Mozambique: Country expects to receive $1.9B after London ‘hidden debts’ ruling – PGR

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Mozambique: Country expects to receive $1.9B after London ‘hidden debts’ ruling – PGR

5:47 CAT | 29 Jul 2024

File photo: O País

The office of Mozambican Attorney General (PGR) said on Monday that the country is entitled to receive approximately $1.9 billion (€1.8 billion) as a result of a court ruling in the ‘hidden debts’ case that was being tried in London.

“This figure reflects the amounts that the state has already paid under the guarantees, including principal, interest and fees, of the Eurobonds, following the takeover of Ematum, as well as the transaction agreements that the Republic of Mozambique reached, initially with Credit Suisse and other banks and financial institutions and, more recently, with VTBC and BCP,” reads the note distributed to the media by the attorney general’s office following the judgement.

The London Commercial Court ruled on Monday in Mozambique’s favour in the so-called hidden debts case and determined that the shipping group Privinvest must pay compensation for the corruption of Manuel Chang, a former minister of finance in the country.

“I am convinced that Mr. Safa and the Privinvest Group were willing to promise or pay anyone, and specifically Minister Chang (…). And that is what they did,” said the judge, Robin Knowles, as quoted in the judgement released earlier.

In the statement issued in the wake of that ruling, the attorney general’s office, which represented Mozambique in the case, also indicates that steps are being taken to secure the reimbursement of all legal costs resulting from the case.

“The Attorney General’s Office will continue, within the scope of its constitutional and legal powers, to work with other actors in society, both inside and outside the country, to eradicate corruption and all organised and transnational crime, holding those involved accountable,” the document reads.

Mozambique’s government had previously announced two out-of-court settlements relating to the hidden debts scandal.

In the first, Maputo paid $130 million (€119.1 million) to financial institutions as part of a settlement with one of the lenders, Credit Suisse, to end their dispute in the London Commercial Court.

In the second agreement, reached with three other banks, including Portugal’s BCP, Mozambique planned to reduce the state’s exposure from $1.4 billion (€1.3 billion) to $220 million (€204 million).

The hidden debts scandal dates back to 2013 and 2014, when then finance minister Chang (who is now in detention in the US) signed State guarantees for loans taken out by state enterprises Proindicus, Ematum and MAM from the banks Credit Suisse and VTB, without parliamentary approval or the knowledge of state auditors or creditors.

The debts, which were discovered in 2016, were estimated at around $2.7 billion (€2.55 billion), according to figures presented by Mozambique’s Public Prosecution Service.

Monday’s court ruling was the culmination of almost four years of litigation in the UK, with the African country alleging corruption, conspiracy to defraud by unlawful means and dishonest assistance, in a bid to have debts cancelled and claim financial compensation worth millions of dollars.

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