Mozambique: LAM sold off planes and leased them back – AIM report

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Mozambique: LAM sold off planes and leased them back – AIM report

8:55 CAT | 10 Mar 2020

Photo: TVM

Mozambique Airlines (LAM) sold three aircraft – two Boeing 737s and one Embraer 190 – to a foreign entity in 2010, and then immediately leased them back, in a deal that was supposed to generate income so that LAM could pay off debts to its suppliers.

This revelation came in the evidence given on Friday by Marlene Manave, a former member of the LAM Board of Directors, during the trial of the former LAM Chairperson, Jose Viegas, former Transport Minister Paulo Zucula, and former Mozambique representative of the South African petro-chemical company Sasol, Mateus Zimba, accused of involvement in the 800,000 dollar bribe paid by Embraer in 2009 so that LAM would buy two Embraer aircraft.

According to Manave, it is common practice in the civil aviation industry to sell aircraft and then rent them back in order to solve cash flow problems. The rented aircraft, she said, served LAM for about three years.

She said that, as a member of the Board of Directors, she was aware of LAM’s acquisition of the two Embraer 190s at the heart of the case. But she claimed to know nothing of any connection between Mateus Zimba and LAM. Nor was she aware of any relationship between Zimba and Embraer, or the Embraer team that negotiated with LAM.

The Embraer 800,000 dollar bribe was not paid directly to LAM, but via a shell company named Xihivele which Zimba had set up, supposedly for tax reasons, in Sao Tome and Principe. Zimba said Embraer paid what he called a “sales commission” into the Xihivele account – even though he had nothing to do with negotiating the sale.

Carlos Sitoe, coordinator of the LAM negotiating commission, also said he knew nothing about any role played by Zimba in the deal. He said the basic price charged by Embraer for each of the aircraft was 31.1 million dollars, which rose to 31.17 million dollars because of modifications to the aircraft requested by the LAM technical team.

Sitoe said he had only seen Zimba on television, and knew nothing of any relationship he had with either LAM or Embraer.

Source: AIM