Attorney-general names “hidden debts” suspects- AIM Report

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Attorney-general names “hidden debts” suspects- AIM Report

9:00 CAT | 11 Jan 2019

in file CoM

The Mozambican Attorney-General’s Office (PGR) has finally named 17 suspects who should face financial penalties for their role in the scandal of the country’s “hidden debts”.

This refers to the illicit loans of over two billion US dollars obtained by the fake companies Proindicus, Ematum (Mozambique Tuna Company) and MAM (Mozambique Asset Management) from the European banks Credit Suisse and VTB of Russia in 2013 and 2014.

The loans were only possible because they were guaranteed by the government, in violation of the Constitution and of the 2013 and 2014 budget laws. All three companies are effectively bankrupt, and so the Mozambican state has become liable for repaying the loans.

The justification for setting up the companies was to provide a sophisticated system of coastal protection and a tuna fishing fleet. Today, there is no sign of the promised coastal protection and the Ematum fishing fleet is 24 rather small boats that do no fishing, have no fishing licence, and sit at anchor in the Maputo fishing port.

The PGR opened an investigation into Ematum in 2015, and extended it to cover Proindicus and MAM in 2016, but refused to give any details. In January 2018, the PGR threw all responsibility for “financial offences” in connection with the illicit loans into the hands of the Administrative Tribunal (Mozambique’s highest audit authority).

A year later the Tribunal seems to have done next to nothing, and so the PGR gave the list of the suspects to the Maputo daily “Noticias”.

Doubtless the PGR was also goaded into action by the arrest of former Finance Minister Manuel Chang in Johannesburg, on an arrest warrant issued by the United States authorities. He is wanted for conspiracy to commit money laundering, wire fraud and securities fraud.

Two other Mozambicans are on the US indictment, but their names have been redacted since they have not yet been arrested.

The details of the PGR case given in “Noticias” says the suspects abused public funds by making undue payments, capitalising the three companies, financing projects that had not gone to public tender, signing contracts without the legally necessary approval from the Administrative Tribunal, and using the loan proceeds for things other than the projects (this seems to be a euphemism for the bribes and kickbacks mentioned in great detail in the US indictment). They also refused to cooperate fully with the audit of Proindicus, Ematum and MAM ordered by the PGR, and undertaken by Kroll, the US firm widely regarded as the foremost forensic auditing company in the world.

The full list of those named is as follows, with an indication of the offences committed. Some names appear under more than one offence.

For involvement in authorising the loan guarantees:

Manuel Chang (then Finance Minister);
Maria Isaltina Lucas (then head of the Treasury Department in the Finance Minister, which gave the go-ahead for the illegal guarantees. She is now an Ematum director, and Deputy Minister of Finance – the only member of the current government on the list);
Ernesto Gove (then governor of the Bank of Mozambique. In that position he should have had full information about the loans and would have known that they were illegal. Yet in April 2016, when the true scale of the loans finally became public knowledge, he claimed that he had “never heard of Proindicus”).
Piedade Macamo (deputy head of the treasury department);
Gregorio Leao (then head of the State Security and Intelligence Service, SISE, which dominated the shareholding structure of the three companies);
Antonio Carlos do Rosario (the senior SISE official who was appointed chairperson of all three companies).

For simultaneously holding public office and being in the companies benefitting from the loans (thus violating the law on public probity):

Antonio Carlos do Rosario;
Maria Isaltina Lucas;
Henrique Alvaro Cepeda Gamito (Ministry of Finance advisor and Ematum director).

For managing funds with illegal guarantees:

Antonio Carlos do Rosario;
Maria Isaltina Lucas;
Henrique Alvaro Cepeda Gamito;
Victor Bernardo (first Proindicus chairperson, before Rosario);
Eugenio Henrique Zitha Matlaba (Proindicus director);
Raufo Ismael Ira (Proindicus and MAM director);
Jose Manuel Gopo (Proindicus director);
Felisberto Manuel (Ematum Chief Executive);
Ivone Lichucha (Ematum director);
Agi Anlaue (Ematum and MAM director);
Herminio Lima Alberto Tembe (Ematum director);
Cristina Alice Valente Matavel (Ematum director);
Nazir Felizardo Passades Aboobacar (MAM director).

The reference to obstructing the Kroll audit must refer to Rosario who publicly boasted that that he had thrown the auditors out of his office. In a message widely distributed on Mozambican social media, the authenticity of which was confirmed by Rosario himself, this SISE official said he had thrown the auditors out “because they wanted details of questions about state security.”

In his message, Rosario declared “For Kroll, we know who they really are and what they want,” he said in the message. “I am happy to see the very negative way they attack me, because this proves that we do not give in to pressure and we are not afraid.”

Thus Rosario regarded Kroll as a foreign intrusion – but in reality Kroll was working for a Mozambican institution, the Attorney-General’s Office. It is not clear who Rosario meant by “we” – but that term clearly did not include the Attorney-General and her staff.

“Today our economic independence is at stake,” he said. “The struggle continues! Economic independence or death, we will win!” Thus Rosario hijacked revolutionary slogans to justify enormous financial abuses.

Kroll denounced the mismanagement of the three companies by Rosario and his team. The audit report found that the three companies “appear to be inadequately managed, are not fully operational, have generated no meaningful revenues, and have no contracts in place to provide future revenues”.

The business plans and feasibility studies claimed that the companies “were expected to generate combined operating revenues of USD 2.3 billion by December 2016”. But these projections verged on the fantastic. Kroll remarked that “at the time of reporting, negligible revenue has been generated and the Mozambique Companies can only meet debt obligations and operational expenses with the financial support of either shareholders, the Ministry of Finance or the Contractor”.

Source: AIM