PERU: Vulture funds hover over poor countries

The Jubilee 2000 anti-debt coalition has condemned the practice of "vulture funds", private hedge funds which buy Third World countries' debt cheap and then sue for full repayment, after one such fund received a one-off $58 million payment from Peru to settle a debt.

Hedge fund Elliott Associates L.P. paid $11 million in 1996 on the secondary debt market to buy $20 million of Peru's sovereign debt and then sued for full repayment plus capitalised interest. The US Federal Court of Appeal ruled in its favour and it received $58 million from the impoverished South American country on October 7, a $47 million profit.

The individuals involved in the case have conducted similar actions against Panama, Ecuador, Poland, Cote d'Ivoire, Turkmenistan and the Democratic Republic of the Congo.

Liana Cisneros, the head of Jubilee 2000s Latin America Campaign, said, "These people are trading in human misery. Elliott Associates L.P. are picking over the bones of the Peruvian economy like a pack of vultures. It may be just business to them, but to the Peruvians it represents schoolbooks, medicine and clean water."

BY SEAN HEALY

From GLW issue 426