Mozambique: Government 'Checking the Position' of VTB

Maputo — The Mozambican government is "checking the position" of the Russian bank VTB, before it undertakes any negotiation with VTB over the money owed to the bank by the company MAM (Mozambique Asset Management), according to the Minister of Economy and Finance, Adriano Maleiane, cited in Monday's issue of the independent newssheet "Carta de Mocambique".

MAM is one of the three fraudulent companies that took out loans in excess of two billion US dollars from Credit Suisse and VTB in 2013 and 2014, covered by illegal loan guarantees issued by the government of the time, headed by President Armando Guebuza.

Most of the money was from Credit Suisse, but all of the 535 million dollars lent to MAM came from VTB. Three former Credit Suisse managers (Andrew Pearse, Detelina Subeva and Surjan Singh) were personally involved in the illicit loans and have been charged by United States prosecutors with conspiracy to commit money laundering, wire fraud and securities fraud, but no similar charges have been brought against anybody from VTB.

That does not necessarily mean that VTB will get its money back. "It's good to check the position of VTB so that we can take measures, probably the same as those taken with Proindicus", said Maleiane.

Proindicus was the first of the fraudulent companies to be set up. The Mozambican government is not repaying the Proindicus loan, and earlier this year the Attorney-General's Office (PGR) demanded the extinction of the guarantee given to Proindicus.

The PGR sought from the High Court in London a declaration that the guarantee given to Proindicus is not legally binding. It also took civil action in London against Credit Suisse, Pearse, Subeva and Singh, and the Abu Dhabi based Privinvest group, which became the sole contractor for Proindicus, Ematum and MAM, providing boats and other assets which auditors would were supplied at grossly inflated prices.

VTB was not named in this suit - but the PGR is demanding compensation for all the liabilities arising from the MAM guarantee as well as the Proindicus one.

Maleiane noted that VTB had not been mentioned in the lawsuit under way in New York, in which the accused are the three Credit Suisse bankers, senior Privinvest officials, and Mozambique's former finance minister, Manuel Chang.

"From what we have read of this case, VTB is not appearing", said Maleiane. But regardless of this, he wanted his Ministry's advisers to look into the position of the Russian bank. This seems to deny reports in April that the government had already reached agreement with VTB.

As for the eurobonds that are the latest incarnation of the bonds sold by Credit Suisse to finance the 850 million dollar loan to Ematum, the Zitamar News Service reported on Monday that Maleiane intends to restart negotiations with the bondholders.

This would be illegal, since the Constitutional Council, Mozambique's highest body in matters of constitutional law, has already ruled the Ematum loan unconstitutional. In June, the Council declared that all acts concerning the Ematum loan were null and void.

This was a categorical rejection as illegal of anything to do with the Ematum bonds. The wafer thin excuse for continuing negotiations with the bondholders is the contrived argument that the Eurobonds are not the same as the Ematum bonds.

Thus the Eurobonds are regarded as a new, and legal, debt. But at the same time Maleiane wants to avoid seeking parliamentary approval for a new deal with the bondholders, on the grounds that this is just a relabelling of an old debt. He is, in short, trying to have it both ways.

According to Zitamar, Maleiane hopes to reach a deal with the bondholders by 20 September. Such a flagrant disregard for a Constitutional Council ruling could have serious consequences. At the very least, the Council will be asked to intervene again to quash the latest attempt to repay an illicit debt.

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