Public prosecutor acts on illicit INSS investment

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Public prosecutor acts on illicit INSS investment

8:10 CAT | 27 Dec 2017

Former chairperson of CTA, Rogério Manuel

The Mozambican public prosecutor’s office has charged senior figures in the National Social Security Institute (INSS), and in the private company CR Aviation, of embezzlement and abuse of office.

Those charged, according to a report in the Maputo daily “Noticias”, are the former chairperson of the CTA (Confederation of Mozambican Business Associations), Rogerio Manuel, who owns 49 per cent of CR Aviation, INSS chairperson Francisco Mazoio, the former INSS managing director, Baptista Machaieie, and the former managing director of CR Aviation, Miguel Curado Ribeiro.

The four were charged on 29 September, but only now has the charge sheet leaked to the press.

The case arises from a memorandum of understanding signed between the INSS and CR Aviation in 2014, which envisaged using INSS funds to purchase four aircraft for CR Aviation at a cost of 84 million meticais (about three million US dollars, at the exchange rate of the time).

Alerted to this deal by press reports in 2016, the public prosecutor investigated and found a damning range of irregularities which constitute criminal offences. Thus the Memorandum of Understanding had never been submitted for approval to the Administrative Tribunal, the body that inspects the legality of public expenditure. CR Aviation had never submitted business plans explaining how the money the INSS invested in the company would be repaid. The INSS managers decided to grant the money to CR Aviation without even consulting the INSS Board of Directors.

The public prosecutors have also begun proceedings in the Maputo branch of the Administrative Tribunal to hold the INSS managers responsible for the return of the money unduly paid to CR Aviation.

This case might have gone unnoticed had it not been for some investigative journalism in early 2016. Those reports said that the INSS intended to invest seven million dollars in CR Aviation, a claim denied at the time by Manuel who said that CR Aviation was still negotiating with the INSS. Manuel refused to say whether any money at all from the INSS had gone into his company. Journalists discovered that the deal had not been completed, but, by the time it was made public, 84 million meticais of INSS funds had been invested in CR Aviation.

According to the Memorandum of Understanding, obtained and published by the weekly “Magazine Independente” (MI), three million dollars of the INSS funds were to be used to buy a 15 per cent stake in CR Aviation, and Manuel denied that these shares had yet been purchased. However, he did not deny that the other four million dollars had been invested. This money was to be used to purchase four light aircraft and pay for inspection and maintenance costs.

One serious problem is that the INSS is not allowed to invest in companies unless their shares can be traded on the Mozambique Stock Exchange (BVM), but CR Aviation has never been quoted on the stock exchange.

The deal was negotiated in the final year of the previous government, headed by President Armando Guebuza. When the current Minister of Labour, Employment and Social Security, Vitoria Diogo, found out, she was furious, and allegedly demanded that the money be returned.

Belatedly Mazoio, in March 2016, demanded the money back. As far as Mazoio was concerned, that closed the matter and there was nothing further to be said. But clearly the prosecutors believe there is a great deal more to be said.

CR Aviation is one of several dubious investments by the INSS. The most notorious was the decision to sink social security funds into a tiny bank, O Nosso Banco (“Our Bank”) which failed last year. The Bank of Mozambique was obliged to step in and liquidate this bank.

Source: AIM