10 January 2018

Mozambique: Embraer Bribe Case Sent to Maputo City Court

Maputo — Mozambique's Central Office for the Fight Against Corruption (GCCC) on Tuesday sent to the Maputo City Court the case of the 800,000 US dollar bribe paid by the Brazilian aircraft company Embraer in 2009 to ensure that Mozambique Airlines (LAM) purchased two of its aircraft.

In connection with the bribe, the GCCC is charging three people with money laundering and illicit participation in business. They are the Transport Minister at the time, Paulo Zucula, the then chairperson of LAM, Jose Viegas, and the man who set up a shell company to receive the bribe, Mateus Zimba, who was then the Mozambican manager for the South African petrochemical company Sasol.

The three men were arrested in December, but released on bail. Bail was set at a total of 14.5 million meticais (about 246,000 US dollars) - five million for Zucula, six million for Zimba and 3.5 million for Viegas.

The Embraer bribe came to light thanks to investigations by Brazilian and United States prosecutors into Embraer's business practices. Embraer confessed to paying bribes to secure contracts in several countries, including Mozambique.

The settlement Embraer reached with the US and Brazilian authorities involved paying total fines of around 225 million US dollars, and giving full details of the bribes.

From the documents of the Brazilian Federal Prosecutor's Office, we know that it was Viegas who negotiated the size of the bribe. He insisted that the deal would not go ahead without a bribe.

Embraer was at first reluctant to “offer” more than 80,000 dollars. But Viegas allegedly said he had received reactions from unnamed other people who regarded the Embraer offer “as an insult and to some extent it would have been less offensive to offer nothing at all”. He thought a million dollars would be acceptable, but eventually settled on 800,000.

When Viegas was told that Embraer did not have that sort of money to pay for what would be passed off as “consultancy services”, he suggested simply increasing the price of the aircraft. Instead of the original price of 32 million US dollars, each aircraft would now cost 32.69 million dollars. This was the price in the sales agreement between Embraer and LAM signed on 13 September 2008. Viegas is thus accused of betraying his trust as LAM chairperson by artificially inflating the price of aircraft purchased by the company

Zimba was the middleman. He set up a shell company called called Xihevele, registered in São Tomé and Príncipe, the sole purpose of which was to move the money from Embraer to the recipients of the bribe. Embraer paid the bribe, disguised as “sales commissions”, in two instalments of 400,000 dollars each to a Xihevele account in Portugal.

On 22 April 2009, Embraer signed a “commercial representation agreement” with Xihevele. The stated purpose of this company was to promote the sale of E-190 aircraft to LAM, even though LAM had already signed the purchase agreement. Xihevele had not existed during the negotiations between LAM and Embraer. The Brazilian prosecutors' document noted that the contract with Zimba's company falsely stated that its sales promotion work began in March 2008.

The exact role of Zucula is not yet clear. His name was not mentioned in the Brazilian documents.

The GCCC had also been investigating the possible undue use of public funds in the purchase of two Canadian Bombardier Q400 aircraft. But this was insufficient evidence to prove a crime in the Bombardier purchase, and so this case has been shelved.


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