George Bush's Favorite Vultures
How financial birds of prey are seizing Africa's AIDS medicine.
This article is from the Spring 2007 issue of Dollars & Sense: The Magazine of Economic Justice available at http://www.dollarsandsense.org
This article is from the Spring 2007 issue of Dollars & Sense magazine.
at a 30% discount.
It's quite a heartwarming story. Rock stars in designer glasses, lefty clergymen, blond-bearded anti-poverty campaigners all joining hands with George Bush and the International Monetary Fund to cut the debts of Africa's poorest nations. The money the African nations save would buy AIDS medicine. Bush did the photo-op thing in the Oval Office with Bono, and the president even popped debt relief into his State of the Union address: "the best hope for lifting lives and eliminating poverty."
However, Bush lies.
And Africans die.
Here's the reality, off camera. Billions of dollars in debt owed by African nations to the U.S. Treasury, the IMF and several European nations were, indeed, written off. But these acts of taxpayer generosity did not buy medicine. Almost all of the savings meant for Africans has been picked off by a crew of speculators known as "vultures."
Zambia, for example, won debt relief last year which was supposed to provide $40 million to improve health care in a nation where 17% of adults suffer from HIV or AIDS.
Forget the medicine. Zambia won't get it. Half the money has been snatched away by a vulture named Donegal International, an affiliate of a Washington, D.C.-based investment group, Debt Advisory International.
"Vulture" is not a name I made up. It's the label used in government circles for investors who, for a small payment, take over the debts owed by one nation to another, then use political muscle, lawsuits, forgery, or bribery to push the debtor nations to cough up payments five, ten, or twenty times the amount of the vultures' original investment.
Consider Zambia. In 1998, Romania offered to let Zambia pay only $4 million to completely write off a $30 million debt. Strangely, the African nation turned down the generous offer. Instead, one Michael Francis Sheehan, using inside information, grabbed the deal for a fund he operates, paying less than $4 million for the right to collect $30 million from Zambia. In January 1999, just weeks after Zambia rejected Romania's offer to pay only $4 million to terminate this debt, its finance ministry agreed, in writing, to pay Sheehan $15 million on that same debt.
Why would Zambia turn down an excellent deal from Romania and, instead, promise a multimillion-dollar windfall to this "vulture"? This mystery was solved when my producer at BBC Television Newsnight obtained the text of an email by Sheehan. The undated note states boldly, "The deal is going to get done for political reasons." Zambia would give Sheehan's firm the higher sum in return for a private $2 million payment to "the [Zambian] President's favorite charity."
A few weeks ago, I greeted Mr. Sheehan as he approached his customized Cadillac. It's quite a car, by the way. Sheehan, who calls himself "Goldfinger" on a Caddy owners' website, has pimped out his ride with magnesium rims and racing tires.
"It was a charitable initiative which did end up building several thousand houses," said Goldfinger. Perhaps.
Goldfinger is a small pecker compared to Paul Singer, the billionaire who controls the biggest vulture fund, Elliott Associates. Singer's group paid just $10 million for Congolese bonds on which he's already won the right to collect $127 million in a U.S. courtroom. He's now suing to parlay that into $400 million, money he may be able to collect only because the sums that Congo owed to U.S. taxpayers have been forgiven.
And Bush could put a halt to it with the stroke of a pen. Under the doctrine of "comity," the president has the constitutional power to halt the speculator's seizure of Congo's cash. U.S. courts won't let concerned citizens overturn the foreign policy established by the president via lawsuit. Instead they are awaiting Bush's note to halt the collection actions. Bush has sent nothing.
Why? Did I mention that since Ken Lay's checkbook was laid to rest, Singer is now the big sugar-daddy for the Republican Party? He put $1.3 million into the Republican campaigns in 2004 (including funding the "Swift Boat" smear of John Kerry). Singer has committed $10 million to Rudy Giuliani's presidential campaign.
Does Bush know that the debt relief for the Congo is getting eaten by Singer the Vulture? Until February 15, Bush could pretend he knew nothing. But on that day, Congressman John Conyers confronted Bush, nose to nose, in the Oval Office, wanting to know why the president had failed use his powers to stop Singer from ripping off the Congo's money—in effect, money donated in the form of debt forgiveness by U.S. taxpayers.
Conyers also wanted the president to explain why the Justice Department stalled an investigation of "Goldfinger" for the $2 million payment to the former president of Zambia. Conyers pointed out, as if the president didn't know, that pay-outs for profit violate anti-bribery laws, including the Foreign Corrupt Practices Act.
Bush promised to "take care of it all in a week." That was three months ago.