Mozambique seeks US$3.1 billion in damages from Privinvest

Login

Register

http://www.clubofmozambique.com/

Mozambique seeks US$3.1 billion in damages from Privinvest

5:51 CAT | 17 Oct 2023

File photo: Privinvest Group

Mozambique is demanding US$3.1 billion from the Privinvest group and its owner, Iskandar Safa, in damages, compensation and indemnity in the context of the “hidden debts” case that began today in the London Commercial Court.

The amount was revealed at the start of the trial today, delayed after agreement was reached with Credit Suisse bank and other banks involved in the process two weeks ago.

The lawyer from the Attorney General’s Office (PGR) of Mozambique representing the state in this case, Joe Smouha, highlighted the “shocking scale and speed” of the fraud and corruption committed.

Privinvest is accused of bribing public officials, in particular former finance minister Manuel Chang, to approve contracts and financing loans from three state-owned companies (Proindicus, EMATUM and MAM) for the purchase of fishing and maritime security equipment from Privinvest.

The company and Iskandar Safa are also accused by Mozambique of bribing employees at Credit Suisse and VTB banks to facilitate transactions.

The Franco-Lebanese businessman and the shipping group both deny having committed acts of corruption.

The US$3.1 billion includes US$700 million in costs and interest on debts incurred through the loans, US$1.4 billion that the Mozambican state owes to holders of bonds and coupons on external debt securities, and US$136 million in bribes paid to public officials.

The remainder is an estimate of the profits that Privinvest obtained on revenues of US$1.8 billion from contracts.

Mozambique had previously announced that it would not pursue compensation for “macroeconomic losses” resulting from the suspension of international support from the International Monetary Fund (IMF) and other donors.

This trial, Smouha said, “finally gives a voice to the people of Mozambique”, a country “burdened with poverty and debt”.

The lawyer also criticized the banks involved for trying to obtain “quick commercial gains at the expense of the population and turning a blind eye to what was obvious to any banker”.

As a result of the Mozambique’s agreeing to drop the allegations against Credit Suisse, the Swiss bank waived a debt of US$450 million but did not pay any compensation, Smouha revealed.

Credit Suisse remains potentially liable to Privinvest if it is proven that the shipping group bribed the bank’s three former employees, Andrew Pearse, Surjan Singh and Detelina Subeva.

The so-called “hidden debts” or “tuna bond” case dates back to 2013 and 2014, when state guarantees on loans from Proinducus, Ematus and MAM to the banks Credit Suisse and VTB were approved.

Disclosed in 2016 and leading to legal proceedings in the United States and Mozambique, the debts involved were estimated at around US$2.7 billion, according to the indictment presented by the Mozambican Public Prosecutor’s Office.

The London case named several high-ranking public officials and state figures, such as former president Armando Guebuza, but diplomatic immunity was recognized for the current head of state, Filipe Nyusi.

In a trial in Maputo in the same case that concluded in December, 11 of the 19 defendants were sentenced to prison terms of between 10 and 12 years.

Three of them, Ndambi Guebuza, son of former president Armando Guebuza, and two former directors of the State Information and Security Service (SISE), Gregório Leão and António Carlos do Rosário, were also ordered to pay compensation to the state equivalent to around US$2.8 billion.

The trial at the London Commercial Court will continue for the next nine weeks, until the end of December.

Source: Lusa