Moza Banco recapitalisation generates controversy in Mozambique

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Moza Banco recapitalisation generates controversy in Mozambique

10:42 CAT | 05 Jun 2017

DW / Bank of Mozambique

While analyst Egídio Vaz says assigning management of Moza Banco to pension fund manager Kuhanha was the “only way to guarantee the bank’s survival”, Mozambique’s Centre for Public Integrity maintains that “there are strong indications of a conflict of interest”.

Kuhanha, the company which manages the Bank of Mozambique workers’ pension fund, last week became Moza Banco’s majority shareholder, the country’s central bank has revealed.

In a statement issued Thursday 1 June, the Bank of Mozambique states that the selection process was transparent and did not violate the law or ethics. It adds that “the steps taken, which, for many analysts, have led to violations of law and ethics, have been surpassed by a superior management decision which avoided the setback which would be noticed had this solution not been taken”.

Egidio Vaz Historiker aus Mosambik (Marta Barroso) — Egídio Vaz, analyst

In an interview with DW Africa, analyst Egídio Vaz says that the Bank of Mozambique decision to assign management to Kuhanha will ensure Moza Banco’s sustainability and safeguard the money invested so far.

Vaz says it may take up to five years to ready the bank for sale, and adds that the central bank acted politically and clearly to sustain Moza Banco, which was bankrupt and unsellable. “What you want to ensure is that the money does not fall into dubious hands, especially not those who led the bank into bankruptcy in the first place,” he said.

Conflict of interests

Vaz admits that “there was clearly a conflict of interest”, but adds, “there was also a need”, and that what was faced was “a conflict between survival and morality”. “I support the Bank of Mozambique. This was the only way to guarantee the bank’s survival. Bankruptcy would have had incalculable consequences,” he says.

Jorge Matine (Privat) — Jorge Matine, Centre for Public Integrity

Jorge Matine of Mozambique’s Centre Public Integrity agrees that “there are strong indications of a conflict of interest”, but adds: “We still need additional information to determine, concretely, how this conflict of interests manifests.”

The Bank de Mozambique employees’ pension fund invests in the capital, financial and real estate markets to pay the institution’s pensioners, and its management company, composed of managers representing the employees, is chaired by the governor of the Bank of Mozambique.

Critical voices question the extent to which bank workers overseeing Moza Banco can be independent, being concerned parties through Kuhanha. On this topic, Vaz says: “Precautionary measures have been taken to guarantee the impartiality of the same and of the business.”

The Bank of Mozambique pension fund is expected to spend about EUR 120 million recapitalising Moza Banco. “We will hope that this injection will assure the bank’s survival and that it will be viable once again, so that other investors will leave Kuhanha free,” Vaz said.

Source: Deutsche Welle