.

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