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Jersey plans new law to stop vulture funds using its courts Jersey plans new law to stop vulture funds using its courts
(40 minutes later)
Jersey has proposed introducing legislation designed to stop international financiers and debt speculators from pursuing some of the world's poorest countries for inflated repayments through its courts.Jersey has proposed introducing legislation designed to stop international financiers and debt speculators from pursuing some of the world's poorest countries for inflated repayments through its courts.
A Guardian/Newsnight investigation into the activities of vulture funds last year revealed that one in particular, New York based FG Hemisphere, was using Jersey to pursue the Democratic Republic of Congo for a payment of up to $100m (£63m). FG Hemisphere had bought the original debt less for than $3m. A Guardian/Newsnight investigation into the activities of vulture funds last year revealed that one in particular, New York-based FG Hemisphere, was using Jersey to pursue the Democratic Republic of Congo for a payment of up to $100m (£63m). FG Hemisphere had bought the original debt for less than $3m.
In an interview following the Guardian/Newsnight investigation, the country's outgoing chief minister, Terry Le Suer, said it was Jersey's duty to "third world countries and to justice as well" to investigate whether or not vulture funds should be made illegal.In an interview following the Guardian/Newsnight investigation, the country's outgoing chief minister, Terry Le Suer, said it was Jersey's duty to "third world countries and to justice as well" to investigate whether or not vulture funds should be made illegal.
The decision to propose a new law was taken following a public consultation on the subject, which closed in December 2011.The decision to propose a new law was taken following a public consultation on the subject, which closed in December 2011.
The new chief minister of Jersey, Senator Ian Gorst, has said of the proposed new bill: "By bringing forward a law to discourage so-called vulture funds from using our courts, Jersey will be sending a clear and positive message that ours is a well-regulated, co-operative and transparent jurisdiction."The new chief minister of Jersey, Senator Ian Gorst, has said of the proposed new bill: "By bringing forward a law to discourage so-called vulture funds from using our courts, Jersey will be sending a clear and positive message that ours is a well-regulated, co-operative and transparent jurisdiction."
Jersey's decision to change the law to shut down the country as a destination for vulture funds to seek repayments has been welcomed by campaigners. Jersey's proposal to change the law been welcomed by campaignersTim Jones at Jubilee Debt Campaign said the proposed legislation would be important step, but added: "Jersey haven't confirmed to us that it will even be as good as the UK legislation at the moment.
Tim Jones at Jubilee Debt Campaign said the proposed legislation would be "an important step" but added: "Jersey haven't confirmed to us that it will even be as good as the UK legislation at the moment … on the DRC-FG Hemisphere case, the key is how quickly the States of Jersey pass legislation. And the UK act only applies to certain countries and certain debts, so we think all governments should go further in regulating vulture fund activity." "On the DRC-FG Hemisphere case, the key is how quickly the States of Jersey pass legislation. And the UK act only applies to certain countries and certain debts, so we think all governments should go further in regulating vulture fund activity."
Vulture funds buy up distressed debt owed by developing countries for a greatly reduced price, often because it is seen as high risk due to war or natural disasters. Once the country in question stabilises, payment can be sought where ever state-backed entities are registered. Vulture funds buy up distressed debt owed by developing countries for a greatly reduced price, often because it is seen as high risk due to war or natural disasters. Once the country in question stabilises, payment can be sought wherever state-backed entities are registered.