World Bank: secret debt devastating Moz economy - By Joseph Hanlon
There will be no further extensions to the deadline given to the auditors investigating the Mozambican security-related companies Ematum (Mozambique Tuna Company), Proindicus and MAM (Mozambique Asset Management), outgoing Swedish ambassador Irina Nyoni has confirmed in an interview published in the latest issue of the independent weekly “Savana”.
An independent, international audit of the three companies was demanded by the International Monetary Fund (IMF) as a condition for re-establishing normal relations with Mozambique, and the Swedish embassy agreed to finance the audit.
In 2013-14, the three companies obtained over two billion US dollars in loans from European banks (mainly Credit Suisse and VTB of Russia) – 850 million dollars for Ematum, 622 million for Proindicus and 535 million for MAM – despite the lack of any due diligence, or any sign that the companies would be able to repay the loans.
The previous Mozambican government, headed by President Armando Guebuza, illegally guaranteed the three loans. Loan guarantees for such large sums smashed the ceiling on guarantees established in the budget laws of 2013 and 2014. The guarantees were also unconstitutional, since such debt can only be authorised by the country’s parliament, the Assembly of the Republic.
Since no list of assets or services purchased by Ematum, Proindicus and MAM has even been published it is far from clear what the two billion dollars was spent on, whether the assets ordered all arrived, whether they met the required specifications, and whether any of the money involved has gone missing.
These are all questions that the audit, by the London branch of the US company Kroll, reputedly the foremost forensic audit company in the world, may answer. Kroll was hired to carry out the audit by the Mozambican Attorney-General’s Office, and was initially given three months to produce its report. That deadline expired on 28 February, but, given the complexity of the audit, Kroll subsequently asked for two extensions, and the new deadline is 28 April.
“We didn’t know exactly how much time it would take”, Nyoni told the paper. “The first 90 days was an indicative deadline”.
The Swedish embassy suspected that this would not be enough time, “but we had to try”, she said. “So we began and when we reached the end of the 90 days, we saw we needed more time, because the information was initially arriving very slowly”.
“For us, what is important is that the audit report should answer all possible questions”, she stressed. So a first extension was granted. Kroll found itself facing “some legal obstacles” outside Mozambique, and needed more time to solve these problems.
She did not say which countries posed these obstacles – but the loans were handled by the London branches of Credit Suisse and VTB, and the boats for Ematum and Proindicus were built in a French shipyard, owned by Abu Dhabi Mar, in which the Lebanese company Privinvest is a major shareholder.
Nyoni said that in mid-March, “Kroll contacted us to say that, due to the constraints, it was unable to finalise the report and asked for more time. Simultaneously, it was receiving more information from the interested international parties about the legal matters”.
Those “international parties”, she added, “said they thought this information would significantly improve the quality of the report. For us, the quality of the report is very important, and so we opted to give Kroll more time so that the analysis of this new information could be included”.
No names, no ‘classified military information’
Nyoni was confident that the second extension would be the last. “The work undertaken so far indicates that this is the last extension”, she said, and Kroll itself believed the report would be ready in late April.
As for publication, Nyoni said that initially the PGR will publish an executive summary of Kroll’s report and 90 days later “it should publish the final report which, according to the agreed terms of reference, will not divulge the names of those who orchestrated the hidden debts”. Nor would it include “classified military information”.
Nyoni explained the “no names” provision on the grounds that the PGR is undertaking its own criminal investigation into the debts and the guarantees. “There are things in this report linked to the investigation that the PGR is undertaking”, she said. “Evidently, if this information comes out before the conclusion of the PGR investigation, it will ruin the work. If the PGR says there is an investigation and it intends to open criminal proceedings, the lawyers for those accused could say that the evidence has already been made public, and everything is spoiled”.
But Nyoni insisted that everything in the audit, minus the names and “military information linked to the country’s security”, will be published 90 days after the executive summary. “The terms of reference say that the final report must be published, and there’s no going back on that”, she stressed.
As for holding individuals responsible for the debts and the guarantees, Nyoni admitted “we have nothing in writing. But if the government agreed to an audit with very detailed terms of reference, it has a clear idea of what it’s going to do afterwards. This is a decision that Mozambique, and not Sweden, must take”.
Nonetheless, Nyoni said that, in her discussions with the PGR, she could see a willingness to push ahead with holding those who incurred the debts responsible for what they had done. She thought the PGR was working hard on the issue, and pledged that from her new post, in New York where she will represent Sweden on the United Nations Security Council, she will continue to follow developments.Source: AIM