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Vulture fund ruling is a victory for poor people, says Christian Aid

July 18 2012 - Christian Aid today welcomed the Privy Council's decision to reject a vulture fund's claim for US$100 million from one of the poorest countries in the world.

And it called for the Channel Island of Jersey to bring its law into line with the UK to prevent similar claims in future.

US-based FG Hemisphere had sought settlement of a debt for a power line contract incurred by Zaire, now the Democratic Republic of Congo, in the days of the late ruler Mobutu Sese Seko.

After acquiring the original debt from an energy company based in Bosnia, FG Hemisphere added interest and claimed against a Jersey-registered company with a stake in the DRC’s state mining company Gecamines.

Although a number of countries have banned claims from vulture funds, which pursue debts against countries in the developing world,  they are still allowed in Jersey.

In a ruling yesterday (July 17) the Privy Council, the ultimate court of appeal for Jersey, rejected FG Hemisphere’s claim that Gecamines as a state owned company was responsible for the debt.

Christian Aid’s Senior Economic Justice Adviser Joseph Stead said: 'The Privy Council ruling is a victory for the people of the DRC and should prompt Jersey to follow the UK's lead and stop vulture funds from exploiting its courts to profit from the debts of the poorest. 'The case also raises wider questions about why Jersey was ever involved in a fight between a Delaware vulture fund and a mining company owned by the DRC.

'The secrecy that tax havens offer has a deeply corrosive effect on developing countries. It urgently needs lifting so that all sides can be held to account for their activities.’

At least 54 companies, many based in tax havens, are known to have taken legal action against 12 of the world's poorest countries in recent years, for claims amounting to $1.5 billion. The World Bank has described such activities as ‘a threat to debt relief efforts’.

The UK’s refusal to allow such claims recently helped Liberia save more than US$40 million, after it was pursued by two vulture funds for a debt dating back to the 1970s. However, the UK restriction does not apply to Overseas Territories and Crown Dependencies such as Jersey.

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If you would like further information please contact Rachel Baird on 0207 523 2446 or rbaird@christian-aid.org

1. Christian Aid works in some of the world's poorest communities in nearly 50 countries. We act where the need is greatest, regardless of religion, helping people build the lives they deserve.

2. Christian Aid has a vision, an end to global poverty, and we believe that vision can become a reality. Our report, Poverty Over, explains what we believe needs to be done – and can be done – to end poverty.  Details at http://www.christianaid.org.uk/Images/poverty-over-report.pdf

3. Christian Aid is a member of the ACT Alliance, a global coalition of 100 churches and church-related organisations that work together in humanitarian assistance and development.  Further details at http://www.actalliance.org

4. Follow Christian Aid's newswire on Twitter: http://twitter.com/caid_newswire

5. For more information about the work of Christian Aid visit www.christianaid.org.uk