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Mozambique: FMO takes inspiration from Malaysian case to demand compensation from Credit Suisse

The recent settlement arrived at between Goldman Sachs and Malaysia has given Mozambique’s Budget Monitoring Forum (FMO) hope that there is also a way for Credit Suisse to compensate Mozambique for the damages caused in the case of the so-called ‘hidden debts’.

On July 24, Bloomberg reported that the Goldman Sachs Group Inc. had struck a US$3.9B deal with Malaysia to end the financial scandal related to the 1Malaysia Development Berhad (1MDB) that had lasted for almost a decade.

According to Malaysian authorities, a large part of the approximately US$6.5B collected by Goldman Sachs between 2012 and 2013, in the name of 1MBD, was allegedly diverted by people linked to the Asian country’s former prime minister. Investment bank group Goldman Sachs earned an extraordinarily US$600M from selling related securities on the Wall Street stock exchange.

According to the Malaysian Ministry of Finance, the settlement, which represents Goldman Sachs’ recognition of the misconduct of two former employees in the biggest fraud and corruption case in Malaysian history, includes a payment of US$2.5 billion to Malaysia for its authorities to put an end to investigations into the American bank’s role in the financial scheme which plundered the country’s 1MDB investment fund.

Also read: The legal basis to void Mozambique hidden debt

FMO wants to see the Malaysian example replicated

Based on the case of Malaysia, the Budget Monitoring Forum (FMO) considers that it is also time for Credit Suisse to compensate Mozambique for the socio-economic damage to its people resulting from the financial scheme perpetuated by some senior employees of that Swiss bank in partnership with senior government officials, with Manuel Chang to the head, who illegally and fraudulently opposed a loan in the name of the country that not only increased the levels of unsustainability of public debt but also did not bring any benefit to the growth and economic development of Mozambique.

In early 2020, the Mozambican State, through the Attorney General’s Office (PGR), filed a lawsuit in London against Credit Suisse with a view to cancelling the debt of about US$600M from ProIndicus and requested compensation to cover losses from the hidden debt scandal.

NGOs demand debt cancellation in Mozambique

Recently, 11 Swiss partner organisations of FMO demanded that the Government of Switzerland cancel the debts of poor and highly indebted countries, including Mozambique, so that they have financial relief that allows them to have greater capacity to bear the economic and financial costs involved in implementing national programs to mitigate the negative effects of the outbreak and spread of the Covid-19 pandemic.

In the same context, a UN Economic Commission for Africa (UNECA) report indicated that Mozambique’s financial situation, in Covid-19 times, is penalised by “four critical challenges”, the most penalising of all being the unsustainability of public debt that led the American agency Fitch Ratings to classify the Metical as a of the most “vulnerable” to the Covid-19 pandemic currencies worldwide.

In this sense, the FMO considers that the Government should not only stop performing debt services related to the “hidden debts” but should also take steps with the Swiss authorities for the quick and exemplary accountability of Credit Suisse for the damages caused to the Mozambican people. It is time for Credit Suisse to compensate Mozambicans for the damage caused by the financial scandal of hidden debts.

Source: Deutsche Welle via Club of Mozambique

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