Mozambique: Prosecutors seek dissolution of enterprises in ‘hidden debt’ scandal

Public prosecutors in Mozambique have proposed the dissolution of Proindicus, Ematum and MAM, the three public enterprises at the centre of the country’s hidden-debts scandal, on the grounds that their liquid assets are less than half the value of shareholders’ assets, according to a source in the office of the attorney-general, as reported by national media.

The proposals from the office of public prosecutions, which are based on an analysis of the report and accounts of the three companies, have been submitted to the Maputo city court, public broadcaster Televisão de Moçambique (TVM) quoted the source as saying.

The formal petitions were submitted to the court on 8 and 9 April and the grounds given are the fact that the companies’ activities have been suspended for more than three years, adds the source, which does not, however, give figures from the reports and accounts.

The three enterprises took out loans totalling some $2.2 billion (€2 billion) in 2013 and 2014 from the UK subsidiaries of investment banks Credit Suisse and VTB. The loans were secretly guaranteed by the government of the time, without the knowledge of parliament, the Administrative Court, or the country’s creditors.

When news of the operations finally emerged, they triggered a financial crisis for the country that led it to default on payments to international creditors and the consequent withdrawal from the international financial markets.

The so-called ‘hidden debts’ are now the subject of legal proceedings in Mozambique and the US, due to indications of illegal activity in the operations.

The loans were endorsed by the then minister of finance, Manuel Chang, but the current government claims that he “had no authority” to issue the sovereign guarantees, which it argues were unconstitutional and illegal because parliament did not approve the loans.

A complaint filed by Mozambique’s government claims that the three transactions involved the payment of bribes to officials, including Chang, who has been in detention in South Africa since 29 December 2018 at the request of the US authorities, which are seeking his extradition for trial in New York for fraud, corruption and money laundering charges.