Jersey, IoM To Outlaw 'Vulture Funds'

by Jason Gorringe, Tax-News.com, London

06 February 2012

The Isle of Man and Jersey have announced that they are to draft legislation designed to stop creditors, including so-called 'vulture' funds, from using the territories' judicial systems to undertake 'inequitable' transactions where the debts of heavily indebted poor countries (HIPCs) are bought for a fraction of their price only for them to be pursued for full value plus interest.

The decision mirrors an earlier one taken by the United Kingdom in the UK Debt Relief (Developing Countries) Act 2010. To date, the UK is the only country in the world to have enacted a similar law to limit practices that could undermine international debt relief.

The law was introduced in response to a joint initiative between the IMF and World Bank to provide debt relief to HIPCs which qualify for cancellation of most debts to the World Bank, IMF and the governments of rich countries. Prior to the introduction of the Act some debts fell outside the scope of the original initiative.

The Jersey government said the proposed legislation would aim to limit practices that could undermine international debt relief efforts, and demonstrates Jersey’s commitment to play its part in the global effort to support measures which assist the world’s most heavily indebted poor countries.

The Isle of Man's Treasury Minister Eddie Teare said: “We have no evidence of vulture fund activity in the Isle of Man and as an internationally responsible country we do not want it here. The Manx government is happy to introduce legislation to ensure that our island is not used for the disreputable business of exploiting Heavily Indebted Poor Countries.”

Recommended