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Hidden Debts: Singh, Pearse and Subeva argue that they should not pay compensation to Mozambique -report
2:21 CAT | 10 Mar 2020
File: WSJ
The former executives at Credit Suisse involved in the hidden debt scandal in Mozambique deny any wrongdoing and allege that Mozambique is not entitled to the compensation requested by the Mozambican Attorney General’s Office.
According to official statements sent to the High Court in London, to which Lusa has had access, Surjan Singh, Andrew Pearse and Detelina Subeva, who are also being tried in the context of the same case in New York, say that they are not responsible for the deterioration of the economic situation in Mozambique following the hidden debt crisis.
“Mr. Pearse denies that the Republic has a right to what it wants, or to any compensation from him,” the document delivered to the London court on behalf of Andrew Pearse reads.
In the text, Pearse also denies “having been involved in any irregular action with the intention of harming Mozambique, having received any payment as part of a conspiracy to harm the country, and having been involved in an illegal conspiracy to target Mozambique”.
The two-page text also reads that the defendant “denies that he has received any money that belongs to the Republic, or on which it [the Republic] has any claim, and that he is responsible for deceiving the country”.
Pearse’s statements were sent in response to a legal case brought by the Mozambican Attorney General (PGR) in January, and closely follow the responses given by his two colleagues. Surjan Singh claimed to be unaware of any bribes and that the Minister of Finance was the right person to sign state guarantees, and Detelina Subeva, who several times in her response asserts that she had “no powers to sign documents on behalf of Credit Suisse” and, on other charges, says she does not remember the events.
Mozambican authorities argue that, in addition to the reimbursement of funds, they are also entitled to compensation for the damage resulting from the hidden debt scandal, which caused cuts in financial support from international donors, a reduction in economic activity and the downgrade to ‘default’ by financial rating agencies, effectively preventing Mozambican access to international financial markets.
The lawsuit that Mozambique filed in London against Credit Suisse aims to cancel the US$622 million ProIndicus debt and secure compensation for all losses from the hidden debt scandal.
The PGR argues that the debt to Credit Suisse is unconstitutional and illegal under Mozambican law, which is why the state should not be required to repay it, and should be compensated for the consequences.
Credit Suisse’s loan to the Mozambican public company ProIndicus, in the amount of US$622 million, was granted with state guarantee, but outside of public accounts and without the knowledge of international donors.
The Mozambican states seeks compensation for “losses on payments of debts it has or will make, resulting from any of the three loans, including those that have already been restructured, and for macroeconomic losses as a result of the financial crisis caused by the scandal and consequent loss of donor funding, reads the court file, dated August 19, 2019, but which has not been public until now”.
In addition, Mozambique also seeks a court order to be able to claim the bribes that were paid to the three former Credit Suisse executives and find out who were the ultimate beneficiaries of the missing funds.
In addition to Credit Suisse, the lawsuit indicated the former executives of investment bank Surjan Singh, Andrew Pearse and Detelina Subeva as defendants, and several companies linked to the naval group Privinvest.
At stake are the hidden debts of the Mozambican state of more than US $ 2.2 billion contracted between 2013 and 2014 in the form of credit with the British branches of the investment banks Credit Suisse and VTB by Mozambican state-owned companies Proindicus, Ematum and MAM, accentuating a financial crisis that led Mozambique to default on payments to international creditors (‘default’) and the consequent departure from international financial markets.
According to the file, the loans were guaranteed by the then Minister of Finance, Manuel Chang, but the Government of Mozambique claims that he “had no authority” to sign sovereign guarantees, which were unconstitutional and illegal because the Mozambican parliament did not approve loans.
The complaint filed by the Government of Mozambique alleges that the three transactions involved the payment of bribes to officials of the executive, including Chang, who has been detained in South Africa since December 29, 2018, following a request of the United States to try him in New York for fraud, corruption and money laundering.
Meanwhile, the former finance minister also faces an extradition request to Mozambique.
Source: Lusa
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