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Last updated: 26 february, 2010 - 16:36 GMT

Vulture funds: UK MPs propose law to end debt relief profiteering

Vulture

Campaigners for lower international debts are backing a proposed law in the UK parliament called the Debt Relief (Developing Countries) Bill.

The idea is to restrict the activities of "vulture funds" which work like this:

  • A developing country borrows money.
  • It cannot pay it back.
  • A vulture fund buys the debt at a heavy discount to reflect the possibility that it may never get the money.
  • The rich governments then say they are writing off much of the developing country's debts.
  • The vulture fund is still there and says it will not write anything off and will sue to get the money.

Recently, two funds won the right to recover $30m from Liberia, which is over 5% of the government's annual revenue.

Greg Palast has been researching this for the BBC.

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Ellen Johnson-Sirleaf

Liberia's president wants to see an end to vulture funds

The judge hearing that case in Britain, Mr Justice Barton, said "Liberia is a poor country, and cannot afford it," but he said the law obliged him to find against Liberia.

Sally Keeble is a British member of parliament who is a co-sponsor of the new law.

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Liberia's president, Ellen Johnson-Sirleaf, describes how much difference the proposed British law make to Liberia.

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First broadcast 25 February 2010

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