I 

111TH CONGRESS 

1ST SESSION H. R. 2932 

To prevent speculation and profiteering in the defaulted debt of certain 

poor countries, and for other purposes. 

IN THE HOUSE OF REPRESENTATIVES 

JUNE 18, 2009 

Ms. WATERS (for herself, Mr. CONYERS, Mr. BACHUS, Ms. MOORE of Wisconsin, Mr. PAYNE, Mr. MEEKS of New York, Mr. GUTIERREZ, Ms. 

WASSERMAN SCHULTZ, Ms. SCHAKOWSKY, Ms. LEE of California, Mr. 

HINCHEY, and Ms. NORTON) introduced the following bill; which was referred to the Committee on the Judiciary, and in addition to the Committee on Financial Services, for a period to be subsequently determined 

by the Speaker, in each case for consideration of such provisions as fall 

within the jurisdiction of the committee concerned 

A BILL 

To prevent speculation and profiteering in the defaulted debt 

of certain poor countries, and for other purposes. 

1 Be it enacted by the Senate and House of Representa2 tives of the United States of America in Congress assembled, 

3 SECTION 1. SHORT TITLE. 

4 This Act may be cited as the ‘‘Stop Very Unscrupu5 lous Loan Transfers from Underprivileged countries to 

6 Rich, Exploitive Funds Act’’ or the ‘‘Stop VULTURE 

7 Funds Act’’. 


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1 SEC. 2. FINDINGS. 

2 The Congress finds the following: 

3 (1) Many poor countries have been struggling 

4 under the burden of international debts for many 

5 years. 

6 (2) In 1996, the international community cre7 ated the Heavily Indebted Poor Countries Initiative 

8 (the HIPC Initiative) to reduce the debt burden that 

9 curtailed spending on economic development and 

10 poverty-reducing programs in many impoverished 

11 countries. 

12 (3) Since adoption of the original HIPC Initia13 tive in 1996 and the Enhanced HIPC Initiative in 

14 1999, donor countries have committed more than 

15 $50,000,000,000 in bilateral and multilateral debt 

16 cancellation to eligible countries. 

17 (4) Congress has demonstrated its support for 

18 bilateral and multilateral debt relief through the en19 actment of comprehensive debt relief initiatives for 

20 heavily indebted poor countries in— 

21 (A) title V of H.R. 3425 of the 106th Con22 gress, as enacted into law by section 1000(a)(5) 

23 of the Act, entitled ‘‘An Act making consoli24 dated appropriations for the fiscal year ending 

25 September 30, 2000, and for other purposes.’’, 

26 approved November 29, 1999 (Public Law 106– 


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1 113; 113 Stat. 1501–311) and the amendments 

2 made by such title; 

3 (B) title II of H.R. 5526 of the 106th 

4 Congress, as enacted into law by section 101(a) 

5 of the Act, entitled ‘‘An Act making appropria6 tions for foreign operations, export financing, 

7 and related programs for the fiscal year ending 

8 September 30, 2001, and for other purposes.’’, 

9 approved November 6, 2000 (Public Law 106– 

10 429; 114 Stat. 1900A–5); and 

11 (C) title V of the United States Leadership 

12 Against HIV/AIDS, Tuberculosis, and Malaria 

13 Act of 2003 (Public Law 108–25; 117 Stat. 

14 747) and the amendment made by such title. 

15 (5) A number of countries, including the United 

16 States, have canceled 100 percent of the bilateral 

17 loans made by such countries to countries that are 

18 eligible for debt relief under the Enhanced HIPC 

19 Initiative, and other major donor nations have can20 celed a large percentage of such loans. However, a 

21 number of countries eligible for such debt relief will 

22 continue to owe substantial debts to international fi23 nancial institutions such as the International Mone24 tary Fund, the International Development Associa25 tion, and the African Development Fund. 


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1 (6) At the same time that the international 

2 community has been extending debt relief to the 

3 poor countries of the world, a new form of business 

4 has emerged for the purpose of speculating in and 

5 profiteering from defaulted sovereign debt at the ex6 pense of both the impoverished citizens of the poor 

7 nations and the taxpayers of the world who have 

8 participated in international debt relief. 

