Privinvest loses appeal over Mozambique debts in London – AIM report

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Privinvest loses appeal over Mozambique debts in London – AIM report

7:36 CAT | 25 Aug 2020

FILE - Iskandar Safa, CEO of the Privinvest Group. [File photo: Youtube]

The Abu Dhabi based group Privinvest, and its owner, Lebanese businessman Iskandar Safa, have lost their appeal in the London High Court which sought a delay in the proceedings over the scandal of what have become known as Mozambique’s “secret debts”, according to a report by the independent television station STV.

The “secret debts” refers to illicit loans of over two billion US dollars which the banks Credit Suisse and VTB of Russia granted in 2013 and 2014 to three fraudulent security-related companies, Proindicus, Ematum (Mozambique Tuna Company) and MAM (Mozambique Asset Management).

Despite the failure to undertake any proper due diligence of the three companies, the banks granted the loans, largely because the government of the day, under the then President, Armando Guebuza, signed illicit loan guarantees. The guarantees violated the budget laws of 2013 and 2014, and the Mozambican constitution.

Privinvest became the sole contractor for the three companies, and sold them equipment at vastly inflated prices, as was discovered when an independent audit was held in 2017.

The secret debt contracts are adjudicated in the London High Court, and in 2019 Mozambique began proceedings claiming that that the supply contracts were one-sided and amounted to “shams” or ”instrument of fraud” and that bribes were paid to certain officials and individuals in Mozambique, and the lead salesman and negotiator of Privinvest.

ALSO READ: Update: Privinvest claims damages of over US$200 million as it sues Mozambique over ‘hidden debts’ scandal

Mozambique claimed that there was a conspiracy to render it liable under the guarantees and that Privinvest and Credit Suisse were liable for damages for that conspiracy.

The Mozambican state, through the Attorney-General’s Office (PGR) has started suits against Credit Suisse, and against members of that bank’s negotiating team, Andrew Pearse, Detelvina Subeva and Surjan Singh, who all testified in the United States that they had received bribes from Privinvest. Also named in the suits are entities of the Porivinvest group, and Iskandar Safa.

Ematum.ap_ — FILE – Mozambique’s President Armando Guebuza, centre, shakes hands with France’s President Francois Hollande, right, as the head of CMN (Construction Mecanique de Normandie) Iskandar Safa stands behind at the CMN shipyard in Cherbourg, northwestern France, Monday, September 30 2013. [File photo: AP]

Privinvest had applied to the London court to delay proceedings in order to allow for arbitration in Swiss courts. This has now been turned down and a new hearing has been set in London for January 2021.

The purpose of the PGR’s suits is to remove all responsibility for the debts from the Mozambican state, and to seek compensation or the losses incurred so far.