7 January 2019

Mozambique: Centre for Public Integrity Calls for a Halt to Debt Negotiations

Photo: VOAPortugues
Mozambique's former finance minister Manuel Chang appears in court during an extradition hearing in Johannesburg.

Maputo — In the light of the American indictment against former Mozambican Finance Minister Manuel Chang, and those who allegedly conspired with him to defraud the Mozambican public and foreign investors, the Mozambican government should immediately halt its debt restructuring negotiations, urges the anti-corruption NGO, the Centre for Public Integrity (CIP).

The restructuring concerns loans of over two billion dollars made by the banks Credit Suisse and VTB of Russia to three fraudulent companies, Proindicus, Ematum (Mozambique Tuna Company) and MAM (Mozambique Asset Management), with guarantees from the Mozambican state, mostly signed by Chang.. The American investigations indicate that the three companies were nothing more than a gigantic criminal enterprise to secure bribes and kickbacks for officials from the Mozamabican government, from Credit Suisse, and from Privinvest, the Abu Dhabi-company that was the sole contractor for the three companies.

CIP points out that, far from the original claim that the loans were necessary for guaranteeing coastal protection, and hence were in the Mozambican national interest, in fact "the debt resulted from a corrupt scheme engineered by staff of Credit Suisse and of Privinvest, in collusion with a group of high ranking Mozambican public officials and politicians".

The American indictment points out that the initiative to set up the fake companies came from the Privinvest and Credit Suisse fraudsters, not from Mozambicans. "The Mozambican government had no plan or interest in contracting such a debt, and it did not even have a plan to develop a coastal security programme", CIP pointed out.

It was only after payment of a bribe of 50 million dollars to as yet unnamed Mozambican officials, that the first loan (to Proindicus) received the go-ahead and the "Integrated Monitoring and Protection System" (SIMP) for the Mozambican coast was invented. To this day, SIMP is not operational, CIP points out.

CIP argues that all agreements with the creditors who held bonds resulting from the illicit loans should be suspended. The charges before the New York District Court "are sufficiently serious so that no payment of the debt should be made until the case is fully cleared up".

Furthermore all Mozambican officials accused of receiving bribes in this scandal should be suspended from their positions until the case is concluded, demands CIP. Although, like any other accused person, they are innocent until proven guilty, the accusations are so serious that they cannot remain in their posts, CIP argues.

Chang is the only Mozambican named in the indictment. Two other Mozambicans have also been charged, but their names have been redacted. There are also three Mozambican "co-conspirators", who are neither charged nor named, perhaps because they opted to collaborate with the prosecutors. It will not be difficult to identify them.

CIP urged the Mozambican Attorney-General's Office (PGR) to use international cooperation mechanisms to obtain from the US Justice Department all relevant information on the Mozambicans involved in the case, so that they can be held responsible for their crimes in Mozambican courts. As a preventive measure, CIP suggests the assets of these citizens should be seized while the investigation and trials continue.

Credit Suisse bears enormous responsibility for the fraud, CIP argues. It allowed its officials to override the bank's internal control procedures, and to remove essential conditions from the loans - such as the requirement that the PGR give an opinion on the loan guarantees, and that the International Monetary Fund (IMF) be informed of the loans.

Since Chang's arrest, nine days ago, the Mozambican government, the country's parliament, the Assembly of the Republic (of which Chang is a member), and the ruling Frelimo Party have said absolutely nothing about the scandal. This silence, CIP argues, shows "the lack of will to resolve transparently this whole shambles in which those most damaged are the Mozambican people".

CIP concludes its release with a call on all Mozambicans: "This debt is not our debt, and we do not agree to pay it!"

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