Mozambique has paid 142 million dollars (130 million euros), mainly through the issuance of internal debt, to financial institutions as part of an out-of-court settlement to end a dispute in the London Commercial Court over “hidden debts”, the Lusa news agency reported last week.
Information from the International Monetary Fund (IMF), consulted by Lusa, recalls that “in an effort to strengthen governance and transparency and resolve costly disputes related to loans to public companies, the Mozambican authorities reached an out-of-court settlement on part of the Proindicus debt in October 2023”.
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“The agreement covers around 522 million dollars (478.6 million euros) of the outstanding capital and includes a cash component (46 million dollars) and the issue of National Treasury bonds (6.2 billion meticais over six years, equivalent to 96 million dollars),” reads the IMF report on the evaluation of the assistance programme for Mozambique.
The document adds that the cash component “was financed by a one-off fine levied by the government due to the cancellation of a natural gas exploration project, and that the issue of Treasury bonds to finance the other component was carried out in 2023, being “consistent with the maximum limit for issuing domestic debt under the budget law for that year”.
Mozambique previously announced that it had paid 130 million dollars (119.1 million euros) to financial institutions as part of the out-of-court settlement with Credit Suisse to end a legal dispute in the London Commercial Court over the “hidden debts” case.
According to documents presented in court that day, Mozambique paid between one million dollars (916,000 euros) and 38.2 million dollars (35 million euros) to eight institutions, including Banco Internacional de Moçambique (BIM), Banco Comercial e de Investimentos (BCI), Moza Banco, United Bank for Africa, Atlantic Forfaitierungs and the investment funds VR Global Partners, Farallon Capital and ICE Canyon.
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Made public on 1 October, the eve of the start of the trial in the British courts, the agreement has as its main signatories the Mozambican government and the UBS group, owner of the Credit Suisse bank, the main financier of the state-owned company Proindicus, to buy ships and maritime surveillance equipment in 2013.
The so-called Transaction Agreement between the Republic of Mozambique, the state company Proindicus, Credit Suisse and other litigants was approved by resolution of the Council of Ministers on 6 June, but only made official in the Supplement to the Official Gazette dated 14 September.
The lawyer representing the Mozambican Attorney General’s Office (PGR), Joe Smouha, indicated that Credit Suisse had waived an outstanding debt of around 450 million dollars (412 million euros), but would not pay any compensation to Mozambique.
The payments provided for by the out-of-court settlement to the other financial institutions that entered into the Prodindicus syndicated loan had an interest in the deal, which varied in terms of proportion according to the status of the litigants.
Left out of the out-of-court settlement were VTB Bank, which was involved in financing Proindicus, and the Portuguese bank BCP, which only participated in the loan to the MAM company.
The current trial is the culmination of almost four years of litigation in the British courts, to which Mozambique appealed alleging corruption, conspiracy to defraud by unlawful means and dishonest assistance to cancel debts and claim financial compensation worth millions of dollars.
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Mozambique is demanding 3.1 billion dollars in damages, compensation and indemnity from the shipping group Privinvest and its owner, Iskandar Safa, accusing them of paying bribes to public officials, including former finance minister Manuel Chang, who signed the sovereign guarantees on the loans.
