Editor’s Note: A February 1, 2012 report by the New York Times has revealed that Elliot Associates hedge fund manager Paul Singer donated $1 million to the pro-Mitt Romney Super PAC, Restoring Our Future, in the last three months of 2011. Singer’s conservative fundraising didn’t begin with the 2012 election, however, as this 2007 article describing his involvement in so-called "Vulture funds" makes clear. 

When the New York Daily News obtained a leaked 140-page strategy memo from the Giuliani campaign in January "one name," according to the article, appeared "throughout the document: Paul Singer, a discreet hedge-fund tycoon who has been described as the Republican George Soros." The Upper East Side billionaire and longtime contributor to Republican and conservative causes was asked by the campaign to raise cash from Wall Street, recruiting other big-money donors and even contacting 9/11 survivors and victims’ family members to support Giuliani’s bid for the Republican nomination.

Since then, Singer has become one of Giuliani’s most important fundraisers, bundling more than $500,000 for the campaign. Singer and employees of his hedge fund, Elliott Associates, have chipped in an additional $168,000. The campaign frequently uses his private jet.

In late September Singer was once again in the news. Republicans in California with ties to the Giuliani campaign were pushing a ballot initiative that would award the state’s electoral votes by Congressional district rather than winner-take-all, a move that could potentially throw a close election to a Republican. The group leading the drive was funded via a previously unknown organization in Missouri with exactly one donation of $175,000. When that outfit refused to divulge who made the contribution, the two GOP strategists in charge of the initiative quit in frustration. Eventually, as questions mounted, Singer admitted to being the sole contributor but claimed complete independence from the Giuliani campaign. Democratic lawyers in California believed otherwise, so they filed a complaint with the Federal Election Commission alleging a Giuliani-connected "money laundering operation."

That Singer was at the center of the controversy should come as no surprise. In the 1990s Singer’s hedge fund pioneered a shadowy, lucrative and often ruthless form of investing whose practitioners earned the not-so-generous moniker "vulture funds." Vulture funds–or "sovereign debt investors," as they prefer to call themselves–buy old defaulted debts, usually from the poorest countries in the world, and then drag the debtors into court, seeking a settlement far above what the funds originally paid for the debt. These are debts that are usually forgiven when the countries are granted relief by wealthy nations like the United States and multilateral institutions like the World Bank. An official at the Bank likens vulture fund activities to giving up your seat on a bus for an old lady, only to see a young college jock swipe it.

Large hedge funds like Singer’s Elliott Associates often operate in secret, through shell companies in tax shelters like the Cayman Islands. Since the end of 2005, more than a third of the countries receiving debt relief have been targeted by at least thirty-eight hedge funds, which have gotten judgments in excess of $1 billion. This reverse Robin Hood scheme has drawn criticism around the globe, including from Nelson Mandela and British Prime Minister Gordon Brown.

It all started in 1996, when Elliott paid $11 million for $20 million of debt, dating back to 1983, theoretically owed by the government of Peru. In 1989, then-US Treasury Secretary Nicholas Brady had urged rich countries to forgive the debts of poor ones in order to spur economic growth and global development. Instead of settling with Peru, as its 180 other creditors did, Elliott took the government to court. "Pay us in full or be sued," Singer threatened.

A federal district court in New York initially ruled against Elliott, finding that the fund had purchased the debt "with the intent and purpose to sue" and "rejected each and every opportunity to participate in Peru’s restructuring." Elliott appealed and won. Then the fund began working the political system in New York. With the help of a lobbying firm in Albany, Elliott, through a subsidiary, persuaded the New York legislature to change an obscure law governing compound interest, increasing Elliott’s payout by $16 million, for a total, including interest, of $58 million. It was done so quietly that Peru’s lawyers didn’t find out until after the fact. A few years later the New York State Assembly eliminated another law that Peru had used to defend itself. Three months after the bill became law, Singer gave the lead sponsor, State Assembly Member Susan John, a $2,500 campaign donation.

Elliott’s most recent target is the oil-rich but desperately poor West African nation of Congo, home to three civil wars since 1993, with 70 percent of the population below the poverty line. In the late 1990s Elliott, through a variety of shadowy subsidiaries, bought $100 million of defaulted Congolese debt for roughly 7 to 10 cents on the dollar, according to a legal brief filed by the Congolese government. A Cayman Islands-based entity called Kensington International went to court in London and received favorable judgments, ordering repayment of the debt plus interest. Then Kensington returned to court in London and sought to prevent Congo from repaying any other creditors until Kensington was paid. This time the judge balked, saying he didn’t even know what Kensington International was and how much it had paid for the debts.

Only when Kensington sued Congo in New York under a RICO statute (which would triple a final judgment to $375 million), was it revealed that Kensington was a subsidiary of Singer’s fund. Since then, Elliott/Kensington has pulled out all the stops. The fund retained as counsel Ted Olson, George W. Bush’s initial choice to replace Alberto Gonzales as Attorney General. Kensington has filed at least fifteen separate lawsuits against Congo and its business partners, in places ranging from the British Virgin Islands to Hong Kong to the United States.

After members of the Congolese government amassed large hotel bills at a UN summit in New York, Kensington lobbied the World Bank to block scheduled debt relief for the country, according to two sources close to the Congolese government. The fund placed op-eds in influential newspapers, produced letters of support from members of Congress and even filed a lawsuit in Brussels against the Belgian government to confiscate a 10 million euro foreign aid payment from Belgium to Congo. (In a separate case against Argentina, Elliott has enlisted former top Clinton Administration officials to persuade the country to pay debts that the firm acquired for as little as 15 cents on the dollar.) "They’re completely amoral," says David Skeel, a professor of corporate law at the University of Pennsylvania. "It’s almost a matter of pride to them."

Elliott says this type of investing accounts for only 1 percent of its $7 billion hedge fund. But Singer is unapologetic about the hardball tactics he pioneered. "Every country has poverty, including the USA," he told The Nation via e-mail. "Our disputes have always been with sovereigns who can pay but refuse." He dismisses his critics as "debtors who attempt to curry populist favor by paying just what they feel like paying" and "ideologically driven people and groups who do not realize that capital goes where it is welcome."

Singer has never been shy about expressing his conservative views. He regularly espouses them in Elliott’s newsletter to investors, warning against universal healthcare and an equitable tax rate for hedge funds and advocating nuclear power to fight global warming.

This summer, as part of a fundraising shakeup, Giuliani made Singer a senior policy adviser focusing on the Middle East, a plum spot for the billionaire, given his ties to neoconservative outfits like the Jewish Institute for National Security Affairs. Indeed, in a newsletter last March, Singer added his name to the list of Giuliani advisers who have advocated bombing Iran. "We think that it is necessary to do so," he wrote, "and soon."