Mozambican court cancels $1.4 billion loans

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Mozambique’s constitutional court on Tuesday declared null and void loans worth $1.4 billion that sparked the country’s worst financial crisis when they came to light, in a ruling hailed by campaigners. debt.

Public security companies borrowed the money between 2013 and 2014 from London branches of Swiss banking giant Credit Suisse and Russia’s VTB, which argue the government is responsible for the money.

The amounts were part of a total of $2.2 billion in loans that only came to light in 2016, triggering a currency crash and sovereign debt default that sent international lenders on the run. .

The United States alleged that at least $200 million had been spent on bribes. Lawsuits have since been filed in the United States, Switzerland, Britain, South Africa and Mozambique.

Mozambique’s former finance minister, Manuel Chang, has been detained in South Africa since December 2018 on charges of pocketing millions in bribes.

Civil society organizations took the case to Mozambique’s Constitutional Court, which ruled on Tuesday that two loans – to ProIndicus and Mozambique Asset Management – were illegal because they had not been pre-approved by parliament. As a result, the country was not obligated to reimburse them.

“The government acted outside the constitution, unequivocally violating the article which reserves the exclusive right of parliament to authorize the making or granting of loans,” the verdict read.

Debt campaigners welcomed the court’s decision.

It “recognizes that the law has not been properly followed in Mozambique,” ​​said Adriano Nuvunga, coordinator of the Mozambique Budget Monitoring Forum.

“The debts are not owed by the Mozambican people, so we shouldn’t have to pay them back. International action is needed to prevent loans being given in secret in the future,” he said.

The decision was “a key victory”, according to Sarah-Jayne Clifton of the UK-based Jubilee Debt Campaign, which works to cancel debt for poor countries.

“The Mozambican people have had no say or benefit from the loans and should not have to pay back a penny,” she said in an emailed statement.

She called on Britain to recognize that local law in Mozambique was not followed and therefore the debts should be declared void.

The two state-owned companies at the center of the scandal said they used the money to fund maritime surveillance and buy military and tuna fishing vessels from an Abu Dhabi-based shipbuilding company called Privinvest.

Last year, the Constitutional Court had already declared null and void loans of 800 million dollars contracted by another company, EMATUM.

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