Loan Sharking - Grand Scale

The BBC is reporting on the rise of personal debt but another BBC report prepared by Greg Palast for Newsnight exposes the hidden loan sharks that are exploiting the poverty of the Third World nations and basically sending around the debt collectors to their capitals . An interview can be seen and listened to at Democracy Now


“Vulture fund” companies buy up the debt of poor countries at cheap prices, and then demand payments much higher than the original amount of the debt, often taking poor countries to court when they cannot afford to repay . Vulture fund is a term that’s used for bond speculators who take the bonds, the cheap debt of the third world, that may sell ten cents on the dollar, because no one expects to ever collect on these debts, they buy up the debts really cheap, and then they use political muscle, bribery or lawsuits to try to squeeze til the pips squeak , as they say .

One company , Debt Advisory International (DAI) owned by Michael Sheenan , has won the right to collect $20 million from the government of Zambia after buying its debt for $4 million.
Here's how the vultures got Zambia. In 1979, Romania lent them $15 million. By 1998, Zambia was broke, so Romania offered to write off the entire debt for just $3 million. But before the deal was final, a vulture swooped in, and somehow snatched Romania’s cheap offer for his own company. Michael Sheehan and his associates are now suing Zambia, not for the $3 million they paid, but for the original debt, plus interest: $42 million.
Then there is Elliott Associates of billionaire Paul Singer. Singer practically invented the vulture fund. In 1996, he bought up some of Peru's debt for $11 million, then threatened to bankrupt Peru if they didn't give him $58 million. He got his $58 million.

Then Singer bought some discounted debt from Congo Brazzaville for only about $10 million. His company then sued the Congo and turned the $10 million into $127 million . Singer's company says the Congo government is corrupt and hid assets from creditors. Courts have agreed, allowing Singer to seek tripled damages under US racketeering law. They could get $400 million.

Gordon Brown to the United Nations :
"We particularly condemn the perversity where Vulture Funds purchase debt at a reduced price and make a profit from suing the debtor country to recover the full amount owed - a morally outrageous outcome".

That was 5 years ago .

Saying something and doing something are very much two different things for politicians .