Vulture Funds defeated.

Last month saw a rare legal judgement against the activities of vulture funds. These funds target the debts of countries that are in financial difficulties, buying up those debts on the cheap from existing creditors. They then sue the countries for the full amount thereby making massive profits.
One such fund FG Hemisphere, run by US based multi- millionaire debt collector Peter Grossman sought to claim $100 million from the Democratic Republic of Congo (DRC) after FG Hemisphere bought the debts under suspicious circumstances for around $3.3 million. The debts originated from a loan from the former Yugoslavian state to the then dictator General Mobutu of Zaire (now DRC) to build a power plant in exchange for Yugoslavian involvement in the build.
FG Hemisphere was claiming assets held by the mining company GTL which are owed to the Congolese state mining company Gecamines. GTL is registered in Jersey. It is 55 per cent owned by US company OM Group, 25 per cent owned by Forrest Group and 20 per cent by Gecamines.
According to the UN Human Development Report (2011), the Democratic Republic of Congo is the poorest country in the world.
Having bought the debt on the cheap long after the former Yugoslavian state had given up on receiving payments, Grossman sought to use legal loopholes to sue Gécamines.
The case was heard in the tax haven of Jersey, and it seems likely that this was chosen because of its rather arcane and opaque tax and financial regulation. Neither the original debt nor the Congolese state are directly related to Jersey. However the UK Privy Council - the Court of Appeal for Jersey -overturned a previous decision to allow Grossman to sue Gécamines, on the basis that even though Gécamines is a state owned company, it is a separate legal entity and as such is not responsible for DRC's debt.
This clearly is good news for the people of DRC and possibly for all those who suffer at the hands of extortionate and morally bankrupt yet entirely legal practices of vulture funds. The International Money Fund, itself no friend of the poor, has said vulture funds are engaged in claims seeking a total of $1.47bn from the world's poorest countries.
DDCI welcomes this ruling and hope it leads to a further reduction in vulture fund activities.