Goba and Ressano Garcia lines closed for maintenance
File photo / Flavio Menete, chairman of the Mozambican Bar Association
The chairperson of the Mozambican Bar Association (OAM), Flavio Menete, has called for the entire recapitalisation of Moza Bank, once the fourth largest commercial bank in the country, to be declared null and void.
Menete’s drastic proposal, cited by the independent television station STV, follows the declaration by the Central Public Ethics Commission (CCEP) that the recapitalisation involved a conflict of interests for the governor of the Bank of Mozambique, Rogerio Zandamela, and thus violated the Law on Public Probity.
Moza Bank faced a severe liquidity crisis last year, and the central bank was forced to step in, sack its board of directors, and appoint a provisional board. The solution found to rescue Moza Bank, was a takeover by Kuhanha, the body that manages the Bank of Mozambique pensions fund.
The CCEP claims that Zandamela violated the public probity law by deciding on a matter in which he is a beneficiary, since the governor of the central bank is automatically chairperson of Kuhanha, which created a potential conflict of interest. The argument is that, since Kuhanha is a body owned by the central bank, and chaired by its governor, he was violating the public probity law when Kuhanha became the majority shareholder in Moza Bank.
The CCEP also accused Moza Bank chairperson Joao Figueiredo of violating the same law, because he had previously headed the provisional Moza board of directors. Under the terms of the law, the CCEP argued, Figueiredo was barred from taking up any position with Moza Banco until two years after he had ceased his duties as head of the provisional board.
Similarly the CCEP accused a former director of the Bank of Mozambique, Joana Matsombe, of breaking the law. She too was allegedly in a conflict of interests because she had been appointed a member of the provisional Moza Board , at a time when she was still on the board of the central bank.
Menete now claimed it was “inevitable” that the takeover by Kunanha be declared null and void. He urged the judicial authorities to act, and demanded in particular that the Attorney-General’s Office take measures. “It should have acted some time ago”, he declared.
Since the recapitalisation involved a conflict of interests, the whole process would have to be cancelled, and return to square one, he added.
“That means returning to the situation in which Moza Bank was run by the central bank, and re-running the recapitalisation, or taking some other decision”. Menete said. “We cannot become used to situations of conflict with the law”.
But Menete’s proposal to turn back the clock to September 2016, when the central bank intervened to keep Moza Bank running is wildly impractical. For there is now a new shareholding structure, and those shareholders have raised the money to recapitalise the bank, allowing the central bank to put a definitive end to its role in Moza in August.
Under the new structure, Kuhanha owns 80 per cent of the shares in Moza, and the two original shareholders, Mocambique Capitais (a grouping of about 400 Mozambican investors) and the Portuguese Novo Banco, hold ten per cent each.
Menete did not suggest how this new structure should be undone. Furthermore, if the central bank were to reassume control of Moza, the likelihood of finding new, serious purchasers of this bank would be slim indeed.
The row over an alleged conflict of interest erupted as soon as the Kuhanha takeover was known, in May. It seemed to baffle Zandamela, who believed he should be thanked, and not vilified, for his role in saving Moza, and strengthening confidence in the Mozambican financial system.
At a press conference in June, he said “I was expecting society to celebrate”, since the decision to put Moza into the hands of Kuhanha had avoided the collapse of the bank.
Zandamela insisted that the procedures followed had been entirely transparent and that the Kuhanha takeover was welcomed by all those most closely involved in the matter – namely both existing shareholders (Mozambique Capitais and Novo Banco), and the banking regulatory authorities in Mozambique and in Portugal.Source: AIM