9 (7) So-called ‘‘vulture’’ creditors acquire, either 

10 by purchase, assignment, or some other form of 

11 transaction, the defaulted obligations of, and some12 times actual court judgments against, impoverished 

13 nations. Vulture creditors usually acquire the debt 

14 for the payment of a sum far less than the face 

15 value of the defaulted obligation. They do so for the 

16 sole purpose of collecting through litigation, seizure 

17 of assets, political pressure, or other means, pref18 erential payment of the defaulted debt on terms and 

19 in amounts far in excess of the amount paid by the 

20 vulture creditor to acquire the debt. The vulture 

21 creditors seek payments far in excess of the rates of 

22 payment made to other similarly situated creditors, 

23 including multilateral creditors (such as the Inter24 national Monetary Fund, the International Develop25 ment Association, and the African Development 


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1 Fund), bilateral official creditors such as those 

2 working through the Paris Club of Official Creditors 

3 or direct negotiations, or commercial creditors work4 ing through the London Club mechanism of sov5 ereign debt restructuring. 

6 (8) Profiteering in defaulted sovereign debt is 

7 made possible by the absence of the same type of 

8 bankruptcy protections for sovereign debtors that 

9 are available to private debtors. Bankruptcy or other 

10 insolvency laws protect private debtors through, 

11 among other things, stays of execution pending reor12 ganization or restructuring of debt, suspension of 

13 the accrual of interest, ‘‘cram-down’’ powers which 

14 allow the majority of creditors to force so-called 

15 ‘‘hold-out’’ creditors to accept a debt restructuring 

16 that will optimize the recovery of all creditors and 

17 avoid preferential payments to a minority of credi18 tors, and the ability to discharge debts and obliga19 tions as part of a debt restructuring process. 

20 (9) Preferential payments to vulture creditor 

21 holders of the defaulted sovereign debt of poor coun22 tries serve to transfer the benefits of international 

23 debt relief efforts from their intended beneficiaries, 

24 the citizens of the poor nations of the world, to the 

25 speculators in sovereign debt who can experience exVerDate Nov 24 2008 04:41 Jun 19, 2009 Jkt 079200 PO 00000 Frm 00005 Fmt 6652 Sfmt 6201 E:\BILLS\H2932.IH H2932

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1 orbitant and usurious rates of return on their specu2 lation. 

3 (10) In pursuit of their collection activities, vul4 ture creditors have engaged in litigation in the 

5 courts of the United States, which has, and con6 tinues to have, a negative effect on the foreign rela7 tions of the United States, and hinders trade be8 tween the United States and the poor countries 

9 whose defaulted debts have been acquired by vulture 

10 creditors. Such disruptive activities have included, 

11 among other actions, attempting to levy against the 

12 embassies of foreign states, seeking to have foreign 

13 states held in contempt of court, issuing subpoenas 

14 to visiting foreign dignitaries, and accusing foreign 

15 governments of violating the Racketeer Influenced 

16 and Corrupt Organizations Act. 

17 (11) Many vulture creditor holders of defaulted 

18 sovereign debt act through ‘‘offshore’’ entities, incor19 porated in foreign states, despite being substantially 

20 owned and operated by United States citizens or 

21 conducting substantial business in the United 

22 States, with the purpose of avoiding regulation and 

23 taxation of their activities in the United States. 

24 (12) The direct or indirect speculation and 

25 profiteering in defaulted sovereign debt by United 


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1 States citizens, and the use of the courts in the 

2 United States to advance such profiteering, is con3 trary to the foreign relations interests of the United 

4 States and negatively affects the interstate com5 merce of the United States. 

6 (13) In order to successfully prevent the specu7 lation and profiteering in the defaulted sovereign 

8 debt of poor countries in a uniform fashion, and pre9 vent the use of the courts of the United States to 

10 assist in such profiteering, national legislation is re11 quired to regulate the practices and procedures used 

12 in litigation against foreign sovereigns. 

13 (14) To be effective and properly regulate the 

14 use of judicial forums in an area affecting the for15 eign relations of the United States, national legisla16 tion is required that will mandate the public disclo17 sure of relevant information concerning the acquisi18 tion, ownership, and consideration provided by credi19 tors in obtaining their property interests in the de20 faulted sovereign debt of poor countries. 

21 SEC. 3. DEFINITIONS. 

22 In this Act: 

23 (1) VULTURE CREDITOR.—The term ‘‘vulture 

24 creditor’’ means any person who directly or indi25 rectly acquires defaulted sovereign debt at a disVerDate Nov 24 2008 04:41 Jun 19, 2009 Jkt 079200 PO 00000 Frm 00007 Fmt 6652 Sfmt 6201 E:\BILLS\H2932.IH H2932

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1 count to the face value of the obligation so acquired, 

2 except that the term does not include the Govern3 ment of the United States or any agency of the Gov4 ernment of the United States, any foreign state, or 

5 any international financial institution (as defined in 

6 section 1701(c)(2) of the International Financial In7 stitutions Act). 

