Maputo — The Mozambican Attorney-General's Office (PGR) announced on Wednesday that it has received two notifications from European arbitration tribunals, concerning attempts by the Abu Dhabi based group Privinvest to sue the Mozambican state for hundreds of millions of dollars.
This is the latest stage in the saga of the three fraudulent companies, Proindicus, Ematum (Mozambique Tuna Company) and MAM (Mozambique Asset Management), which, in 2013 and 2014, obtained over two billion US dollars from the banks Credit Suisse and VTB of Russia.
The banks were happy to lend the money, despite the lack of any track record of the three companies, because the Mozambican government of the time, then led by President Armando Guebuza, issued illicit loan guarantees, in violation of the Mozambican constitution and budget laws.
Those guarantees mean that, in the event that the companies collapsed, the government would become liable for repaying the money.
Privinvest played a key role in ensuring that the loans were granted, and then became the sole contractor for the three companies. The main mediator for Privinvest, the Lebanese Jean Boustani, is currently in detention in New York.
Boustani is said to have been deeply involved in around 200 million dollars of bribes and kickbacks channelled via Privinvest. Also indicted by the US authorities, but not yet in custody, is the Privinvest Chief Finance Office, Najib Allam.
The PGR says the notifications it has received are from the Paris International Arbitration Court and the Swiss International Arbitration Institution. Privinvest is demanding compensation of 200 million dollars for losses it supposedly suffered due to breach of contract by the three fraudulent companies.
The PGR told the independent television station STV that it is now taking measures to respond to the notifications.
The Privinvest action against the Mozambican state dates from mid-March, and is clearly retaliation for the attempt by the PGR to sue Privinvest in London. The PGR is suing five companies in the Privinvest group - namely Privinvest Shipbuilding S.A.L. Abu Dhabi (Branch), Abu Dhabi Mar LLC, Privinvest Shipbuilding Investments LLC, Logistics International SAL (Offshore), and Logistics International Investments.
The PGR is also suing Credit Suisse International and Credit Suisse AG, and the three Credit Suisse former managers named in the US indictment, namely Andrew Pearse, Surjan Singh and Detelvina Subeva. These three were all arrested in London in January, on the basis of US warrants. They were released on bail, and are currently fighting extradition to New York.
A civil suit against these companies and individuals was deposited with the High Court of Justice/Queen's Bench Division, in London. The PGR is demanding that each of those named in the suit compensate Mozambique for its losses in the corrupt scheme.
The Privinvest suits in Paris and Geneva face enormous obstacles because of in the massive detail about the fraud contained in the US indictment, and in the audit of Proindicus, Ematum and MAM undertaken by the company Kroll in 2017.
Summarising the fraud, the US indictment says that between 2013 and 2016 "the co-conspirators conspired to defraud investors and potential investors in the Proindicus, Ematum and MAM financings through numerous material misrepresentations and omissions", which included "bribe and kickback payments to Mozambican government officials and bankers". The deceit also covered issues such as the amount and maturity dates of the debt incurred by Mozambique and "Mozambique's ability and intention to pay back the investors".
The indictment notes that the borrowed money was paid directly to Privinvest, as the sole contractor for the maritime projects the three companies were supposed to implement. But in reality, Boustani and the others indicted "created the maritime projects as fronts to raise money to enrich themselves and intentionally diverted portions of the loan proceeds to pay at least 200 million dollars in bribes and kickbacks to themselves, Mozambican government officials and others".
The indictment reaches the same conclusion as the Kroll audit - namely that the fishing and patrol boats and other assets provided by Privinvest were grossly overpriced. Kroll put the overpricing at around 700 million dollars.
"The co-conspirators applied only a portion of the loan proceeds towards the maritime projects", the indictment says. "In furtherance of the scheme, Privinvest charged inflated prices for the equipment and services it provided, which were then used, at least in part, to pay bribes and kickbacks".
The American prosecutors base much of their case on e-mails and other communications between the defendants, which show a persistent pattern of bribery. They also show that the coastal protection scheme, far from being vital to Mozambican sovereignty, was not a Mozambican idea at all. As from 2011, Boustany and "Privinvest co-conspirator 1" (believed to be Najib Allam) were working to persuade Mozambican officials to enter into a contract with Privinvest for coastal protection. Part of these discussions concerned the bribes that should be paid to guarantee the contract.
The US indictment argues that Ematum was not a Mozambican idea at all, but was cooked up in May 2013 by Boustani, Pearse and Subeva. The fraudsters devised a project that had nothing to do with Mozambique's legitimate fishing needs: instead, the project was "a pretext to justify the maximum possible loan amount".
Part of the money was not for Ematum at all, but was intended to carry on paying for the first of the fraudulent schemes, Proindicus. Boustani sent an e-mail on 21 July 2013, saying "we will go for 800 million dollars so we keep a cushion for Proindicus interest payment next year".
To give the impression of competitive tendering, the fraudsters, the indictment says, "created fake competing bids for contracts". Fully aware that there was no proper tender, Boustani e-mailed Pearse at the end of July, suggesting "Let's say they contacted South African shipyards and Spanish and Portuguese. Without naming them".
Surjan Singh then "included fake bid information" in a memorandum sent to Credit Suisse, "falsely asserting that the Privinvest proposal was deemed the most competitive one in comparison to bids from three other international companies".
All of this might make it very difficult for Privinvest to fight a case in a European court.