The United Nation’s Independent Expert on the Effects of Foreign Debt and other Related International Financial Obligations on Human Rights, Dr Cephas Lumina, will visit Australia this week to discuss efforts to prevent profiteering by vulture funds. Vulture funds are operated by private investment firms which purchase foreign debt of developing countries at a heavily discounted price and then seek to recover the full amount of debt with significant interest and spurious fees through legal proceedings based in countries such as the US, UK and Australia.
A ruling in the NSW Supreme Court in November last year found in favour of a vulture fund operator, ordering the Democratic Republic of Congo (DRC) to pay well in excess of $30million, in addition to exorbitant interest and legal fees. This is more than twice the amount of humanitarian assistance that Australia has provided the DRC since 2006.
Rachel Ball, Director of Policy of the Human Rights Law Resource Centre, which is co-hosting a seminar featuring Dr Lumina with Monash University’s Castan Centre for Human Rights Law , said the operation of vulture funds severely undermines Australia’s contribution to debt relief programs.
“Australia’s legal system is being exploited for unscrupulous financial gain and the government needs to take practical steps to help stamp out such practices,” Ms Ball said.
“The operation of vulture funds is a vile practice. Countries already struggling with crippling levels of poverty are being lumped with overblown debt arrangements that are unrealistic and immoral. The good news is it can be stopped by introducing the appropriate legislation,” Ms Ball said.
Dr Lumina last year commended the UK for passing the landmark Debt Relief (Developing Countries) Act which he said was the first time a country had banned profiteering by vulture funds.
Dr Lumina will be speaking at a free public forum, Preying on the Poor; Vulture Funds, Debt Relief and Human Rights in Developing Countries, at 12:30pm Thursday 10 February 2011, Monash University Law Chambers, 472 Bourke St, Melbourne.