8 (2) SOVEREIGN DEBT.—The term ‘‘sovereign 

9 debt’’ means a commercial obligation of a foreign 

10 state, whether evidenced by a claim, contract, note, 

11 negotiable instrument, award, or judgment. 

12 (3) DEFAULTED SOVEREIGN DEBT.—The term 

13 ‘‘defaulted sovereign debt’’ means any sovereign debt 

14 for which payment has been refused by a foreign 

15 state, which is subject to an announced moratorium, 

16 upon which an award or judgement has been en17 tered, or upon which a payment of interest or prin18 cipal has not been paid according to the terms of the 

19 debt obligation. 

20 (4) SOVEREIGN DEBT PROFITEERING.—The 

21 term ‘‘sovereign debt profiteering’’ means any act by 

22 a vulture creditor seeking, directly or indirectly, the 

23 payment of part or all of defaulted sovereign debt of 

24 a qualified poor country, in an amount that exceeds 

25 the total amount paid by the vulture creditor to acVerDate Nov 24 2008 04:41 Jun 19, 2009 Jkt 079200 PO 00000 Frm 00008 Fmt 6652 Sfmt 6201 E:\BILLS\H2932.IH H2932

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1 quire the interest of the vulture creditor in the de2 faulted sovereign debt (excluding any amount paid 

3 for attorneys’ fees or other fees and costs associated 

4 with collection), plus 6 percent simple interest per 

5 year on the total amount, calculated from the date 

6 the defaulted sovereign debt was so acquired, but 

7 the term does not include the purchase or sale of 

8 such a debt, or the acceptance of a payment in satis9 faction of the debt obligation, without threat of, or 

10 recourse to, litigation. 

11 (5) UNITED STATES PERSON.—The term 

12 ‘‘United States person’’ means— 

13 (A) a national of the United States (as de14 fined in section 101(a)(22) of the Immigration 

15 and Nationality Act); and 

16 (B) a corporation, partnership, association, 

17 joint stock company, business trust, unincor18 porated organization, or sole proprietorship that 

19 is— 

20 (i) organized under the laws of the 

21 United States or of any political subdivi22 sion thereof; or 

23 (ii) owned or controlled by a citizen or 

24 resident of the United States. 


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1 (6) FOREIGN STATE.—The term ‘‘foreign state’’ 

2 includes a political subdivision of a foreign state, or 

3 an agency or instrumentality of a foreign state (as 

4 defined in paragraph (7)). 

5 (7) AGENCY OR INSTRUMENTALITY OF A FOR6 EIGN STATE.—The term ‘‘agency or instrumentality 

7 of a foreign state’’ means an entity— 

8 (A) which is a separate legal person, cor9 porate or otherwise; 

10 (B) which is an organ of a foreign state or 

11 political subdivision thereof, or a majority of 

12 whose shares or other ownership interest is 

13 owned by a foreign state or political subdivision 

14 thereof; and 

15 (C) which is neither a citizen of a State of 

16 the United States (as defined in section 1332 

17 (c) and (e) of title 28, United States Code), nor 

18 created under the laws of any third country. 

19 (8) UNITED STATES.—The term ‘‘United 

20 States’’ includes all territory and waters, continental 

21 or insular, subject to the jurisdiction of the United 

22 States. 

23 (9) QUALIFIED POOR COUNTRY.—The term 

24 ‘‘qualified poor country’’ means a foreign state idenVerDate Nov 24 2008 04:41 Jun 19, 2009 Jkt 079200 PO 00000 Frm 00010 Fmt 6652 Sfmt 6201 E:\BILLS\H2932.IH H2932

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1 tified on the list maintained by the Secretary of the 

2 Treasury under section 6(a)(2). 

3 SEC. 4. PROHIBITIONS ON SOVEREIGN DEBT PROFIT4 EERING; PENALTIES. 

5 (a) PROHIBITIONS.—It shall be unlawful for any 

6 United States person, directly or indirectly, to engage in 

7 sovereign debt profiteering, or for any person, directly or 

8 indirectly, to engage in sovereign debt profiteering in the 

9 United States. 

10 (b) PENALTIES.—Whoever willfully violates sub11 section (a) shall be fined an amount equal to the total 

12 amount sought by the person through the sovereign debt 

13 profiteering. 

