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Last Updated: Friday, 1 June 2007, 09:34 GMT 10:34 UK
World Bank offers 'vulture' aid
A farmer in a maize field in Zambia
Zambia is one country that has been hit by vulture funds
The World Bank has said it will boost its efforts to reduce the commercial debts of poor countries, which are preyed on by so-called "vulture funds".

To do this, the Bank said it will now extend the life of its debt reduction facility, which helps countries buy back their commercial debts.

Vulture Funds buy up a poor nation's debt at knockdown prices, before going to court to recover the full amount.

UK Chancellor Gordon Brown has branded such schemes "morally outrageous".

'Penalising the poor'

Danny Leipziger, the World Bank's vice president for poverty reduction and economic management, said that extending the life of its grant-based debt reduction facility would help curb the increasing litigation against poor countries by vulture funds.

"The spate of litigation by vulture funds against countries receiving debt relief will penalise some of the world's poorest countries unless we tackle this aspect of commercial debt more actively," he said.

The Bank estimates that more than one-third of the countries which have qualified for its debt relief have been targeted with lawsuits by at least 38 litigating creditors, with judgments totalling $1bn (505m) awarded in 26 of these cases.

Zambia is one recent case after it agreed last month to pay $15.5m to a British Virgin Isles-registered firm to settle a case at London's High Court.

The company in question - Donegal International - had taken the country to court seeking payment of a debt and late payment penalties.




SEE ALSO
Zambia pays 'vulture fund' $15m
24 Apr 07 |  Business
Zambia loses 'vulture fund' case
15 Feb 07 |  Business
Brown condemns poverty 'vultures'
10 May 02 |  Politics

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