Mozambique: Parliament approves sovereign fund from gas revenues
O País (File photo) / A very brief statement issued by the IMF’s Resident Representative in Mozambique, Ari Aisen, gave a cool response to the latest release from the Attorney-General’s Office (PGR)
The International Monetary Fund (IMF) on Tuesday dashed the hopes of anyone who believed that relations between Mozambique and the IMF will return to normal any time soon.
A very brief statement issued by the IMF’s Resident Representative in Mozambique, Ari Aisen, gave a cool response to the latest release from the Attorney-General’s Office (PGR), which called for those public managers involved in the scandal of the country’s “hidden debts” to be held “financially responsible” for their actions.
The “hidden debts” are the loans of over two billion US dollars contracted from the European banks Credit Suisse and VTB of Russia in 2013 and 2014 by the security-related companies Ematum (Mozambique Tuna Company), Proindicus and MAM (Mozambique Asset Management), with illicit guarantees issued by the government of the time, headed by President Armando Guebuza.
The PGR’s Monday release noted that financial crimes may have been committed when the loans were guaranteed (in particular, the guarantees violated the ceiling on state guarantees for loans laid down in the 2013 and 2014 budget laws). The PGR announced that on Friday it submitted a denunciation to the Administrative Tribunal, the body responsible for checking the legality of public expenditure, in order for the public managers involved in the scandal to be held financially responsible.
The IMF statement described this as “an encouraging step to guarantee holding people responsible”. But it was not enough, and the IMF “reiterates the need to fill in the information gaps in the audit report on Ematum, Proindicus and MAM.”
The PGR hired the company Kroll Associates, considered the foremost forensic audit company in the world, to audit the three companies. But Kroll could not complete this task because it did not receive the expected cooperation from the companies, and particularly from the man who chairs all three companies, Antonio do Rosario, who is an officer in the Mozambican State Security and Intelligence Service (SISE).
In late June 2017, the PGR published the executive summary of the Kroll audit report, which accused the management of Ematum, Proindicus and MAM of failing to cooperate and concealing information. The main challenge in completing the audit, Kroll said, “was the lack of information available from the Mozambique companies. Kroll spent a considerable amount of time requesting and liaising with representatives of the Mozambique companies to obtain information and documentation that was, in some cases, either ultimately incomplete or not provided at all”.
Kroll said it repeatedly asked Rosario for “outstanding information that would provide a better understanding of expenditure: the response was that the requested information was ‘classified’ and not available”.
Kroll also found it could not obtain “reliable accounting records from the Mozambique companies to enable a proper assessment of the financial position of each company. Further, the Mozambique companies were unable to provide complete loan agreements or supply contracts”.
The invoices that the companies did provide “did not include sufficient detail to provide comfort that the documents accurately reflect the true price of the assets and services”. Some of the assets, such as the Ocean Eagle patrol vessels supplied to Ematum, did not feature in the accounting records at all.
There were huge holes in the Ematum records. Kroll found that Ematum “only provided limited information for two bank accounts which did not cover the period from the account opening, nor did Ematum provide details of two bank accounts held with BNI-Mozambique and Moza Banco. Of particular concern is that the Moza Banco account was not recorded in the Ematum accounting records, despite this account being used to receive more than 1.7 billion meticais (USD 55 million) from SISE”.
“The inability of Ematum to provide complete accounting records and bank statements demonstrates that the company has not maintained adequate books and records, either through mismanagement or a deliberate attempt to frustrate Kroll’s independent audit”, the report declared.
Since June, the situation has not changed. There is no public indication that the PGR has demanded that the three companies to fill in the many gaps identified by Kroll. The PGR has not even published on its website the full Kroll audit report – although it has been leaked, and can be readily found on the Internet.
Stonewalling has not worked with the IMF. The position expressed in Aisen’s brief statement is exactly the same as the position the IMF has held consistently since June. Relations cannot be restored to normal until the missing information is supplied.
Other western partners of the government tend to take their cue from the IMF, and have also cut financial cooperation with Mozambique. In April 2016, all 14 donors who used to provide direct support to the Mozambican state budget suspended further disbursements, and they have no yet resumed. They too have made it clear that they want a full explanation of what happened to the two billion dollars.
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