14 (c) EFFECTIVE DATE.—This section shall take effect 

15 90 days after the date of the enactment of this Act. 

16 SEC. 5. PROHIBITION ON USE OF COURTS OF THE UNITED 

17 STATES TO FURTHER SOVEREIGN DEBT 

18 PROFITEERING. 

19 (a) IN GENERAL.—A court in or of the United States 

20 may not issue a summons, subpoena, writ, judgment, at21 tachment, or execution, in aid of a claim under any theory 

22 of law or equity a purpose of which would be furthering 

23 sovereign debt profiteering. 

24 (b) DISCLOSURES REQUIRED IN ACTIONS INVOLVING

25 COLLECTION OF SOVEREIGN DEBT.—A court in or of the 


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1 United States may not issue a summons, subpoena, writ, 

2 judgment, attachment, or execution against a foreign state 

3 or any debtor or creditor of a foreign state, with respect 

4 to collection of sovereign debt of the foreign state, unless 

5 the court has required each party seeking the summons, 

6 subpoena, writ, judgment, attachment, or execution to file 

7 with the court, and the court has received, affidavits, 

8 under oath, setting forth— 

9 (1) a statement that written notice of the claim 

10 against the foreign state has been provided to the 

11 Department of the Treasury; 

12 (2) a copy of the list of qualified poor countries 

13 maintained under section 6(a)(2), which is current 

14 as of the date of the affidavit; and 

15 (3) if the foreign state is identified on the list— 

16 (A) a statement of the names and address17 es of all persons who, directly or indirectly hold 

18 any interest in the claim against the foreign 

19 state; 

20 (B) a statement of the total amount paid 

21 by all persons, directly or indirectly holding an 

22 interest in the claim against the foreign state, 

23 to acquire the interest, including the date the 

24 interest was acquired and the identity of any 

25 person from whom the interest was acquired; 


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1 (C) a statement containing a calculation of 

2 6 percent simple interest per year on the total 

3 amount so paid, for the period beginning with 

4 the date the interest was acquired, as of the 

5 date of each action sought from the court; 

6 (D) a statement that the claim against the 

7 foreign state has not been further assigned or 

8 encumbered by the party; 

9 (E) a statement that neither the holder of 

10 the debt, nor any owner, employee, or agent of 

11 the holder has given anything of value to a for12 eign state, or any officer or agent of a foreign 

13 state, in exchange for any action in connection 

14 with the acquisition or collection of the debt, or 

15 any information concerning the acquisition or 

16 collection of the debt; 

17 (F) a statement that each person against 

18 whom any legal process is sought in the case 

19 has been served with a copy of this Act, a copy 

20 of the complaint or initial process in which the 

21 claim is stated, and copies of the affidavits re22 quired by this subsection; and 

23 (G) a statement that copies of the affida24 vits required by this paragraph have been pro25 vided to the Department of the Treasury. 


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1 (c) LEGAL PROCESS ISSUED IN VIOLATION OF THIS

2 SECTION IS VOID.—A summons, subpoena, writ, judg3 ment, attachment, or execution issued in violation of any 

4 provision of this section shall be void. 

5 (d) DISMISSAL OF ACTIONS BROUGHT OR MAIN6 TAINED IN VIOLATION OF THIS SECTION.—If it appears 

7 to a court in or of the United States that an action 

8 brought in the court constitutes, or is in furtherance of, 

9 sovereign debt profiteering, the court shall, on its own ini10 tiative or at the request of any interested party, promptly 

11 dismiss the action. 

12 (e) ENTITLEMENT TO DISCOVERY.—A party against 

13 whom a summons, subpoena, writ, judgment, attachment, 

14 or execution is sought in an action brought with respect 

15 to collection of sovereign debt of a foreign state, and the 

16 foreign state, shall be entitled to discovery to determine 

17 the veracity of the matters attested to in any affidavit re18 quired by subsection (b). 

19 (f) REQUIREMENT TO SERVE AFFIDAVITS ON ALL

20 PERSONS AGAINST WHOM ANY LEGAL PROCESS IS

21 SOUGHT.—Each party seeking a summons, subpoena, 

22 writ, judgment, attachment, or execution pursuant to sub23 section (b) shall serve on each person against whom any 

24 legal process is sought a copy of this Act, a copy of the 


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1 complaint or initial process in which the claim is stated, 

2 and copies of the affidavits required by subsection (b). 

