A new type of hedge fund was invented in the mid-1990s. It was eponymously called ‘vulture fund.’ These funds are used to ‘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 the debt from the original holder at an immensely undervalued price of its paper value. They, then, proceed to sue the country in Britain or the US, asking for 100 percent of the debt.  If the debt is not paid posthaste, interests will expectedly accrue over the years. Add to these are the court costs.

In reality, these so-called vulture funds allow some of the richest people in the world to make ‘profit margins of 500 per cent by shaking money out of the poorest people in the world – for debt they did not incur.’

If the poor debtor country cannot pay, the vulture fund runs after anyone who gives the country money, forcing these country donors to give them the money instead. For instance, Belgian aid payments to the Congo can be frozen by a court order and redirected to the bank account of the owner of the vulture fund.

Some of the countries whose people have been unwittingly victimized by such tactics of vulture funds are Zambia, Malawi, Liberia, and Peru.

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Via The Independent