17.11.11

Bureau Recommends: ‘Vulture Fund’ sues Congo for $100m over $3m debt

The Bureau recommends a joint investigation by Newsnight and the Guardian into moves by an American speculator to sue the Democratic Republic of Congo for $100m over a $3m loan.

Peter Grossman runs a ‘vulture fund’, which purchases the debt of poorer nations before suing for many times their original value. Although such funds are illegal in the UK, Mr Grossman’s fund is pursuing the debt through Jersey, which is not covered by the ban.

The Guardian/Newsnight investigation has also established that the original debt, a loan from Yugoslavia to Zaire from 30 years ago, was illegally sold to Mr Grossman’s fund FG Hemisphere.

The chief of financial police in Bosnia has claimed that the deal was illegal, and the Centre for Investigative Reporting in Sarajevo obtained a police report recommending that the former prime minister of Bosnia be indicted over the sale of the loan.

When approached by Newsnight and asked whether he thought it was fair to take $100m from the DRC over a loan for which he paid $3m, Mr Grossman replied, ‘Yeah, I do actually’.

However, he denied having paid $3m for the loan, and said he was unaware that it had been sold illegally.

A number of charities are now calling on Jersey to introduce its own version of the vulture fund ban in order to save the $100m.

For Newsnight’s full coverage of the story, click here.

For the Guardian’s coverage, click here.

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