Mozambique could receive billions of dollars if a London court upholds the government’s lawsuit relating to the ‘hidden debt’ scandal, according to the Jubilee Debt Campaign, a non-governmental organisation.
“It is outrageous that the UK Serious Fraud Office and National Crime Agency have not launched an in-depth investigation into these loans, and nothing has yet resulted from the Financial Conduct Authority’s investigations,” the NGO quoted the head of its UK’s public policy department, Tim Jones, as saying. “The efforts of the US Department of Justice have been hamstrung by the lack of link to the US. It is past time for the UK authorities to properly look into a case originating with banks in London.”
The suit, which was filed by the office of Mozambique’s attorney-general in London’s Commercial Court, a division of the High Court, and which Lusa has now seen, argued that the loan granted by Credit Suisse is unconstitutional and illegal under Mozambican law, and that state should thus not be obliged to pay the loan and should be reimbursed for the consequences.
The $622-million (€561-million) loan from Credit Suisse to the public company Proindicus was underwritten by the state, but without this being written into the public accounts and without the knowledge of parliament, the public and international creditors and donors.
The Mozambican state is seeking compensation for losses from debt payments it has made or will make, arising from any of the three loans, including those already restructured, and for macroeconomic losses as a result of the financial crisis caused by the scandal and consequent loss of donor funding, according to the lawsuit. It is dated 19 August 2019 but has not, until now, been public.
Denise Namburete, of the Mozambique Budget Monitoring Forum, questioned the absence of a reference in this case to the Russian bank VTB, which lent $535 million to another public company, Mozambique Asset Management (MAM).
“These loans led to a social crisis in Mozambique, which pushed people further into poverty,” she said in a statement, arguing that the state should not pay back these loans, as illegal and unconstitutional.
“All those involved need to be questioned and held accountable,” she said.
At issue are hidden debts totalling more than $2 billion contracted in 2013 and 2014 in the form of loans from the UK subsidiaries of investment banks Credit Suisse and VTB by Mozambican state-owned enterprises Proindicus, Ematum and MAM. The debts pushed the country into a financial crisis that led it to default and consequently be barred from international financial markets, with donor institutions also suspending funding.
VTB Capital filed a lawsuit at the London Commercial Court against the Republic of Mozambique and MAM on 23 December 2019, but no hearing in that case has yet been scheduled and no documentation have been presented.
A US court recently acquitted Jean Boustani, a Lebanese national who negotiated on behalf of Privinvest, a shipbuilding company involved in arranging some of the debt, who had been charged with conspiracy to commit wire fraud, securities fraud and money laundering in the hidden-debts case.