Mozambique Loses Latest Round in London ‘Hidden Debts’ Case

Maputo — Mozambique has lost the latest round of a court case in London, where the British judges ruled that the London High court was not the appropriate jurisdiction for Mozambique’s complaint against the Abu Dhabi based group, Privinvest.

Last Thursday, the appeals court ruled that the case should go to arbitration – which means it accepted the claim by Privinvest that the correct jurisdiction is the International Arbitration Tribunal in Switzerland.

The court thus overturned the initial ruling (by Justice Waksman) who argued that the English courts were competent to hear the case.

The legal battle between the Mozambican government and Privinvest arises from the scandal of Mozambique’s “hidden debts” – a term referring to the loans of over two billion US dollars made in 2013 and 2014 by the banks Credit Suisse and VTB of Russia to three fraudulent Mozambican companies, Proindicus, Ematum (Mozambican Tuna Company) and MAM (Mozambique Assets Management).

The loans were only possible because the banks carried out no due diligence on the three companies, which had no business record and were effectively run by the Mozambican security service, SISE, and because the Mozambican government of the day, under President Armando Guebuza, issued illegal loan guarantees, in violation of the 2013 and 2014 budget laws, and of the Mozambican constitution.

Massive corruption was involved in the loans, as was admitted by the three Credit Suisse managers who negotiated them, Andrew Pearse, Detelvina Subeva, and Surjan Singh. These three people were among those charged by American prosecutors, who took a close interest in the case because the US financial system had been abused, and US investors were swindled. According to the prosecutors, at least 200 million dollars of the loan money was diverted into bribes and kickbacks.

Privinvest was closely involved in the bribery as became clear in the 2019 trial in New York of Privinvest official Jean Boustani. Privinvest was very much an interested party since it became the sole supplier to Proindicus, Ematum and MAM. An independent audit into the two companies in 2017 showed that Privinvest had vastly inflated the prices it charged for the fishing boats and other assets it supplied. This over-invoicing was estimated at around 700 million dollars.

The Mozambican Attorney-General’s Office (PGR) began proceedings in London in 2019 against five companies in the Privinvest group, and the owner of the group, the Lebanese bilonnaire Iskandar Safa. It is also suing Credit Suisse and the three Credit Suisse officials who have admitted taking Privinvest bribes, Pearse, Subeva and Singh.

The key demand from the PGR is that the London court should declare null and void the government guarantee on the 622 million dollar loan arranged by Credit Suisse for ProIndicus, on the grounds that this debt, along with the rest of the loans were part of a gigantic fraud.