A United Nations human rights expert today urged Jersey to enact laws to restrict the ability of so-called “vulture funds” to use the British crown dependency’s courts to sue heavily indebted poor countries.
Cephas Lumina, the UN Independent Expert on foreign debt and human rights, issued a statement calling on the Government of Jersey – one of the Channel Islands between the British mainland and France – to introduce legislation similar to that adopted last year in the United Kingdom.
The UK laws made permanent a temporary law to restrict the actions of vulture funds, which buy up defaulted debt of poor countries at heavily discounted prices and then demand repayment of the debt’s full value, either through litigation, the seizure of assets or political pressure.
But the laws do not apply to the UK’s crown dependencies and overseas territories such as Jersey, Guernsey, the British Virgin Islands and Cayman Islands.
The US vulture fund FG Capital Management, formerly known as FG Hemisphere, has sued the Democratic Republic of the Congo (DRC) in Jersey’s courts for $100 million of debt obligations, with media reports indicating that the debt was bought by the fund for about 3.3 per cent of its total value.
Mr. Lumina stressed that vulture funds “unfairly deprive poor countries of the gains from international debt relief efforts meant for the improvement of delivery of basic social services such as safe drinking water, health care, education and housing.
“The international community must not accept this immoral and unfair deprivation of scarce financial resources from the world’s poorest countries,” he added.
The Independent Expert said he welcomed the Jersey Government’s current consultations on the issue and asked them to enact the laws “as a matter of urgency.”