4 March 2019

Mozambique Suing Credit Suisse and Privinvest

Photo: Daily Trust
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Credit Suisse and Privinvest will be sued by Mozambique in the High Court in London, according to a notice on intent submitted on 28 February by the attorney general's office (Procuradoria-Geral da Republica, PRG). The notice relates to the government guarantees supposedly given on the $2 bn secret debt.

Details of the notice are not yet public, but it seems to have been written and submitted quickly, probably in order to make it public before the IMF staff mission arrives on 13 March. This legal action is enough to allow the $2 bn secret debt to be considered "disputed" by the IMF. As we explained last week (bit.ly/Moz-439) that means it can be removed from the IMF debt sustainability analysis, which would mean that Mozambique's debt can now be considered sustainable, which would permit an IMF programme and could release additional aid and credits. The first step would be to agree a "staff monitored programme", perhaps during the mission. This does not involve IMF executive board approval or any IMF money, but a full IMF programme could follow.

The notice in the London court is clearly linked to arrests in Maputo and is important to demonstrate to South Africa and the United States - and to Mozambican voters - that the Mozambique government is taking action against both the Mozambicans who took bribes and those who offered the bribes.

The case is being brought against two parts of Credit Suisse, two parts of Privinvest Shipbuilding and their owner Abu Dhabi Mar, and the three former Credit Suisse London-based employees who are charged in the United States (Andrew James Pearse, Surjan Singh and Detelina Vaneva Subeva).

The court will be asked to:
+ declare the guarantees given for the Proindicus loans to be invalid and illegal
+ cancel guarantees given to Credit Suisse
+ make the defendants pay all liabilities arising from the MAM guarantee.
+ order payment of damages and compensation for fraud, bribery, conspiracy to act by unlawful means, misrepresentation and deception.
+ order an accounting of the all bribes paid.

No claims are made against the Russian bank VTB which was also involved in the hidden debt, also from its London office. And it appears that no claims are made related to the Ematum bonds, which as we noted last week have a very different status because parliament approved the nationalisation of the that debt.

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