http://www.democracynow.org/article.pl?sid=07/02/15/1528209
"Vulture Fund" Company Seeks $40 Million Payment from Zambia on $4 Million Debt
"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. Investigative journalist Greg Palast reports on one company trying to collect $40 million from the government of Zambia after buying its debt for $4 million. [includes rush transcript]
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GREG PALAST: Yeah, 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, not only get back the money that they put down -- in the case of Zambia, $3 million by Mr. Goldfinger -- or they'll try to get $40 million. In the case of the number one vulture here in New York City, Paul Singer, he's paid about $10 million and expects to collect $400 million from the Congo.
AMY GOODMAN: And tell us who these people are.
GREG PALAST: Who they are, in the case -- for example, Paul Singer is the number one donor to George Bush at the moment, has given over a million-and-a-half dollars in the last campaign. He's Rudy Giuliani's chief fundraiser, raising $15 million now for his presidential campaign. He's a billionaire. He controls a $7 billion fund, and he's obviously very close with the Bush administration, which is crucial, absolutely crucial to his making these profits.
AMY GOODMAN: Why?
GREG PALAST: Under US law, the President of the United States has the absolute power to stop any vulture fund from collecting money from a poor nation, under the US Constitution. It's called the power of comity. The African nations are pleading with George Bush to stop his big donors from collecting. Now, what's happening is, is that in the State of the Union, George Bush said we have to give debt relief to the poorest nations. The US taxpayers are putting up more than a billion dollars to write off the debts of the African nations, but what Bush isn't saying is that he is then allowing that money to be captured by his biggest donors, like Paul Singer, so that the money for debt relief is not going to the African nations, where they're desperately in need for, you know, funding for medicine for AIDS, for education, which is what it's earmarked for. These guys are actually going into US courts and saying, "Give us the money." Now, George Bush, again, has the absolute power, and the judges are waiting for him to write a note. They're saying, "George Bush can ask us to dismiss this case in one minute, but we need something in writing from the White House."
AMY GOODMAN: At the end of 2005, Zambia announced the United States had agreed to cancel debts owed by Zambia worth $280 million. So what's happened in this past year?
GREG PALAST: OK. The US taxpayer takes a hit. We pay $280 million. Zambia saves, in interest, around $40 million. The problem is, is that you have the vulture go into court in London and then use the court judgment in London to come into the United States and seize the $40 million from the government of Zambia's bank accounts in the United States, so that the money never gets to Zambia or never gets to be used by Zambia to buy medicine--