Investigators conclude probe of Mozambique secret loan scandal

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Investigators conclude probe of Mozambique secret loan scandal

7:13 CAT | 15 May 2017

Lusa (File photo) / A view of Maputo

Forensic investigators have concluded their audit into secret loans worth $2bn the Mozambican government secured that prompted an IMF and World Bank aid cutoff, the government said on Saturday.

Investigators from New York-based firm Kroll reported their findings to Mozambican officials on Friday.

“The country’s chief prosecutor will proceed with the verification and analysis of the report,” the prosecutor’s office said in a statement, adding that it wants to release the results of the probe “as soon as possible”.

News emerged last year that the government had borrowed massively – including three secret loans amounting to $2bn – between 2012 and 2014 to fund a coastal protection project.

A parliamentary commission of inquiry in December determined that the government broke the law when it failed to seek authorisation from the assembly to secure the funds, saying it “violated the Constitution and budgetary laws”.

The government later explained the loans were used to fund military vessels and defence equipment and said it did not disclose them as a matter of national security.

The scandal seriously damaged Mozambique’s economy, already affected by the collapse in commodity prices, triggering the worst financial crisis since a civil war ended in 1992.

Several major donors to the state budget – including the International Monetary Fund and World Bank – suspended aid to the southern African nation.

The audit is a condition of reinstating international aid.

“The IMF welcomes the release of the report from international audit experts to Mozambique’s state prosecutor,” said Ari Aisen, the IMF representative in Mozambique. “We await with interest the publication of a summary of the report by the end of the month, and in due time, the full report”.

The loans, which the government is unable to repay, were taken out in anticipation of a windfall from recently discovered natural gas deposits – but that income remains illusive.

“The government thought it would repay the loans with gas money,” Borges Nhamire, an analyst at anti-corruption group CIP, previously said.

Mozambique’s political opposition accuse former president Armando Guebuza and current leader Filipe Nyusi of direct involvement in the loans debacle.

Source: AFP