3 (g) INFORMATION REQUIRED TO BE PROVIDED TO

4 THE TREASURY DEPARTMENT.—Each party seeking a 

5 summons, subpoena, writ, judgment, attachment, or exe6 cution pursuant to subsection (b) shall present to the Sec7 retary of the Treasury— 

8 (1) written notice of the claim involved; and 

9 (2) copies of the affidavits required by sub10 section (b)(3). 

11 (h) EFFECTIVE DATE.—This section shall apply to 

12 actions brought or pending on or after the date of the en13 actment of this Act. 

14 SEC. 6. DUTIES OF THE DEPARTMENT OF THE TREASURY. 

15 (a) MAINTENANCE OF LISTS.—The Secretary of the 

16 Treasury shall compile and maintain, and make available 

17 to the public— 

18 (1) an up-to-date list of the foreign states that 

19 are eligible for financing from the International De20 velopment Association but not from the Inter21 national Bank for Reconstruction and Development; 

22 and 

23 (2) an up-to-date list of the foreign states listed 

24 under paragraph (1) with respect to which the SecVerDate Nov 24 2008 04:41 Jun 19, 2009 Jkt 079200 PO 00000 Frm 00015 Fmt 6652 Sfmt 6201 E:\BILLS\H2932.IH H2932

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1 retary of the Treasury, in consultation with the Sec2 retary of State, has not determined that— 

3 (A) the government of the state (including 

4 its military or other security forces) engages in 

5 a pattern of gross violations of internationally 

6 recognized human rights (as defined in section 

7 116 of the Foreign Assistance Act of 1961 

8 (Public Law 87–195)); 

9 (B) the government of the state has an ex10 cessive level of military expenditures; 

11 (C) the government of the state has pro12 vided support for acts of international ter13 rorism, as determined by the Secretary of State 

14 under section 6(j)(1) of the Export Administra15 tion Act of 1979 (50 U.S.C. App. 2405(j)(1)), 

16 or section 620A(a) of the Foreign Assistance 

17 Act of 1961 (22 U.S.C. 2371(a)); or 

18 (D) the government of the state is failing 

19 to cooperate with the United States on inter20 national narcotics control matters. 

21 (b) MAINTENANCE OF AFFIDAVITS AS PUBLIC

22 RECORDS.—On presentation of an affidavit pursuant to 

23 section 5(g), the Secretary of the Treasury shall accept 

24 the affidavit and maintain the affidavit as a public record. 


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1 (c) NOTIFICATION OF POOR COUNTRIES OF THE

2 PROVISIONS OF THIS ACT.—Within 90 days after the date 

3 of the enactment of this Act, the Secretary of the Treasury 

4 shall provide written notice to each foreign state referred 

5 to in subsection (a)(1) of the provisions of this Act. 

6 (d) ANNUAL REPORTS.—Within 1 year after the date 

7 of the enactment of this Act, and annually on the anniver8 sary of the date the first report is submitted under this 

9 subsection, the Secretary of the Treasury shall submit to 

10 the Committees on Financial Services and on the Judici11 ary of the House of Representatives and the Committees 

12 on Foreign Relations and on the Judiciary of the Senate, 

13 and make available to the public, a report that— 

14 (1) explains how the Secretary determined 

15 which countries would be included in the list of for16 eign states maintained under subsection (a)(2); 

17 (2) summarizes the affidavits presented to the 

18 Secretary pursuant to subsection (b) during the pe19 riod covered by the report; and 

20 (3) discusses how this Act has advanced the 

21 policies of the United States with respect to poor 

22 countries and supported the goals and purposes of 

23 the Enhanced HIPC Initiative (as defined in section 

24 1625(e)(3) of the International Financial Institu25 tions Act), the Multilateral Debt Relief Initiative, 


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1 and other international efforts to provide debt relief 

2 to poor countries. 

3 SEC. 7. RELATIONSHIP TO STATE LAW. 

4 In the event of a conflict between this Act and a pro5 vision of State law, this Act shall control. 

6 SEC. 8. SEVERABILITY. 

7 If any provision of this Act or the application thereof 

8 to any person or circumstance is held invalid, the inva9 lidity does not affect other provisions or applications of 

10 this Act which can be given effect without the invalid pro11 vision or application, and to this end, the provisions of 

12 this Act are severable. 

Æ 


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