Maputo, 2 Oct (AIM) – The Mozambican state has reached an extra-judicial settlement with the Credit Suisse group which ends the litigation over the illicit loan granted by Credit Suisse to the fraudulent, security-linked Mozambican company, Proindicus.
In 2013 and 2014 Proindicus and two other fake companies, Ematum (Mozambique Tuna Company) and MAM (Mozambique Asset Management) obtained loans of over two billion US dollars from the banks Credit Suisse and VTB of Russia.
No due diligence was done of the three companies, all of which were run by the Mozambican Security and Intelligence Service (SISE). The loans were granted only because the Mozambican government of the day, under the then President Armando Guebuza, issued loan guarantees for 100 per cent of the amount.
The guarantees were signed by Guebuza’s Finance Minister, Manuel Chang, even though they were clearly illegal, smashing through the ceiling on guarantees fixed by the 2013 and 2014 budget laws.
The loans involved massive corruption. The Abu Dhabi based group Privinvest became the sole contractor for the three companies, and offered hundreds of millions of dollars in bribes to Mozambican officials (including Chang) and to the Credit Suisse bankers negotiating the loans.
Predictably, the three companies soon went bankrupt, and the creditors demanded their money back from the Mozambican state. Thus what had initially been hidden loans became hidden debts.
Acting through the Attorney-General’s Office (PGR) the government has been asking that the British courts (notably the Business and Property Court, a division of the London High Court) declare the guarantees null and void. The government also wants to claw back compensation from Privinvest and Credit Suisse.
At a Maputo press conference on Monday, the Minister of Economy and Finance, Max Tonela, and Deputy Attorney-General Angelo Matusse, announced that agreement has been reached, but only on the Proindicus debt. Credit Suisse had agreed to lend Proindicus up to 900 million dollars, although in fact only 622 million dollars was lent.
The agreement is between the government, Credit Suisse and most members of the banking sindicate that financed Proindicus. VTB is not a signatory to this agreement.
Although the government ratified the agreement on 14 September, the ratification resolution was not published until Monday.
Full details of the agreement are not yet available, since it has yet to go before the London court. Tonela and Matusse assured the reporters they would give further information as soon as possible.
This extra-judicial agreement is described as a “global and definitive solution” to the dispute between the signatories over the Proindicus loan. All the signatories have renounced their claims over Proindicus and its guarantee.
The guarantee for the Proindicus loan signed by Chang is this consigned to history.
But Matusse warned that this deal does not affect other cases concerned with the hidden debts. In particular, Privinvest is not a signatory, and so the case pitting the Mozambican government against Privinvest is likely to go ahead in London this week, as scheduled. VTB’s claims against the Mozambican state are also unaffected.
The agreement is concerned exclusively with Proindicus and says nothing about the Ematum and MAM loans. The government hopes to have the guarantee for the MAM loan (for 535 million dollars), granted by VTB, declared null and void.
But the government is committed to paying the Ematum debt. The original Ematum bonds were replaced by “Eurobonds”, with a longer repayment time, but at a much higher interest rate.
Although the Constitutional Council, effectively Mozambique’s highest court, in 2019 declared null and void all acts concerning the Ematum loan, the government, using the paper-thin excuse that the Eurobonds are not the same thing as the original loan, is still paying.
Tonela and Matusse did not say how much Mozambique stands to gain from the agreement, but it could be as much as 500 million dollars.
Of course, the London litigation involves substantial legal fees. The PGR cannot act on its own in a British court, and so has to hire British law firms. So far the legal costs have been 80 million dollars.
But the PGR is hoping to retrieve this money – the legal costs will be included in Mozambique’s claim for compensation.
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