London, 31 Jan (AIM) – A huge bundle of previously confidential documents related to the London High Court case of Mozambique’s “hidden debts” was released on Tuesday to AIM and other press and organisations who observed the trial.
The case relates to loans of over two billion US dollars made by the banks Credit Suisse and VTB of Russia in 2013 and 2014 to three fraudulent Mozambican companies (Proindicus, Ematum, and MAM) which were all effectively run by the security service, SISE.
In theory, the loans were for, amongst other things, a tuna fishing fleet, shipyards and maritime security. But none of these ventures ever took off and soon became bankrupt.
However, that was far from the end of the story as the projects’ loans were backed by undisclosed state guarantees meaning that the government became responsible for paying off these debts. Essentially, the trial is looking at whether these guarantees are void due to bribes paid to government officials and other gross irregularities in the process and whether the company at the centre of the scandal, the Abu Dhabi-based group Privinvest, should pay over three billion dollars in compensation to Mozambique.
On 23 January, the trial judge Justice Robin Knowles ruled that dozens of documents be made available and asked that Mozambique’s solicitors, Peters & Peters, facilitate this. In particular, Justice Knowles noted the request by AIM for the release of expert witness reports that had been withheld by Privinvest.
Among the documents released was the confidential settlement agreement reached out of court between Mozambique, Credit Suisse and eight other financial institutions in relation to the Proindicus facility agreement – where Credit Suisse was the lead bank.
The settlement agreement, dated 30 September 2023, is clear in its purpose, which is to extinguish any liability Mozambique would otherwise have in debt or damages in return for releasing the other parties to the agreement from any liability arising out of the wrongdoings revealed in the trial.
However, it specifically mentions “for the avoidance of doubt” that nothing in the agreement will compromise Mozambique’s rights against Privinvest, or VTB and the Portuguese bank BCP. Nor does it limit Mozambique’s rights to “investigate, prosecute or otherwise pursue any criminal action, criminal prosecution or criminal proceedings”.
The main gain for Mozambique is that, in return for dropping its case against Credit Suisse, the Swiss bank has written off the remaining debt. During the trial in London, Mozambique’s barrister Joe Smouha revealed that as a result of the agreement Credit Suisse had agreed to waive the entire outstanding debt which stood at 450 million US dollars. In return, Mozambique agreed not to pursue the bank for compensation.
Each of the other eight financial institutions also agreed to drop all claims against Mozambique and the agreement lists the amounts that they would receive in final payment from the Republic as follows:
Atlantic Forfaitierungs US$1,000,000
Banco Internacional de Mozambique (BIM) US$38,188,800
Banco Comercial e de Investimentos (BCI) US$15,840,000
Farallon Capital US$15,120,000
ICE Canyon US$5,000,000
Moza Banco US$20,592,000
United Bank for Africa (UBA) US$21,840,000
VR Global Partners US$12,240,000
The international lenders were paid in dollars whilst the Mozambican banks received their payment in local currency in the form of bonds.
Financial experts have told AIM that the settlement was a good one for Mozambique. Credit Suisse, as lead bank, had been at the centre of the scandal with the key members of its “deal team” receiving bribes in return for pushing the loans through.
Three of the Credit Suisse negotiators (Andrew Pearse, Detelina Sibeva and Surjan Singh) confessed to a New York court that they had taken bribes from Privinvest. Therefore, there was little prospect of Credit Suisse recovering any of the debt from Mozambique.
But as one moves further away from the heart of the scandal it is less clear how much the other lenders could have known about the corruption and deceit. Thus, the agreement is a tacit acceptance of the “bona fide” nature of the eight financial institutions and is seen as a fair compromise to put an end to the matter.
In December the remaining litigants presented their closing arguments to the Court and Justice Robin Knowles is currently considering the evidence. He is expected to deliver his judgment within the next two months. This is unlikely to be affected by the death on Monday of the Lebanese billionaire Iskandar Safa who was founder and owner of the Privinvest group.
(AIM)
jhu/pf (745)
