In the past few years a handful of private equity or hedge funds have garnered a reputation as “vulture funds,” a term coined to describe companies that profit from the debt of extremely poor countries. The hedge funds buy defaulted debt for pennies on the dollar, then sue them later for the full amount owed in U.S. and European courts.

Both in 2008 and earlier this year, members of Congress introduced bills to protect these debtor nations from lawsuits. The legislation was introduced after heavy lobbying campaigns by countries like the Republic of the Congo, which has spent millions of dollars hiring D.C.-based heavyweight lobbying firms.

The hedge firms–like Kensington International Ltd. which fought a long drawn case with the Republic of the Congo (Brazzaville)–claim that corrupt practices by rulers, and not the poverty of the countries, are the reason they are not able to repay their debts.

Kensington International, based in the Cayman Islands, is a subsidiary of Elliott Associates, a New York company. In the 1990s, Kensington bought up several debt packages worth $100 million from Congo, which led to a decade-long round of negotiations and legal battles spanning a few continents before the lawsuit was settled in 2007. But before that happened, Kensington International’s sleuthing uncovered a series of hidden bank accounts, some belonging to the President’s son, straw men and companies in tax-haven countries run by the head of the Congo’s state-owned oil and gas company SNPC.

While the court case was still underway, the Office of President Denis SassouNguesso of the Republic of the Congo hired lobbyists, according to filings under the Foreign Agents Registration Act maintained by the Department of Justice. In 2006, the filings show, SNPC paid Trout Casheries LLC, its U.S. lobbyists, the sum of $700,000 on behalf of the Republic of the Congo. The filing was the first time that the lobbying issues specifically related to debt management were listed; Trout Casheries also disclosed that they represented the President of the Republic of Congo, Sassou-Nguesso, “to respond to allegations of misconduct directed by creditors.”

According to the 2008 filings, the country spent $590,000 on lobbying alone and a total of $3.2 million to retain lawyers and for “non-FARA related” activities, including public relations campaigns and consultancy fees. They employed four lobbying firms, the Livingston Group, Trout Casheries LLC,Chlopak Leonard Schechter and Associates and the Loeffler Group, that waged an intensive heavy lobbying campaign. Lobbyists from the firms met with members of Congress, their staff and executive branch officials about 1500 times–mostly to discuss vulture funds, according to data from Foreign Lobbying Influence Tracker.

People with close connections to President SassouNguesso, including his son, Denis Christel Saasou-Nguesso and close aide Denis Gokana who was then the head of SNPC, feature prominently in the legal dispute between the vultures and the Republic of the Congo. In addition to SNPC, Gokana headed two other companies, Sphynx Bermuda and Africa Oil and Gas.

Kensington’s sleuthing uncovered that the SNPC, through its trading arm Cotrade, was selling Congolese oil to intermediaries; instead of direct trade, the off-shore companies headed by Gokana siphoned off millions of barrels of oil before delivering the rest to commercial markets in Europe and elsewhere.

Kensington argued that the diverted funds should be used to repay the country’s creditors rather than enrich individuals close to the president. They sued various parties in U.S. federal court, including banking giants BNP Paribas for aiding Congo in diverting the oil revenues, using the Racketeer Influenced Corrupt Organizations Act, which was changed under the Patriot Act to give U.S.courts jurisdiction over international money laundering operations.

A separate investigation of Congo’s oil industry by Global Witness, a U.K.-based non-profit, uncovered documents that furthered the investigation. They published credit card receipts in 2007 showing that Denis Cristel’s personal shopping for designer wear in Dubai and Paris were paid for by accounts from another off-shore company, Long Beach. They also discovered that Long Beach had received payments from companies set up by Gokana.

The report found that Sphynx and Africa Oil were both controlled by Gokana, and found that his role as a special counsel to the President while he controlled private companies was a conflict of interest, one that was prohibited under the statutes that created the state oil company, SNPC.

Although there is very little mention of these allegations of corruption in the U.S. media, European outlets have covered the story. At the end of a two-year court battle, Congo reached an out of court settlement with Kensington International an undisclosed amount.

Despite the revelations unearthed in Kensington International’s suit, some in Congress continue to argue that impoverished nations are being short changed. Rep. Maxine Waters, D-Calif., who serves on the who is on the Subcommittee on International Monetary Policy, has reintroduced the Stop Vulture Funds Act. She or her staffers met with lobbyists for the Republic of the Congo about “vulture” funds at least 40 times in the one year period. A similar bill was sponsored in the Senate by Robert Casey, D-Pa., in 2008. Casey was never contacted by Congo’s lobbyists.

To counter the lobbying efforts by the Congo, Elliott Associates hired Akin Gump Strauss Hauer and Feld to represent them in Washington, spending $570,000 in 2008 alone.

Waters’ bill would prohibit U.S. citizens from trying to profit from defaulted sovereign debt, and bar U.S. courts from acting on cases filed by sovereign debt “profiteers.”

Waters’ office has not returned phone calls or e-mails commenting on the issue.