Bad day for vulture fund that was after 100 million dollars from Congo
Britain’s Privy Council has ruled that a “vulture fund” cannot collect 100 million dollars from the Democratic Republic of Congo. Newsnight revealed last year that old Congo debts had been illegally sold to FG Hemisphere for 3 million and the fund had then sued in Jersey where they were awarded 100 million.
The award was against Congo's state-owned mining company Gecamines who successfully appealed to the Privy Council in London. FG Hemisphere denies any wrongdoing.
Nick Dearden, Director of the Jubilee Debt Campaign, said: “We welcome the fact that these funds will not flow into the coffers of a secretive vulture fund which tries to unfairly profit from the past debt distress of impoverished countries”.
Vulture funds, also known as ”distressed debt“ investors, buy up the debt of poor nations cheaply when it is about to be written off and then sue countries such as Zambia or Liberia or DRC for the full value of the debt plus interest which can be ten or 100 times what they paid for it.
They pursue any companies which do business with their target country in courts around the world and try to force them to pay money to the fund instead of the country.
Critics say this holds poor countries to ransom and prevents them trading their way out of poverty rather than relying on aid. Until 2010 they often sued in the UK but Britain effectively made vulture funds illegal that year after the Liberian President Ellen Sirleaf Johnson made an emotional appeal on Newsnight.
It later emerged there was a loophole in the Debt Relief Act which allowed action still to be taken in Jersey. Jersey has announced that it will be closing that loophole shortly.
FG Hemisphere is run a New York financier called Peter Grossman. When Newsnight confronted Mr Grossman in Brooklyn about his vulture fund operation last year, he said: ”I'm not beating up the Congo. I'm collecting on a legitimate claim.“
However, a joint BBC Newsnight/Guardian newspaper investigation has established that the debt in question, which was originally a loan from Yugoslavia to Zaire 30 years ago, was illegally sold to Mr Grossman's fund, FG Hemisphere.
Zufer Dervisevic, who is the chief of the financial police in Bosnia, told journalists: ”Of course it was illegal,“ and said that the man who organised the sale, former Bosnian Prime Minister Nedzad Brankovic, ”should go to jail“.
Mr Brankovic was Prime Minister of Bosnia until he was indicted for separate corruption charges - charges of which he was acquitted in 2010.
The Centre for Investigative Reporting in Sarajevo obtained a police report, which is now with prosecutors, recommending that Mr Brankovic be prosecuted for his part in the sale of the loan to FG Hemisphere.
Bosnian police showed the Newsnight/Guardian team paperwork which reveals that FG Hemisphere paid 3.3m for the claim, of which more than a half a million went to another ”vulture“ operator who helped set up the deal - Michael Sheehan, an American who calls himself ”Goldfinger“ after the James Bond villain.
Asked by reporter Greg Palast whether he thought it was fair to take 100m from Congo for a debt for which he had paid 3m, Mr Grossman said: ”Yeah, I do actually,” but he denied paying just 3m for the claim.
Mr Grossman also said he did not know that the Bosnian police said the loan had been illegally sold to him.
Vulture funds are increasingly being blocked in US courts from collecting on the debts they buy up.
In 2011, China blocked FG Hemisphere's attempts to sue China Railways for the DR Congo money and of course the British route is now stopped. We have been asked to add that Mr Grossman is clear in his response that the Bosnian police have not accused or implicated him or FG Hemisphere Associates in any wrongdoing
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20 comments Feed
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Vulture funds buy up the debt of poor nations cheaply when it is about to be written off and then sue countries such as Zambia or Liberia or DRC or Argentina.........................
Bye Bye vulture funds.......
if every country acted like these Country s who have no honor the world would distend into chaos
Mr Grossman, that also worked at Bain Capital (annother vulturefund, where mittens romney “created” jobs) is one of the many “donators” to o'bozo DEM that's full of ex bain workers and GOP mittens romney. The more vulturefunds get destroyed, the better the world gets.
“if every country acted like these Country s who have no honor the world would distend into chaos”
Total BS, untill you realize how debt is created and why not all debt should and cannot be honored, specially if it's created out of nothing and with pure fraud (illegal) placed on the nation's balance sheet..like what's happening today (include in the UK) and what happened in Argentina in the past. Do your homework first before you type shit.
1, 2 and 4.
Vulture funds and Fraudulent Bankers have to be in jail.
I,m interested,what foreign debt of Argentina was fraudulent?
Ireland where I hail from had manageable debt but our banks were out of control so our government bailed them out,landing the population with 20 years of debt but they saw that as the right thing to do,any comments?
You say:
“Why do we allow a protectorate with less than 3000 citizens to prevent our state from enjoying the full extent of the taxes accruing from the exploitation of natural resources in an EEZ around British sovereign and administered territory?”
I say:
Well...... If that happened in my South American Patria, I would just call it corruption......
But you Brits have surely much fancier words for it.....
Ohhh that…..
No sweat……..
I have had dozens of comments erased and been banned twice from MercoPress.
Some, at MercoPress, don’t like my style…..
Some others* do…..
(*Saludos Sr. G., if you are reading)
In this specific case the reasons can be:
1) I, inadvertenly, came to insult someone by pointing to yet another translation gaffe and calling him a root vegetable…… (Sorry, Mr. Editor)
2) I pasted a short passage of el “Llamamiento de la Pasionaria,” in it’s original language. (Not sorry about that)
@13 So, you have “form” then. If you were edited out every time you described a fellow poster as a turnip you would hardly have any entries left in the archive. Anyway, I now see how you came to have those other identities - to get around the censo{r],.
By the way, I didn't post at the time but I'm still smiling at the exchanges over the RFIP/Royal Malvinas Constabulary, through which a number of fellow posters showed us that, on the whole, root vegetables don't have a sense of humour.
www.youtube.com/watch?v=A4I9DMSvJxg
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There is only one Think.
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#13 “Some, at MercoPress, don’t like my style…..
Some others* do…..”
I do =)
If they had a sense of humour and could recognise irony, then they wouldn't be root vegetables..................... Would they?
(18) British_Kirchnerist
www.youtube.com/watch?v=-FucbvoFFy0
;-)
You're right again, as you always are.
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