Andrew Gwynne MP has introduced a bill into Parliament which would restrict the activities of so-called “vulture funds”. The MP for Denton and Reddish has committed himself to try and bring to an end the practice of investment companies  aggressively pursuing the poorest countries in the world for debts that have been forgiven by the international community.

The practice runs contrary to the international agreed Heavily Indebted Poor Countries (HIPC) Initiative.  It involves firms buying up the defaulted debts of the world’s poorest countries at very low prices and then taking them to court to aggressively recoup the debts at full value.  

Recently, two funds won £20million in a case in the UK High Court against the Republic of Liberia – one of the poorest countries in the world. This represents over 5% of government revenues of one of the poorest countries in the world. 

Andrew’s Bill aims to protect the poorest 40 countries in the world  who qualify for international debt relief through HIPC. HIPC gives debt relief to countries on their historic debts and the Bill will seek to make sure that creditors cannot pursue payment beyond the level assessed as sustainable by the IMF and World Bank. 

Mr Gwynne came third in this year’s Private Members’ Ballot which offers a handful of MPs the opportunity to introduce legislation into Parliament.

Andrew Gwynne MP for Denton and Reddish said: 

“This Bill would represent a major step forward in tackling these funds. It cannot be right that companies are allowed, in British courts, to make profits out of the world's poorest people. In some of the very poorest countries almost half the population lives on just under a dollar a day.”

“I propose to heavily restrict the actions of creditors that do not participate in debt relief, dealing with the so-called “Vulture Funds.” For too long, some companies have been allowed to get away with exploiting the debt relief received by developing countries for their own profit; taking vital resources away from those that need it most. Through my Private Members Bill I aim to put a stop to it.”

Speaking after the reading of the Bill Ian Pearson MP, Economic Secretary to the Treasury said:

“I fully support Andrew Gwynne’s decision to use this Private Member’s Bill to tackle so-called vulture funds, ensuring that the world’s poor see the full benefits of debt relief. 

“The UK Government has led the world in providing debt relief and it is not acceptable that certain creditors continue to pursue full repayment for debts that the international community has worked so hard to reduce.

“This Bill will allow poorer countries to spend more on the schools, hospitals and other vital services that are so needed to make sure that they continue to support their populations. 

“Commercial finance has a key role to play in building sustainable economic growth in developing countries, but it is also right that all creditors play their part in providing the debt relief that can help make that development possible.”

For more on vulture funds see: www.jubileedebtcampaign.org.uk/vultures.