Governance Watchdogs Warn of Corruption Risks in Sale of Mozambique Airlines

- Government plans to acquire three passenger aircraft for LAM within the next three months

By Ricardo Dias

Maputo (MOZTIMES) – The recent decision by the Mozambican government to sell 91% of the shares in Mozambique Airlines (LAM) to the publicly owned companies Hidroeléctrica de Cahora Bassa (HCB), Mozambique Railways (CFM), and the Mozambican Insurance Company (EMOSE) is sparking criticism and scrutiny from governance watchdogs.

The sale, valued at 130 million US dollar, aims to restructure LAM, which is grappling with a financial crisis and a debt of 300 million dollars. The operation involves using public companies as investors to recapitalise the airline and enable the purchase of eight new aircraft.

However, despite government assurances that LAM’s restructuring will be conducted according to the highest international management and financial sustainability standards, governance watchdogs in Mozambique are questioning the viability and transparency of the process.

“Selling the shares to other public companies may be the government’s way of dodging the problem by transferring it to other state institutions without addressing the root causes of corruption,” said Gift Essinalo, a public enterprise research expert at the anti-corruption watchdog, the Centre for Public Integrity (CIP), in an interview.

“The core issue lies in LAM’s mismanagement and corruption, schemes previously exposed by Fly Modern Ark, the South African company that managed the airline for about a year,” Essinalo added.

The Centre for Democracy and Human Rights (CDD) argues that the decision to sell 91% of LAM shares could jeopardise Mozambique’s public finances, as the companies involved are key revenue sources for the state.

“In 2023, HCB transferred 6.3 billion meticais to the state, a sum used to finance essential public services such as health, education, and security. If these companies are required to allocate resources to acquire LAM and take on its debts, it could reduce the government’s capacity to finance vital sectors for the population,” reads a recent CDD publication.

In the Governance Plan for the first 100 days, released by the government last week, the acquisition of three aircraft for LAM within the next three months is outlined, with an estimated cost of 204 billion meticais. This expense is expected to be borne by the companies acquiring LAM. The government plans to purchase eight passenger aircraft for LAM later this year. (RD)

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