We Must Stop the 'Vulture Funds' that Feed on the World's Poor

by Johann Hari

Would you ever march up to a destitute African who is shivering with Aids and demand he "pay back" tens of thousands of pounds he didn't borrow - with interest? I only ask because this is in effect happening, here, in British and American courts, time after time. Some of the richest people in the world are making profit margins of 500 per cent by shaking money out of the poorest people in the world - for debt they did not incur.

Here's how it works. In the mid-1990s, a Republican businessman called Paul Singer invented a new type of hedge fund, quickly dubbed a "vulture fund." They buy debts racked up years ago by the poorest countries on earth, almost always when they were run by kleptocratic dictators, before most of the current population was born. They buy it for small sums - as little as 10 per cent of its paper value - from the original holder and then take the poor country to court in Britain or the US to demand 100 per cent of the debt is repaid immediately, plus interest built up over years, and court costs.