The governor of the Bank of Mozambique (BoM), Rogério Lucas Zandamela, said this Wednesday, 1 November, that the out-of-court settlement of the “hidden debts” will “improve macroeconomic indicators” and take pressure off the management of international reserves.
At the opening of the central bank’s 48th Consultative Council, in the southern city of Inhambane, Zandamela recognised that “the cancellation of debts contributes to improving the sustainability of macroeconomic indicators, with emphasis on the profile of commercial debt, which will consequently put less pressure on International Reserves”.
“As well as opening up space for restoring foreign investors’ confidence in the country and strengthening the stability of the national banking sector,” he added.
Lusa previously reported that Mozambique paid 130 million dollars to financial institutions as part of an 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 on 20 October, Mozambique paid between one million dollars and 38.2 million dollars to eight institutions.
These institutions include Millennium 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.
Made public on 1 October, the day before the start of the trial taking place in the British courts, the agreement has 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, as its main signatories.
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 purpose of the Settlement Agreement is the global and definitive resolution of the dispute between the parties referred to in the previous article and the total and reciprocal waiver of their claims, in litigation, for the litigating parties, and outside litigation, for the non-litigating parties, with regard to responsibilities for financing Proindicus,” the publication states.
On Tuesday, 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, but that it 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 or had an interest in the deal varied in terms of proportion according to their status as litigants or not.
For example, Millennium bim participated with 61.2 million dollars but received 38.1 million dollars, while UBA contributed 35 million dollars but received 21.84 million dollars. Both were parties to lawsuits brought against Mozambique for non-payment of debts and received a 37.6 per cent discount on their initial investment.
Left out of the out-of-court settlement were VTB bank, which was involved in financing Proindicus, and Portuguese bank BCP, which only participated in the loan to the MAM company.
In the ongoing trial, Mozambique is demanding 3.1 billion dollars in damages, compensation and indemnity from the shipping group Privinvest and its owner, Iskandar Safa, whom it accuses of paying bribes to public officials, including former Finance Minister Manuel Chang, who signed the sovereign guarantees on the loans.
The case in the London Commercial Court, part of the High Court, is expected to last until December.
