Stop Vulture Culture Melinda St. Louis Jubilee USA Network

1. Stop Vulture Culture Melinda St. Louis Jubilee USA Network Jubilee USA Network

2. Presentation Outline • Debt cancellation and the threat of vulture funds for impoverished countries • How vulture funds operate • The Stop VULTURE Funds Act (HR 2932) • Next steps Jubilee USA Network

3. Jubilee USA Network • US arm of global Jubilee campaign working in 60 countries to cancel the unjust and crushing debts of impoverished countries • Today, Network includes 75 religious denominations, labor, environmental, and solidarity groups Jubilee USA Network

4. The Crisis of Debt • The crisis of debt faced by developing nations is a major barrier to development and global economic justice • Africa pays $13 billion a year in debt service. More than $15 billion needed to stem the tide of the AIDS pandemic • Many nations in Africa, Asia, Latin America spend more on debt than health or education Jubilee USA Network

5. Debt Cancellation Initiatives • 1999 - G-8 leaders committed to limited debt relief through the Heavily Indebted Poor Countries Initiative (HIPC) • 2005 – Multilateral Debt Relief Initiative (MDRI) • Donor countries have committed over $50 billion in bilateral and multilateral debt cancellation to promote economic development and poverty-reduction Jubilee USA Network

6. Positive Results of Debt Cancellation • Allowed Tanzania to abolish school fees and put 1.6 million children in school • Gave 2.2 million people in Uganda access to clean water • Helped fight HIV/AIDS in Mali, Mozambique, & Senegal • The World Bank found that countries that have received debt relief have increased social spending by 75% Jubilee USA Network

7. Enter Vulture Funds… Jubilee USA Network

8. Donegal vs. Zambia case • Donegal bought Zambian debt for $3.28 million in 1999 • Seven years later, sued the Zambian government for $55 million after debt cancellation. • The British High Court ruled that the government of Zambia pay Donegal $15.4 million, 65 percent of what was saved in debt relief delivered through the MDRI Jubilee USA Network

9. The Debilitating Costs of Vulture Lawsuits • Ethiopia and Niger - a ratio of lawsuit costs to debt service obligations in one year of over 200 percent • Niger - lawsuit costs were 52.2 percent of health and education expenditure • Cameroon’s budget revenue totaled $52.6 million, while lawsuit costs totaled $51.7 million, or 98.3 percent of revenue Jubilee USA Network

10. Coalition to Stop Vulture Funds United Church of Christ, Justice and Witness Ministries And many more organizations and grassroots groups who support debt cancellation. Jubilee USA Network

11. Types of Sovereign Debt Creditors • IMF/Work Bank (Multilateral Creditors) • Paris Club (Official Bilateral Creditors) • Non-Paris Club Official Creditors • London Club (Commercial Creditors) • Holdouts • Vulture Funds Jubilee USA Network

12. The Problems with Vulture Funds Profiteering in Defaulted Sovereign Debt • Preferential Treatment of Vulture Creditors Over Taxpayers and Cooperative Creditors • Profiteers at Expense of the Poor • Disrupts Trade • Imposes Indirect Costs/Transaction Costs • Disrupts Debt Relief Efforts • Obstructs Transparency Jubilee USA Network

13. Variety of Actions Taken by Vulture Funds to Coerce Payment • Direct Litigation Against the Sovereign in Foreign Courts • Attachments of Embassy Property • Subpoenas to visiting officials • Seizure of Commercial Assets • Indirect Litigation • Against Trading Partners • Against Financial Service Providers • Against Government Officials • Against Cooperative Creditors • Against Donors • Lobbying to Disrupt Debt Relief or Aid • Public Relations • Lobbying to Obtain Their own Legislative Relief Jubilee USA Network

14. Judgment Evading Foreign States Accountability Act • 2008—110 HR 7205 (Sep. 28, 2008) • 2009—111 HR 2493 (May 19, 2009) Jubilee USA Network

15. The Development of the Stop VULTURE Funds Act Jubilee USA Network

16. Key Provisions of the Stop VULTURE Funds Act • Limits on Profiteering • Prohibits Use of Courts in Aid of Profiteering • Mandatory Disclosures • Gate Keeping by Court • Discovery to Ensure Accuracy of Disclosures Jubilee USA Network

17. I. Limits on Profiteering • Makes it Illegal to “Profiteer” in Defaulted Sovereign Debt • “Profiteering in Sovereign Debt” is defined as attempting to collect more than you paid for defaulted sovereign debt, plus six percent (6%) annual interest on what you paid. • Applies to US Persons or Persons Acting in the United States. Jubilee USA Network

18. II. Prohibits Use of Courts in Aid of Profiteering • This would serve to close the door of US Courts to lawsuits where creditors seek to win more than 6% per annum return on the amount they pay for defaulted debt. Jubilee USA Network

19. III. Mandatory Disclosures • Mandatory Certifications by Sovereign Creditors Whenever They Seek Judicial Assistance • How much they paid • Who they are • Certification that they have paid no bribes Jubilee USA Network

20. IV. Gate Keeping by Court • Courts Are Required to Review the Creditors’ Certifications to Ensure Compliance with Act Prior to Issuing Any Process for the Collection of Defaulted Sovereign Debt • Judicial Process Issued in Violation of Act Is Void Jubilee USA Network

21. V. Discovery to Ensure Accuracy of Disclosures • Creditors Must Submit To Discovery to Allow Any Party in Litigation to Test the Accuracy of Their Certifications Jubilee USA Network

22. Other Provisions of the Bill • Protection Limited to “Qualified Poor Countries” • Requires Treasury Department to Maintain a List of “Qualified Poor Countries” • Conditionality to Protection • No gross violations of human rights • No excessive level of military expenditures • No support for terrorism • Cooperation on international narcotics control • Notification to Protected Countries • Certifications centrally filed and maintained as public records Jubilee USA Network

23. For additional information and follow up: • www.jubileeusa.org • www.transafricaforum.org • www.africaaction.org Thank you for your kind attention! Jubilee USA Network