Mozambique’s lenders can only wait and see
The Mozambican Attorney-General’s Office (PGR) on Thursday announced that the independent audit of the security-related companies Proindicus, Ematum (Mozambique Tuna Company) and MAM (Mozambique Asset Management) will not be ready by the deadline of Friday.
The company carrying out the audit, the London branch of the US firm Kroll Associates, has asked for more time. It sent a letter to the PGR saying that the audit report could not be delivered until 12 May.
This is the third extension Kroll has requested. Initially the deadline was the end of February. Then it was extended to the end of March, to 28 April, and finally to 12 May.
Kroll informed the PGR that it needed the extra days for “reverification work”, and for ensuring that the report is correctly translated into Mozambique’s official language, Portuguese.
The PGR had little choice but to accept this further delay. “Faced with these circumstances, the PGR awaits reception of the report, for the following procedures”, the PGR note concluded.
These three companies, in 2013 and 2014, took out loans from European banks (mostly Credit Suisse and VTB of Russia) for over two billion US dollars – 850 million for Ematum, 622 million for Proindicus and 535 million for MAM. The loans were illegally guaranteed by the Mozambican government of the time, headed by President Armando Guebuza.
The three loans added 20 per cent to Mozambique’s foreign debt, and pushed the debt beyond sustainable levels.
Initially, the public only knew about Ematum, because this loan took the form of bonds sold openly on the European market. But the Proindicus and MAM loans were kept in deepest secrecy until journalists found out about them in April 2016.
The International Monetary Fund (IMF) accused the government of failing to disclose the true state of the country’s debts, and immediately suspended its programme with Mozambique. Other western partners followed suit, and all 14 donors who had been providing direct support to the Mozambican state budget suspended further disbursements.
A key condition for resuming normal relations between Mozambique and its international partners is an international, independent audit of the three companies.
This is not a simple matter, because the scandal spans continents. The banks that issued the loans were the London branches of Credit Suisse and VTB. The special purpose vehicle used to sell the Ematum bonds was set up in Holland. Some of the equipment, notably fishing vessels and patrol boats for Ematum and Proindicus, were built at a shipyard in the French port of Cherbourg. That shipyard is owned by the company Abu Dhabi Mar, in the United Arab Emirates in which the main partner in the Lebanon-based concern Privinvest.
With such a complex web of interests, it is perhaps not surprising that Kroll required much more than the initial 90 days to complete its work.
Mozambicans hope that the audit will explain exactly what happened to the two billion dollars, what assets or services were purchased, whether they all arrived, if they were fit for purpose, and whether there are any indications of diversion of funds.Source: AIM
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