Tuesday, June 12, 2007

Vulture Funds and the 2008 Election

A vulture fund is a financial organization that specializes in buying securities in distressed environments, such as high-yield bonds in or near default, or equities that are in or near bankruptcy. Vulture funds target not only companies but also whole countries.

In the African country of Zambia, over 70 percent of people live in poverty. The average wage is just over a dollar a day, one in five people are infected with HIV/AIDS and life expectancy is merely 37.7 years. Yet, in the midst of qualifying for debt cancellation by G-8 nations, the Donegal Corporation, owned by American businessman Michael Sheehan, bought Zambian debt from Romania. In April, British courts awarded Donegal 15 million dollars, almost five times the value Donegal paid for the debt.

The morally bankrupt actions of vulture funds render the commitments to debt relief made by the U.S. and other wealthy nations meaningless. U.S. taxpayer money, pledged to provided relief and assistance through debt relief, will fall into the hands of these greedy corporations. At the upcoming G-8 Summit President Bush should call for a commitment by world leaders to address debt relief and vulture funds. The U.S. Treasury should follow the lead of U.K. Chancellor Gordon Brown and limit the awards vulture funds can claim for these debts. Congress must examine this practice and its impact on our overall foreign policy interests. The international community must employ effective means to protect countries like Zambia who have fallen prey to these vulture funds, including implementing fair and transparent international mechanisms to resolve these matters.
Greg Palast of the BBC last night posted this report. It is about 15 minutes long but well worth the investment of time. How can we do nothing while people are literally dying due to these vulture funds?

Michael Sheehan, the main owner of Donegal Corp. is also a huge contributor to the presidential campaign of Rudy Giuliani. Remember that old saying "You can judge a man by his friends", what does that say about Rudy Giuliani?

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