28 November 2012

Mozambique: Assembly Delegates Bankruptcy Laws to Government

Maputo — The Mozambican parliament, the Assembly of the Republic, on Wednesday passed a bill authorizing the government to establish a new legal regime for the bankruptcy and recovery of companies.

The current legislation on bankruptcy dates from the colonial period, and laws that were passed in Lisbon in 1961 and 1967. These colonial rules are not only completely out of date, but only defend the interests of creditors, and not of the workers employed by failing companies.

The bill gives the government 180 days to draw up new rules aimed at helping businesses survive and recover, rather than simply letting them go to the wall.

Introducing the bill, the Minister of Industry and Trade, Armando Inroga, said laws governing bankruptcy must be brought into line with Mozambique’s new commercial legislation, with the demands of economic development, and with the need to improve the Mozambican business environment.

Key purposes of the new laws, said Inroga, would be to ensure that businesses could keep going wherever possible, and to ensure that their workers were not thrown into unemployment.

Deputies of the former rebel movement Renamo opposed giving the government this responsibility and demanded that the Assembly itself should draw up the bankruptcy legislation – although it has become normal practice to delegate such detailed and technical economic legislation to the government.

Renamo saw a conspiracy by the government to defend bankrupt companies owned by members of the ruling Frelimo Party. Mario Naula even claimed that the national business class “is a minority aligned with Frelimo and opposed to the majority of the people who live in penury. They will dilapidate the treasury for their own interests”.

Lest anyone should imagine that this was a left wing discourse, in his next breath Naula denounced “cooperatives of communists”.

Jose Palaco claimed the government bill aimed “to take the subject out of a multi-party environment (the Assembly) and place it in a single party environment (the government)”.

“What is the real motive for taking it out of the Assembly”, asked Palaco.

“We legislate for all Mozambicans”.

He claimed that though privatizations “Frelimo took over all the companies and made them bankrupt”, while other Renamo deputies saw a “hidden agenda” in the bill.

Frelimo’s main arguments - that the legislation had to be overhauled in order to bring it into line with modern practices, to keep the economy running smoothly, and to keep workers employed - made no impression on Renamo.

When a final vote was taken the bill passed, with 174 deputies from Frelimo and the Mozambique Democratic Movement (MDM) voting in favour while the 39 Renamo deputies present voted against.

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