Maputo — Mozambique's Budget Monitoring Forum (FMO), a coalition of civil society organisations, has argued that the arrests of former finance minister Manuel Chang, three former executives of the bank Credit Suisse, and a senior manager of the Abu Dhabi-based company Privinvest, in connection with Mozambique's "hidden debts" are conformation of the FMO's longstanding conviction that the debts were illegal.
The "hidden debts" of over two billion dollars were obtained by three fraudulent companies, Proindicus, Ematum (Mozambique Tuna Company) and MAM (Mozambique Asset Management) from Credit Suisse and the Russian bank VTB in 2013 and 2014. The Mozambican government, then led by President Armando Guebuza, guaranteed the loans, in violation of the country's constitution and the budget law. Chang signed many of the loan guarantees.
The FMO statement pointed out that it has argued for years that "the entire process around the illegal debts, including the relationship between international bankers, various contractors and beneficiaries, was intended to conceal criminal activity, including money laundering".
The FMO believes it has been vindicated by the arrests, made under international arrest warrants issued by the US authorities. An opportunity had now opened "for Mozambicans to get full disclosure on the illegal debts and to recover all costs incurred by the Mozambican fiscus as a result of illegal and immoral conduct by international bankers, contractors, public officials and their relatives and collaborators in Mozambique".
The FMO "fully endorses" the criminal sanctions proposed by the American prosecutors "as they will serve as a deterrent against corrupt activities in Mozambique and beyond".
The FMO says it will continue campaigning against any restructuring of Mozambique's public debt that does not recognise the criminal nature of the Proindicus, Ematum and MAM loans.
The Mozambican people, it urges, "should not bear the burden for collusive and illegal behaviour between the government of Mozambique and the international bankers". Those who benefitted from the illegal debt, it argues, "should absorb all the costs associated with the Mozambican debt crisis, in addition to facing the criminal sanctions being pursued by the US authorities".
The FMO expressed dismay at the supine attitude of the British authorities towards Credit Suisse. Although the illegal loans were arranged through the Credit Suisse branch in London, the British regulator, the Financial Conduct Authority (FCA), recently dropped its investigation into illicit behaviour by Credit Suisse.
"The arrest of three Credit Suisse bankers should embarrass the FCA", says the FMO, "since it shows that the FCA decision failed to fulfil the organisation's basic statutory standards, and suggests that the UK regulators did not apply the necessary care in handling the Mozambican debt case".
The FMO urged the FCA to reconsider its decision and "continue to pursue action against UK-regulated entities (such as the London branch of Credit Suisse) implicated in this scandal".
Credit Suisse has distanced itself from its three former officials arrested in connection with the illicit loans, claiming that they worked on their own, without authorisation from the bank. The FMO rejects these excuses, and argues that "illegal, immoral and negligent conduct was not by a rogue banker, but rather a systematic part of Credit Suisse culture".
The FMO statements concludes with an insistence that Mozambicans cannot be expected to repay illegal debts, and that any claims arising out of the debts "must be brought against the international banks, contractors and any other beneficiary of proceeds from the illegal debt".