Mozambique: Eight Years for Former Chair of INSS

Maputo — The Maputo City Court on Thursday sentenced Baptista Machaieie, the former General Manager of Mozambique's National Social Security Institute (INSS), to eight years imprisonment for abuse of office and embezzlement.

But the court acquitted his two co-accused, the former chairperson of the INSS Board of Directors, Francisco Mazoio, and the former director of the company CR Aviation, Miguel Angelo Cuado Ribeiro.

The prosecution claimed that 84 million meticais (about four million US dollars at the exchange rates of the time) was diverted from INSS funds to purchase four aircraft for CR Aviation.

The deal between CR Aviation and the INSS goes back to the final year of the previous government, under President Armando Guebuza, when the Labour Ministry, which oversees the INSS, was run by Helena Taipo, who is now under detention in connection with several unrelated corruption scandals.

The INSS and CR Aviation signed a memorandum of understanding in 2014, which envisaged using INSS funds to purchase four aircraft for CR Aviation at a cost of 84 million meticais.

Alerted to this deal by press reports in 2016, the public prosecutor's office investigated and found a damning range of irregularities which constitute criminal offences. Thus, the Memorandum of Understanding was not submitted for approval to the Administrative Tribunal, the body that inspects the legality of public expenditure.

CR Aviation had never submitted business plans explaining how the money the INSS invested in the company would be repaid. Additionally, the INSS managers decided to grant the money to CR Aviation without even consulting the INSS Board of Directors.

This case might have gone unnoticed had it not been for some investigative journalism in early 2016. Those reports said that the INSS intended to invest seven million dollars in CR Aviation. Journalists discovered that the deal had not been completed, but, by the time it was made public, 84 million meticais of INSS funds had been invested in CR Aviation.

The INSS is not allowed to invest in companies unless their shares can be traded on the Mozambique Stock Exchange (BVM), which was never the case with CR Aviation.

Belatedly Mazoio, in March 2016, demanded the money back. But this did not satisfy the prosecutors. During the trial Mazoio blamed Machaieie. He said he was only aware of the memorandum of understanding through Machaieie, who told him that everything was legal and the only thing he had to do was sign the document.

Mazoio said he had not been informed of what the next steps in the deal would be, and that his role as INSS chairperson was merely administrative. He claimed it was the INSS general management, under Machaieie, which had undertaken the viability study, and the job of the Board of Directors was only to approve the investment.

Machaieie, however, said the plan to invest in CR Aviation was approved, first by the INSS Board of Directors, and then by Taipo. Machaieie also claimed it was normal practice for the INSS to buy shares in companies that were not quoted on the stock exchange.

Ribeiro told the court that the deal with the INSS had been the idea of the minority shareholder in CR Aviation, Rogerio Manuel, who owned 49 per cent of the company. Manuel was also the former chairperson of the Confederation of Mozambican Business Associations (CTA), the main organisation of the country's employers.

Ribeiro said Manuel had told him that the INSS was interested in buying shares in CR Aviation. He then agreed to sign the memorandum: Ribeiro said he only did so after taking legal advice.

But Ribeiro said that, after he had received the 84 million meticais from the INSS and had purchased the aircraft, he had disagreements with Manuel, and sold him his shares in the company in 2015. Ribeiro told the court he had been the victim of "an act of bad faith" by Manuel.

Manuel could not answer this charge, since he died in a helicopter accident in December 2018.

The court ruled that, in addition to serving an eight year prison sentence, Machaieie must also return the 84 million meticais diverted from the INSS.

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