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Dear Chris,
Tell your friend to find a Court of
Justice.
John Wilson.
-----Original Message-----
From: Chris Chaplin <[EMAIL PROTECTED]> To: s11 list <[EMAIL PROTECTED]>; leftlink <[EMAIL PROTECTED]>; Greens - Activist list <[EMAIL PROTECTED]> Date: Wednesday, 1 November 2000 1:42 Subject: [melb2000-announce] Jubilee 2000 urges action against 'Vulture Funds' The following was originally posted by Deb Foskey
to <[EMAIL PROTECTED]> on
31/10/2000. Apologies for X-postings....
Chris --------------------------------------------------------------------- Jubilee 2000 - http://www.jubilee2000uk.org/
Dear friends
In the last few weeks Jubilee 2000 has uncovered a previously
hidden, contemptible aspect of the debt crisis: the unregulated greed of
'vulture funds', which make a killing from the debts of the poorest countries. I
am writing to ask you to take action against this trade in human misery, and to
call for a change in the law to prevent it.
Best wishes
Marlene Barrett Head of Campaigns Jubilee 2000 Coalition
UK
TAKE ACTION AGAINST VULTURE FUNDS WHICH PREY ON THE POOREST
COUNTRIES
'Vulture funds' buy up the debt of impoverished countries at
bargain rates on the secondary market, and then sue for full repayment plus
interest, even from countries which are getting debt relief from other
creditors. Jubilee 2000 is calling for tougher controls to prevent private
investors from using 'vulture funds' to make millions out of the debt crisis in
developing countries.
New York-based hedge fund Elliott Associates L.P. bought $20
million worth of Peru's debt for just $11 million in 1996. Their intention was
clear: Paul Singer, a general partner at Elliott Associates, said "Peru
would either... pay us in full or be sued." Elliott Associates then pursued
the Peruvian government through the courts for full payment of the debt plus
capitalised interest, finally receiving a payment of $58 million on Oct 7 2000.
In the process, Elliott Associates blocked Peru from paying other creditors
first, nearly forcing a default on its debt payments, which would have thrown
the country further into economic chaos.
The hedge fund was the only one of Peru's creditors to operate
outside a package designed to help Peru manage its $3.7 billion 'Brady bond'
debt (a mechanism for restructuring unpayable commercial debt). If the New York
hedge fund had opted to participate with all the other Brady bond holders, it
still would have made a hefty profit, realising about $10 million. But Elliott
Associates L.P. sued the Peruvian government for full payment and pushed through
a change in New York law to claim capitalised interest on the repayments. The
hedge fund then used court injunctions in Canada, Belgium, Luxembourg, Holland,
Germany and the UK to prevent the Peruvian government from repaying other
creditors until the hedge fund had received payment in full. Had Peru not paid
the $58 million to Elliott Associates L.P., they would have been forced to
default on their Brady plan, rocking market confidence.
The individuals involved in the Peru case, Singer, adviser Jay
Newman and attorney Michael Straus, have amongst them carried out similar
practices concerning debt from Panama, Ecuador, Poland, Côte d'Ivoire,
Turkmenistan, and the Democratic Republic of Congo.
Jubilee 2000 has helped to put the spotlight on these ruthless
practices and is calling for tough controls to prevent them. Elliott Associates
responded by calling Jubilee 2000's viewpoint 'unsophisticated' and arguing that
it is "naïve to expect private entities to forego sound business
practices and fiduciary obligations". Jubilee 2000 maintains that making
profit by forcing an indebted country to the brink of default is not 'sound
business practice'. When a company goes bankrupt, legal controls ensure that
creditors share the burden of the cost of debt. Similar controls are needed at
international level to ensure that when a country faces economic bankruptcy,
private investors cannot see their own payments met at the expense of other
creditors or of the government itself. An independent arbitration process must
be established, to allow fair and transparent negotiation for both debt
cancellation and new lending.
What you can do
Please send as many letters, faxes or emails as you can to the
following recipients, and circulate this action as widely as
possible.
1. Write to the individuals involved at Elliott Associates:
Paul Singer, Jay Newman and Michael Straus.
* Tell them what you think of their practice of making money from the bankrupt economies of heavily indebted poor countries. * Explain that millions of people worldwide support the principle of debt cancellation as a means of freeing up resources for schools, medicines and clean water. * Call on them to end their actions, which are a clear breach of moral justice and undermine attempts to reduce poverty Elliott Asssociates L.P.
712 Fifth Avenue 35th Floor New York NY 10019 USA Tel: 00 1 212 974 6000 Fax: 00 1 212 974 2092 2. US Treasury Secretary Larry Summers, responding to the
Elliott case, said that it is not "appropriate for Treasury to get involved
in this matter". Jubilee 2000 believes that the US government should take
responsibility for the actions of US companies, especially where they undermine
the government's own involvement in initiatives to reduce the debts of the
poorest countries.
Write to US Treasury Secretary, Larry Summers.
* Ask him to publicly condemn the actions of vulture funds which prey on the poorest countries. * Remind him that the G7 leaders promised regulation of hedge funds following the Asian and Russian crises in 1997/8 and the destabilising role played by the collapse of hedge fund Long Term Capital Management (LTCM), but have not yet taken any action. * Call on him to introduce legislation to protect the interests of sovereign debtors like Peru and regulate the practices of vulture hedge funds to prevent similar cases in future. Larry Summers
US Treasury 1500 Pennsylvania Avenue, NW Washington, D.C. 20220 Tel: 00 1 202 622 2000 Fax: 00 1 202 622 6415 Email: [EMAIL PROTECTED] 3. New York State law plays a central role in the vulture fund
cases, because Brady bonds are usually managed under the state legislation. New
York Senate candidates Hillary Clinton and Rick Lazio can use their influence to
promote an end to the unregulated greed of vulture funds like Elliott
Associates.
Write to Hillary Clinton and Rick Lazio.
* Call on them to publicly condemn the actions of vulture funds which prey on the poorest countries * Tell them it is a dishonour for New York, home to many communities from developing countries, to be associated with the practices of these vulture funds * Call on them to promote an amendment to state law to protect the interests of sovereign debtors like Peru and outlaw the practices of vulture hedge funds Hillary Clinton
450 Seventh Avenue, Suite 804 New York, NY 10123-0073 Tel: 00 1 212 239 2000 Fax: 00 1 212 293 3411 Email: [EMAIL PROTECTED] Rick Lazio
PO Box 5063 Bay Shore, NY 11706 Tel: 00 1 631 666 3020 Fax: 00 1 631 666 3087 Email: [EMAIL PROTECTED] 4. The practices of vulture funds reinforce the case for
creating a comprehensive international arbitration process.
Write to the Italian Government, as chair of the G8 group of
countries in 2001
* Explain the need for an independent arbitration process, to provide fair and transparent negotiation between borrowers and lenders, and to prevent ruthless vulture funds from undermining the provision of debt cancellation or restructuring by other creditors. * Note the support for such a process voiced by the United Nations Secretary Kofi Annan, who has called for an entirely new approach to the debt problem. * Call on Italy to use its influence as G8 chair, to promote the establishment of an international arbitration process, overseen by the United Nations or similarly independent body. President of the Council of Ministers Giuliano Amato
Presidenza del Consiglio dei Ministri Palazzo Chigi Piazza Colonna 370 00187 Roma ITALY Email: [EMAIL PROTECTED] For more information visit http://www.jubilee2000uk.org/news/vulture141000.html
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