HIDDEN DEBTS: PRINVEST SHOULD PAY MOZAMBIQUE 2.3 BILLION DOLLARS
Maputo, 29 Jul (AIM) – A judge in London on Monday ruled that the Abu Dhabi based Privinvest group should pay the Mozambican state over 2.3 billion US dollars.
The judge, Robin Knowles, in the commercial division of the London High Court, was hearing the case brought by Mozambique against various companies of the Privinvest Group, and the group’s owner, the late Iskandar Safa.
Also in the dock were the Credit Suisse bank, and three of its staff, Andrew Pearse, Detelina Subeva and Surjan Singh, who had all confessed to taking bribes from Privinvest.
The long list of claimants also included the Russian bank VTB capital, and the Portuguese Commercial Bank (BCP).
Two out-of-court settlements whittled down this list. In one, Credit Suisse reached an agreement with Mozambique, while in the second a deal was struck between Mozambique, the VTB group and the BCP.
This left the litigation between Mozambique and Privinvest, in which Mozambique was demanding compensation from Privinvest of 3.1 billion dollars arising from the illicit loans of about two billion dollars granted by Credit Suisse and VTB to three fraudulent Mozambican companies, Proindicus, Ematum (Mozambique Tuna Company) and MAM (Mozambique Asset Management).
Mozambique claimed that the contracts entered into by the three companies were achieved by means of bribery. Privinvest had bribed senior Mozambican officials, and the Credit Suisse negotiating team.
Although Privinvest insisted that it never pays bribes, Knowles found that bribes had indeed been paid, notably to the then Finance Minister, Manuel Chang (who is now on trial in New York on charges of conspiracy to commit money-laundering, wire fraud and securities fraud).
“I found that the evidence of corruption on the part of Minister Chang was sufficient to provide an element of a route to liability on the part of Mr Safa and the Privinvest companies”, said the judge.
Knowles concluded that “Mozambique is entitled as against Mr Safa and the Privinvest companies to payment of USD 825,188,391, and to an indemnity in respect of the payments estimated at USD 1,501,250,000 that it is liable to pay hereafter (USD 95,000,000 under the most recent settlement agreement, and the estimated USD 1,406,250,000 to bondholders)”.
That is a total that Privinvest should pay of over 2.326 billion dollars.
Although this falls short of what Mozambique had demanded, it is a slap in the face for Privinvest and for all those who forecast that Mozambique would receive nothing.
Knowles noted that Mozambique had not received any benefits from Proindicus, Ematum and MAM. “There is no evidence of the payment of dividends or capital distributions”, he said. “Ematum and MAM were in liquidation and all three state-owned enterprises may now be dissolved. There is no sign of the possibility of any distribution to Mozambique as owner. Could it be said instead that there was . . . an increase in the value of shares in Proindicus, Ematum or MAM? The answer appears to be no, because on no credible analysis did the value of the supply exceed the price paid”.
The assets and services provided by Privinvest, Knowles added “were simply not suited for Proindicus, Ematum, MAM or Mozambique”.
The entire deal resulted from state guarantees, without which the banks would not have lent the money, and those guarantees were the result of bribes.
Knowles said “I see no circumstance in which profits and positive cashflows would have been made by Proindicus, Ematum or MAM. On no credible analysis would Mozambique have received value as a (direct or indirect) owner of Proindicus, Ematum or MAM”.
The judge added “I am not persuaded that it is the law, of Mozambique or of England, that a victim of bribery that has induced a contract of guarantee or a contract of supply should be required to give credit for profits that could have been but were not made from the supply”.
Knowles noted that there had been a major trial in Maputo (in 2021-2022) arising from the debts. The trial, he said, “revealed this to be a case of Mozambique, as a developing nation being exploited by highly developed institutions and corporations that should know better. But it also showed a nation well capable of doing better, but which was let down by its own officials and office-holders”.
Knowles said he had been “unable to identify a single senior official or office-holder who, over the period 2011-2015 stood up for Mozambique and challenged or tested what was or might be going on”.
As for the assets that Privinvest sold to Proindicus, Ematum and MAM, the judge added, “Mozambique was hustled to buy what it couldn’t use properly, didn’t need, and wasn’t prepared for. The chances of choices being made that were good for Mozambique and its people were eroded at every turn”.
“There was corruption”, Knowles declared. “But this is also a case about an overall absence of standards that went far wider than instance of corruption. There were those prepared to prey on weakness and inexperience. Those who saw the opportunity to make money with no regard to whether the projects would fail. Those who set their sights on self-interest and personal financial reward, and put those above any sense of responsibility”.
This is by no means the end of the story. Privinvest is almost certain to appeal and so Mozambique is unlikely to see the money awarded any time soon.
There is also the intriguing possibility that President Filipe Nyusi may be obliged to give evidence. Knowles said that he was not called as a witness because, as head of state, he enjoys sovereign immunity.
But when he leaves office, in February next year, his immunity falls away and fresh attempts might be made to force him to testify.
(AIM)
Pf/ (956)
