Pope's visit to Mozambique: Government to spend 20 million meticais on preparations - RM
File photo: CNBC
The Russian bank VTB on Wednesday gave Mozambique an ultimatum – pay up, or we’ll declare you in default.
VTB and Credit Suisse are the two banks involved in the scandal of Mozambique’s “hidden debts” – the loans of over two billion US dollars which these banks granted to the fraudulent, security-related companies Ematum (Mozambique Tuna Company), Proindicus and MAM (Mozambique Asset Management).
The loans were granted simply because the government of the time, under the then President Armando Guebuza, issued illicit loan guarantees. Those guarantees violated both the budget laws of 2013 and 2014 and the Mozambican constitution.
Neither Credit Suisse nor VTB bothered with any due diligence, of the sort that banks would normally do, as a matter of routine, if previously unheard-of companies ask for huge sums of money. They did not ask if there was any likelihood that these companies, established by the Mozambican Security and Intelligence Service (SISE), could ever repay the money.
They assumed that, with guarantees signed by the then Finance Minister Manuel Chang (currently in a South African jail, awaiting extradition to either Mozambique or the United States), they would extort the money from the Mozambican state when the companies proved unable to pay.
VTB lent the entire 535 million dollars that went to MAM, and now it is demanding the money back, reports Monday’s issue of the independent newssheet “Carta de Mocambique”.
Speaking on Wednesday to reporters at the Eastern Economic Forum in Vladivostok, Andrey Kostin, the Chief Executive Officer of VTB, said “If our colleagues in Mozambique do not take steps to speed up this process, by the end of the year we shall have to declare that the country has defaulted”.
“I hope our black friends in Mozambique are listening to this”, Kostin added. Using the irrelevant term “black” in this context gives off a whiff of racism – so much so that the VTB press service felt obliged to say that Kostin “did not intend to offend anyone”.
VTB is effectively controlled by the regime of Vladimir Putin, since the Russian government owns over 60 per cent of its shares.
Both VTB and Kostin himself are under United States sanctions because of the Russian annexation of the Crimea from Ukraine.