Mozambique $ 2 billion scandal with shipping company Privinvest and Credit Suisse
Maputo fought for many months to avoid the arbitration scenario. Before the London Court of Appeal, Mozambican lawyer Nathan Pillow pleaded at length for âjustice to be done in broad daylight and not behind closed doorsâ.
Now that the private courts of Geneva and Zurich have seized the complaint filed by Maputo against Privinvest, the case is expected to be settled out of court despite public interest in the case. This includes accusations of corruption brought against the highest levels of the Mozambican government that have held the country and its creditors on suspense for six years already.
It has also fueled allegations of international arbitration, which is seen as an alternative form of justice that resolves disputes in secret.
Despite this decision, two trials are still pending before the High Court in London.
- One concerns Mozambique’s accusations against the boss of Privinvest – the Franco-Lebanese billionaire Iskandar Safa – and three companies affiliated to Privinvest, as well as Swiss credit and three former bank employees.
- The other concerns complaints from certain creditors, including Russian investment bank VTB Capital, against Mozambique.
In both cases, several depositions are still awaited this year, which means that the first hearing will take place – at the earliest – towards the end of 2021.
According to the files already compiled, these trials promise to shed a cruel light on this state scandal which, despite legal investigations in the United States and Mozambique, is still far from having revealed all its secrets.
To understand this case, we have to go back to 2013. Former Mozambique President Armando Guebuza is laying the foundations for a vast program to develop the fishing industry, a key sector for this coastal country. Three dedicated public companies have been created: Mozambique Asset Management (MAM), Empresa MoÃ§ambicana de Atum (Ematum) and ProIndicus, which in turn subcontracted the project to Privinvest, a private company based in Beirut and Abu Dhabi.
MAM took out a $ 540 million loan, through VTB Capital and others, to finance the construction of the shipyards. Ematum borrowed $ 850 million on the bond market via Swiss credit and VTB to finance the creation of a fishing fleet, while ProIndicus borrowed $ 622 million from these same two banks to finance the deployment of coast guards to fight piracy and illegal fishing. The Mozambican government has approved all of these loans.
These transactions quickly became the subject of heated debate. In 2015, Ematum investors suspected that some of their money was used to buy weapons, contrary to the terms of the loan, and the following year they found out that ProIndicus had also taken out a loan. This hidden debt seriously damaged Mozambique’s reputation in financial markets, forcing the IMF to withdraw funding that inevitably contributed to the country’s currency collapse.
None of the protagonists came down lightly
All of this happened against the backdrop of accusations of widespread corruption. In order to secure its participation in the project, Privinvest allegedly paid huge bribes to Swiss credit bankers and the Guebuza administration.
The London files, which we have been able to consult, reveal an avalanche of accusations and counter-accusations, which none of the protagonists have escaped lightly.
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In particular, Mozambique accused its then finance minister, Manuel Chang, of taking at least $ 5 million in bribes following a September 2013 meeting with Safa at the residence. of the latter in the south of France.
According to Mozambique, Safa also organized transfers to several people close to President Guebuza, including his personal assistant and his eldest son.
Bribes and bribes amounted to at least $ 136 million, according to the complaint filed by the Mozambican government.
President Nyusi destabilized
Remarkably, Privinvest does not deny having made these transfers. In its statement, prepared by Signature Litigation, the company goes one step further and states that Chang actually received not $ 5 million, but $ 7 million.
He claims, however, that these were perfectly legal payments that were used for election campaigns and real business ventures. Privinvest denies any attempt to bribe the country’s authorities in order to win the public market.
According to Privinvest, President Filipe Nyusi – in power since January 2015 – denounced this flagship project of the Guebuza administration in order to damage the reputation of his predecessor. The aim of this maneuver was to oust Guebuza from the Frelimo political party, which they both wanted to control.
But Mozambique’s complaint, which was carried out with the help of the Peters & Peters law firm, could backfire on the country’s current president. According to the court file, Privinvest claims to have put $ 1 million in Nyusi’s UAE bank account in April 2014 and also helped him buy a Toyota 4 Ã 4 in July of the same year.
According to Privinvest, if the transfers to the entourage of the former president were criminal in nature, as the Nyusi administration claims, then the transfers to the current president are just as criminal. This is a clever argument that risks destabilizing the plaintiff and further widening the scope of potential offenders.
Litigation of several hundred million dollars
Three elders Swiss credit bankers in Mozambique – Andrew Pearse, Surjan Singh and Detelina Subeva – are also involved. Pearse admits accepting $ 45 million from Privinvest but says it was not a bribe. Singh admits receiving $ 5.7 million in bribes from Privinvest to secure the Swiss bank’s participation in the project. Subeva denies having received a bribe.
Safa’s company confirms it has not transferred any money to him, but claims it has since discovered that Pearse, who is her boyfriend, allegedly paid her $ 2.2 million in 2013.
Swiss credit, who is also accused of participating in this plot, has dissociated himself from his former employees. In its press release, the bank admits to having been bribed by Privinvest but claims to have itself been the victim of this conspiracy, the aim of which was to channel funds to Privinvest without taking into account the commercial interests of the bank. Swiss credit is represented by the London firm Slaughter and May.
In any case, the Nyusi administration considers that the state guarantees signed by Chang on all the debts incurred have no legal value, these signatures having been allegedly bought by Privinvest. Swiss credit and VTB, represented by Freshfield Bruckhaus Deringer, said these contracts are still valid and that the Mozambican government must honor its commitments.
This litigation could therefore amount to several hundreds of millions of dollars. This is a significant sum for Mozambique, which is currently going through a serious humanitarian crisis due to the combined effect of the Covid-19 pandemic, natural disasters and the rise of Islamist terrorism.
UK courts will have to determine who is at fault. If the Swiss arbitration courts take up Privinvest’s claim, certain aspects of the case may remain secret.