Administrative tribunal seeks more data on “hidden debts”

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Administrative tribunal seeks more data on “hidden debts”

8:56 CAT | 27 Dec 2018

In file CoM

Mozambique’s Administrative Tribunal has demanded that the security-related companies Ematum (Mozambique Tuna Company), Proindicus and MAM (Mozambique Asset Management) and their managers provide all the pertinent documents that were withheld from the American firm Kroll Associates, when it was auditing the three companies in early 2017.

In a release published on Thursday, the Tribunal announced that it has demanded the companies provided “more elements and explanations”

Once these additional materials are provided, the Tribunal added, the legal proceedings will continues “with the speed that is necessary, given the importance and complexity of this case”.

Ematum, Proindicus and MAM borrowed over two billion US dollars from the European banks, Credit Suisse and VTB of Russia, in 2013 and 2014. These loans were only granted because the Mozambican government of the time, under the then President Armando Guebuza, issued illegal guarantees.

Those guarantees violated the 2013 and 2014 budget laws, since they smashed through the ceiling on guarantees set by the law. They also violated the Mozambican constitution, which states that only the country’s parliament, the Assembly of the Constitution, can authorise such debt.

The three companies proved useless, and by mid-2016 were effectively bankrupt and quite unable to repay the loans. Although the 850 million dollars lent to Ematum was public knowledge, since it took the form of a European bond issue, the Guebuza government kept the 1.1 billion dollars lent to Proindicus and MAM secret, and the true scale of these debts only erupted into the public domain in April 2016.

The International Monetary Fund (IMF) accused the government of concealing information about the true size of the country’s foreign debt and suspended its programme with Mozambique. Other institutions followed suit – in particular the 14 donors who provided direct support to the Mozambican state budget suspended their disbursements.

Over two and a half years later, direct budget support has not resumed. At a conservative estimate, this has cost Mozambique over a billion dollars.

Kroll, reputedly the foremost forensic auditing company in the world, was hired (paid for by the Swedish embassy) to audit Ematum, Proindicus and MAM, and establish what had happened to the two billion dollars. The management of the three companies deliberately obstructed its investigations, and at one point, the man who was chairperson of all three companies, Antonio do Rosario, threw the auditors out of his office.

As a result Kroll could not determine what had happened to all the money. But it was able to inspect some of the assets, such as the Ematum fishing boats, and concluded that they were worth much less than the sum on the invoice.

But, despite the damning indictment of the Kroll audit, no measures were taken against anybody responsible for the illicit loans and guarantees.

The Attorney-General’s Office (PGR) had opened a file on Ematum in 2015, and in 2016 expanded the investigation to cover Proindicus and MAM. But still nothing happened until, suddenly, in January 2018, the PGR handed much of the investigation over to the Administrative Tribunal.

The PGR said that, during the investigations, prosecutors had noted facts that may constitute financial crimes. These included violating the ceiling set on government guarantees for loans laid down in the budget legislation, and “lack of observance of the legal procedures for contracting foreign financing and in contracting goods and services”. The goods and services for Ematum, Proindicus and MAM were provided by just one contractor, the Lebanese Privinvest Group.

The PGR also noted that the contracts and other acts had been carried out “without being submitted for the obligatory inspection by the competent bodies”. The main such body is the Administrative Tribunal.

So the PGR announced that it had submitted a denunciation to the Administrative Tribunal in order for the public managers involved in the scandal to be held financially responsible for their acts. It did not name them, but they would presumably include Antonio do Rosario, and the Finance Minister at the time, Manuel Chang, who signed many of the illegal guarantees.

Since then a veil of silence has fallen over the investigations. In May, a spokesperson for the Administrative Tribunal promised there would “soon” be news about the case.

In fact, there was no news at all until the Thursday release announcing the Tribunal’s request for more information from the three companies.

This release said that, in the preparatory investigation by the PGR, “facts were found that indicate financial offences that can be imputed to the public managers involved in the design and implementation of the projects of the three companies” – which was why the PGR had put the entire case in the hands of the Administrative Tribunal.

The Tribunal had found that key documents on the projects of Ematum, Proindicus and MAM were missing. These missing documents had already been mentioned by the Kroll auditors and by the report from the 2016 Parliamentary Commission of Inquiry into the “hidden debts”.

So the Tribunal was now asking for further documentation and information from the companies and their managers. It would then carry out its task with all due speed (although speed has certainly been lacking to date), while “strictly observing the legally defined procedures, as well as respecting the universal principles of judicial secrecy and the presumption of innocence”.

And that is all. This is the meagre harvest of an investigation which began in mid-2015, and which has been in the hands of the Administrative Tribunal for almost a year.

Source: AIM