The House of Commons is to debate a bill to restrict the activities of 'vulture funds' - investment companies, often based off-shore, which buy up poor country debts cheaply, and then sue for massive profits.
The Debt Relief (Developing Countries) Bill is supported by anti-poverty and debt cancellation campaigners, including the Jubilee Debt Campaign.
It is a private member’s bill but has received the backing of both the government and the Liberal Democrats. Proposed by Andrew Gwynne MP, it will have its crucial Second Reading on Friday 26 February.
The Bill would impede the ability of vulture funds to recover debts through the British courts from countries which have received debt relief under the Heavily Indebted Poor Countries (HIPC) initiative.
Vulture funds are made up of hedge funds and other private investment firms. Campaigners point out that they take advantage of the relaxed laws in British courts to buy up debt at dramatically reduced prices and sue poor countries for their full value plus costs.
Only last November, the High Court in London awarded two vulture funds $20 million from Liberia for debts dating back to the 1970s.
So far vulture funds have amassed over $1.2 billion from such cases, many of which take funds from countries that have qualified for the HIPC initiative, which provides debt relief for those countries with the most severe levels of poverty.
Supporters of the Bill say that profits made by vulture funds not only counteract the positive impact that debt cancellation and aid provide, but also prevent such countries from carrying out their human rights obligations.
Campaigners are optimistic that the Bill will become law if passed at the Second Reading. Early Day Motion 618, in support of the Bill, has been signed by 167 MPs so far - in the top 10 of over 800 motions in this parliamentary session.