A coali­tion of 50 advo­cacy groups are call­ing on the U.S. Con­gress to stop the prac­tices of Vul­ture Funds. The funds buy coun­tries debt at pen­nies on the dol­lar but charge them huge inter­est on the pur­chases. Once the pay­ments are late, the funds sue the gov­ern­ments for what they feel is owed to them.

From Afrik.com, writer Muri­tala Bakare gives us a fur­ther descrip­tion of the vul­ture funds practice.

Accord­ing to the group of fifty advo­cacy insti­tu­tions which dis­cov­ered the “unscrupu­lous loan trans­fer” called VULTURE funds, Highly Indebted Coun­tries’ debt are pur­chased at pen­nies to dol­lar and the finan­cial firms “aggres­sively pur­sue their claims through the seizure of assets, lit­i­ga­tion and polit­i­cal pres­sure, seek­ing repay­ments that are far in excess of the amount that they paid for the debt,” the group say.

For instance, FG Hemi­sphere Fund based in the United States was suc­cess­ful in its court case against the Demo­c­ra­tic Repub­lic of Congo for US$105million for a US$30million loan bor­rowed in 1980 by the gov­ern­ment of Mobutu Sese Seko. The DRC was ordered to pay nearly US$80,000 a week by a US judge.

“The DRC is being forced to siphon these des­per­ately needed resources from ini­tia­tives like health­care, edu­ca­tion, com­bat­ing HIV/AIDS, and access to clean water to its impov­er­ished cit­i­zens to pay off wealthy cor­po­ra­tions such as FG Hemi­sphere,” said Melinda St. Louis, deputy direc­tor of the Jubilee USA Network.

“This runs totally counter to the progress made by the U.S. and the inter­na­tional com­mu­nity on debt can­cel­la­tion, through the World Bank’s Highly Indebted Poor Coun­try (HIPC) effort,” St. Louis added.

Renowned experts have been cam­paign­ing hard against finan­cial aid to Africa and have argued it does more harm than good. Dem­bisa Moyo in her con­tro­ver­cial book: Dead Aid, warned that aid dam­ages and impov­er­ishes Africa’s economies.

Michael Stul­man, asso­ciate direc­tor of pol­icy and com­mu­ni­ca­tions at Africa Action said: “Since 1996 donor coun­tries — includ­ing the U.S. — have com­mit­ted 90 bil­lion dol­lars in bilat­eral and mul­ti­lat­eral debt relief to over 30 coun­tries. VULTURE funds profit from this debt relief.”

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