5 July 2017

Mozambique: Hidden Debts 'Should Be Declared Unconstitutional'

Maputo — The Budget Monitoring Forum (FMO), a coalition of Mozambican civil society organizations, on Wednesday submitted a request to the Constitutional Council, the highest body in matters of constitutional law, to declare unconstitutional the inclusion of the country's “hidden debts” in the General State Accounts (CGE).

The debts in question are loans for over two billion US dollars to the security related companies Ematum (Mozambique Tuna Company), Proindicus and MAM (Mozambique Asset Management) obtained from the European banks Credit Suisse and VTB of Russia in 2013 and 2014 that were illicitly guaranteed by the government of the day, under President Armando Guebuza.

In April the Mozambican parliament, the Assembly of the Republic approved the CGE for 2015, in which the government included the Proindicus and MAM guarantees. For the government and the ruling Frelimo Party, including the guarantees was merely a statement of fact, but the opposition parties denounced it as a way of legalising illegal and unconstitutional debts.

They called for the 2015 CGE to be declared unconstitutional, and also the 2014 CGE which had included the guarantee for Ematum. The FMO had reached the same conclusion.

For a civil society organisation to request a ruling from the Constitutional Council it must submit a petition signed by at least 2,000 citizens. The FMO collected the requisite number of signatures, and submitted the petition on Wednesday morning.

Speaking at a press conference later in the day, FMO representative Denise Namburete said she hoped that by Thursday the Council would notify the FMO as to whether there are any irregularities in the request, so that these could be corrected.

Namburete also insisted that the government should give a public undertaking that it would not use tax revenue to pay the “hidden debts”. Since mid-2016, Proindicus and MAM have been defaulting on these debts, and the government has not stepped in to pay. Neither has the government paid interest owed to the Ematum bondholders, even though the original Ematum bond was replaced by government sovereign bonds.

“We want the Constitutional Council to declare that including the hidden debts in the CGEs of 2014 and 2015 was unconstitutional”, she said. However, the current petition to the Council only specifically mentions the Ematum debt, since the 2015 GCE, with its references to the Proindicus and MAM debts, has not yet been published in the official gazette, the “Boletim da Republica”.

But Namburete promised that, when the 2015 CGE did appear in the gazette, the FMO would lodge a second petition with the Council.

The FMO is also demanding that the full audit report by the company Kroll should be published and made accessible to all Mozambicans. Kroll was hired by the Attorney-General's Office (PGR) to audit Ematum, Proindicus and MAM, and the PGR published the executive summary of its report on 24 June. The full report should be made public within 90 days.

“The FMO questions the public usefulness of Ematum, MAM and Proindicus”, declared Namburete, “and repudiates the acts and attitudes of the actors described in the Kroll report. We stress that no assets belonging to Mozambicans - whether they are financial, or natural resources, or any other type - should be used to pay criminal debts”.

The FMO noted that the Kroll report suggested that the financial engineering involved in setting up the three companies is not linked to any coherent national development project.

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