Mozambique: Government wants Credit Suisse to pay for the consequences of the ‘hidden debts’ scandal

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Mozambique: Government wants Credit Suisse to pay for the consequences of the ‘hidden debts’ scandal

3:11 CAT | 20 Jan 2020

File photo: AFP

In the lawsuit filed in London against Credit Suisse, Mozambique is asking for ProIndicus’ US$622 million debt to be cancelled, and demanding compensation for all losses resulting from the hidden debt scandal.

The demand, presented by the Attorney General’s Office (PGR) of Mozambique at the Commercial Court of the High Court of Justice of London, to which Lusa News Agency had access yesterday, argues that the debt to Credit Suisse is unconstitutional and illegal under Mozambican law, which is why Mozambique should not be obliged to repay it, and should be compensated for the consequences of it being granted.

Credit Suisse’s US$622 million loan to the Mozambican public company ProIndicus was given state guarantee, but without being entered into the public accounts, and reportedly without the knowledge of the public or international donors.

The Mozambican state seek compensation for “losses on payments of debts it has made or will make, resulting from any of the three loans, including those that have already been restructured, and for macroeconomic losses as a result of the financial crisis caused by the scandal and consequent loss of donor funding,” the (PGR) document dated August 19, 2019, which has not been public until now, reads.

In addition, Mozambique also wants a court order reclaiming the bribes that were paid to the three then-Credit Suisse executives, and to establish who the ultimate beneficiaries of the missing funds were.

Last week, Judge Mark Pelling, who is leading the case, declined any further postponement and ordered Credit Suisse to present its defence by the end of Tuesday.

In addition to Credit Suisse, the lawsuit indicates as defendants former executives of that investment bank Surjan Singh, Andrew James Pearse and Detelina Subeva, and several companies linked to the naval group Privinvest.

At stake are the so-called ‘hidden debts’ of the Mozambican state contracted between 2013 and 2014 and totalling more than US$2 billion, in the form of loans from UK branches of the investment banks Credit Suisse and Russian bank VTB, to Mozambican state-owned companies ProIndicus, EMATUM and MAM, which precipitated a financial crisis which led Mozambique to default on payments to international creditors and consequently prevented the country accessing international financial markets.

According to the Mozambican PGR, the loans were backed by then-finance minister Manuel Chang, but the government says that he “had no authority” to sign sovereign guarantees, which were unconstitutional and illegal because parliament did not approve them.

The complaint filed by the Government of Mozambique alleges that the three transactions involved the payment of bribes to government officials, including Chang, who has been held in custody in South Africa since December 29, 2018, at the request of the United States, which wants to put him on trial in New York for fraud, corruption and money laundering.

The former finance minister also faces an extradition request from Mozambique.

Source: Lusa