The British government today (Wednesday) made a move to stop those owed money by poor countries, exploiting them by using the UK courts to extract using unfair amounts of repayments, interest and penalties for late payments from them.
To meet their people’s needs, many developing countries first need to escape the burden of unfair and unbearable debt. But even when they manage to negotiate debt relief plans, these countries can still fall prey to greedy and unethical investors who buy up their old debt at huge discounts, then use the legal system to demand payment at up to 200 per cent more than the original value of the debt.
The House of Commons today passed a law that makes The Debt Relief (Developing Countries) Act 2010 permanent. The legislation will stop creditors, including what are known as ‘Vulture Funds’, from using the UK courts to charge poor countries huge and unfair payments for debts that the companies may in some cases have bought for a fraction of the cost.
The original Debt Relief (Developing Countries) Act 2010 was first made law in April 2010, temporarily preventing Vulture Funds from operating in the UK. But the act had a sunset clause meaning that it was run out on 7 June. So to stop Vulture Funds coming back to the UK, the Government has passed legislation to make the law permanent.
“Today the Government has acted to stop the unjust actions of a few unscrupulous companies having a huge impact upon the futures of some of the poorest countries in the world,” Danny Alexander, the Chief Secretary to the Treasury said:
“This act will make sure that Vulture Funds will never again be able to exploit the poorest countries in the world within the UK’s courts.”
Giving poor countries debt relief frees them up to spend more of their money on schools, hospitals and other vital services needed to boost growth and reduce poverty.
"It is important that other nations now follow our lead and look at what they can do to address this issue," said International Development Secretary, Andrew Mitchell.
The financial secretary to the Treasury Mark Hoban MP, said: "It is a privilege to be involved in passing this legislation and making this Act permanent. The Government is committed to ensuring that the poorest countries are protected from the exploitative practices of Vulture Funds and this Act will ensure that they have no place in the British legal system.”