2 August 2017

Mozambique: Embraer Bribe - Three Countries Send Information

Maputo — According to the Mozambican Attorney-General's Office (PGR), the authorities of three countries - Brazil, Portugal and Sao Tome and Principe - have responded to requests for information about the payment of an 800,000 US dollar bribe by the Brazilian aircraft manufacturer Embraer, to ensure that Mozambique Airlines (LAM) purchased two LAM aircraft in 2009.

A source in the PGR, cited in the Maputo daily “Noticias”, said the PGR is still waiting for information from the United States, Britain and France. The authorities in those three countries say they are working on the PGR's requests, compiling all data regarded as useful.

The PGR has activated the mechanisms for legal cooperation that it has with these countries. “It's a long path, but we're making advances”, the source said. “We are satisfied, because the countries from which we requested information are cooperating. We are waiting for the others to do so shortly”.

Last year, Embraer admitted to paying bribes, not only in Mozambique, but also in India, Saudi Arabia, and the Dominican Republic. The Brazilian and US judicial authorities fined Embraer a total of 225 million US dollars.

We know a great deal about these bribes thanks to the documents released by the US and Brazilian prosecutors. According to the documents from the Brazilian Federal Prosecutor's office, the bribe was demanded by the then chairperson of the LAM board, Jose Viegas, and Mateus Zimba, then the Mozambique representative of the South African petrochemical company Sasol, was the intermediary who set up a shell company, named Xihevele and registered in Sao Tome, that handled the 800,000 dollar bribe.

Xihevele sent Embraer two invoices for 400,000 dollars each, and the money was paid into the Xihevele account in Portugal. From Embraer's viewpoint the bribe appeared successful, since it resulted in LAM acquiring two Embraer-190 planes, for 32 million dollars each.

Because Embraer found it difficult simply to slip the money out of its own accounts, it simply added the bribe to the amount LAM was charged for the two planes. Hence this act of corruption resulted in an inflated invoice.

The PGR is prosecuting Viegas, Zimba and a third suspect, believed to be former transport minister Paulo Zucula, who denies any wrongdoing. None of the three suspects has been detained.

No advance seems to have been made yet in the case of a second scandal involving bribes paid to a Brazilian company. The PGR had hoped that the Brazilian authorities would send it information on the Mozambican officials who took a bribe of 900,000 dollars from the construction company Odebrecht.

As in the Embraer case, it was the US authorities who first investigated Odebrecht, establishing that the company had paid bribes to guarantee contracts for over 100 projects in a dozen countries (Mozambique, Angola, Argentina, Brazil, Colombia, Dominican Republic, Ecuador, Guatemala, Mexico, Panama, Peru and Venezuela).

The 900,000 dollar bribe paid to as yet unnamed Mozambicans, during the period of the government of President Armando Guebuza, appears to have been connected with the construction of an international airport at Nacala, on the northern coast. The conversion of the old Nacala air base into an international airport cost 200 million dollars - and appears to have been a spectacular waste, since the only airline flying to Nacala is LAM.

It was hoped that Nacala would be a hub, linking southern Africa and the Middle East, but to date no international airlines have shown any interest in Nacala.

Mozambique

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