Mozambique | ‘Hidden debts’: Those responsible will face Justice, pledges PGR – AIM

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Mozambique | ‘Hidden debts’: Those responsible will face Justice, pledges PGR – AIM

8:55 CAT | 08 Jul 2024

File photo: O País

The Mozambican Attorney-General’s Office (PGR) has stressed that the out-of-court settlement reached last week with the Portuguese Commercial Bank (BCP) and VTB of Russia does not prevent Mozambican prosecutors from bringing to justice those responsible for contracting illicit debts in the first place.

The PGR was responding, on Saturday to a claim by the NGO, the Centre for Democracy and Development (CDD), that the out-of-court settlement damages the interests of the Mozambican state and protects leaders of the ruling Frelimo Party.

At the heart of this dispute are the loans contracted in 2013 and 2014 by three fraudulent Mozambican companies, Proindicus, Ematum (Mozambican Tuna Company) and MAM (Mozambique Asset Management), which were all run by the security service, SISE. The loans, for over two billion US dollars, were guaranteed by the Mozambican government of the day, under the then President Armando Guebuza.

Guebuza’s finance minister, Manuel Chang, signed the guarantees, which were entirely illegal since they smashed through the ceiling on state guarantees established in the 2013 and 2014 budget laws.

Predictably, the three companies could not repay the loans and soon went bankrupt, leaving the Mozambican state liable for the full amount. Thus hidden loans became hidden debts.

The Constitutional Council, the country’s highest body in matters of constitutional law, declared the loans illegal and unconstitutional.

The CDD based its stand on the Constitutional Council ruling. “Bearing in mind the non-recognition of the debts, declared null and void by the Constitutional Council, the CDD believes that the position of the government in entering into negotiations with the creditors is contradictory and damages the State”, it argued.

The PGR, however, insisted that the deal with the banks does not prevent prosecutors from bringing to court those responsible for contracting the illegal debts.

The out-of-court settlement, it said, “does not affect the actions under way which seek to hold criminally responsible those persons, Mozambican and foreign, whose illicit acts resulted in contracting the undeclared debts and issuing the corresponding guarantees”.

Assistant Attorney-General Angelo Matusse told a press conference last week that the ruling by the Constitutional Council is not sufficient “to annul the burden borne by the Mozambican state, and the treatment of which is in the hands of foreign courts, notably English ones”.

He pointed out that the jurisdiction of the Constitutional Council does not extend beyond the borders of Mozambique. It could not be enforced in English courts, and the contracts signed by the Mozambican companies state that they will be governed by English law.

Matusse thought the agreement was a good deal for Mozambique, since it reduced the exposure of the Mozambican state to 220 million dollars – 84 per cent less than the original demand from the creditor banks.

There are various criminal cases under way in connection with the hidden debts. Thus former Finance Minister Manuel Chang will face criminal charges on his return to Mozambique. Currently he is in detention in New York, awaiting trial on fraud and money laundering charges.

The government is also suing the Abu Dhabi-based group, Privinvest, for 3.1 billion dollars. The fraudulent scheme was largely the brain child of Privinvest which spent hundreds of millions of dollars in bribing Mozambican officials, including Chang, and Credit Suisse bankers. Three of these bankers (Andrew Pearse, Detelina Subeva and Surjan Singh), who played a key role in negotiating the loans, confessed to an American court that they had taken bribes from Privinvest.

Privinvest became the sole contractor for Proindicus, Ematum and MAM, and grossly over-invoiced the three companies for the fishing boats, patrol vessels and other assets it sold them. An independent audit of the companies in 2016/17 calculated the amount of over-invoicing at more than 700 million dollars.

A further defendant in the Mozambican case is the founder of Privinvest, the Lebanese billionaire Iskandar Safa. However, he will not face justice for his role in the scandal, since he died in January this year.

Source: AIM