Mozambique Opposes Leave to Appeal for Privinvest

- Recently, Privinvest's chief sales officer, Jean Boustani, testified that the company had "an order book of more than four billion dollars" at the start of its Mozambican operations

Por Paul Fauvet

Maputo (MOZTIMES) – The Abu Dhabi-based group Privinvest still hopes to avoid paying the Mozambican state billions of US dollars ordered by the London High Court in July.

The case of the “hidden debts” became a crushing defeat for Privinvest, when the court found that the Group and its owner, the late Iskandar Safa, had indeed paid bribes, including to the then Mozambican Finance Minister Manuel Chang.

Chang was Minister of Finance in 2013-14, when three fraudulent companies, run by the Mozambican security service (SISE), Proindicus, Ematum (Mozambique Tuna Company) and MAM (Mozambique Asset Management) obtained loans of over two billion US dollars from the banks Credit Suisse and VTB of Russia.

The companies only received the loans because the government of the day, under the then president Armando Guebuza, guaranteed 100 per cent of the money. So, in the event of the companies collapsing, the banks could demand their money from the Mozambican state.

The guarantees were signed by Chang, even though they were flagrantly illegal, smashing through the limits on such loans set by the 2013 and 2014 budget loans. Key to this were the bribes that Privinvest paid to Chang and other Mozambican officials and to the Credit Suisse negotiating team.

Mozambique turned to the London High Court to demand compensation for the fraudulent deals. And the court agreed: Judge Robin Knowles found that bribes had indeed been paid, notably to Chang.

Knowles concluded that “Mozambique is entitled as against Mr. Safa and the Privinvest companies to payment of USD 815,188,391 and to an indemnity in respect of the payments estimated at USD 1,01,250,000 that it is liable to pay hereafter (USD 95,000,00 under the most recent settlement agreement and the estimated USD 1,406,250,000 to bondholders)”.

Hence Privinvest should pay Mozambique a total of over 2.36 billion dollars. (The bondholders mentioned are the holders of the bonds initially issued in the name of Ematum, but later swapped for the innocuously named Eurobonds. Payment of the interest and capital on these bonds will continue until 2031)

Privinvest is trying to avoid payment, and so has applied to the court for leave to appeal. Mozambique argues there is no good reason for granting the right to appeal.

In what is known as a “consequentials hearing” held in London on 18 September, Mozambique’s legal team argued that the application for permission to appeal should be dismissed.

“The proposed appeal has no real prospect of success”, it said, and none of the grounds for appeal raised by Privinvest “raise an arguable legal error or point of principle”.

Instead, Privinvest sought to overturn matters of fact, which the court had already decided on. Mozambique’s lawyers noted that the judgment “followed a three month trial, spanning 40 sitting days, of 12 separate sets of proceedings, between a multitude of parties, involving 19 factual witnesses, 23 expert witnesses, over three expert disciplines (producing multiple reports with tens of thousands of pages of supporting material), over 1,799 pages of written submission at trial, and 56,859 pages (of evidence)”

“There is no basis for interfering with the factual findings, evaluative judgments or case management decisions reached by the court, nor its conclusions on the law”, the Mozambican case argued.

Furthermore, established precedent is that an appeals court should not interfere with the trial judge’s conclusions on primary facts “unless it is satisfied that he was plainly wrong”. Privinvest had not shown that Judge Knowles was “plainly wrong”, or his rulings “perverse”.

The court had found “as a fact” that Safa and the Privinvest Group bribed Chang, and the effect of this was that Chang signed the loan guarantees.

“The conclusion that the guarantees resulted from the bribery of Minister Chang is the correct (and only) conclusion to be drawn from the documentary record”, argued the Mozambican case.

But if, contrary to Mozambique’s wishes, the court does grant Privinvest leave to appeal, then it should require, the Mozambican legal team urges, that any appeal be conditional on paying at least the interim award determined by the court. That would include payment of at least 23 million dollars towards Mozambique’s legal costs.

Privinvest also called for a “stay of enforcement” in paying any money, including the sum determined at the trial and the subsequent costs. Privinvest claimed that enforcement could lead to “irremediable harm”. In other words, if Privinvest pays up, it would be in danger of bankruptcy.

Mozambique firmly rejects this delaying tactic, arguing that Privinvest has given no evidence for the alleged “irremediable harm”, and there would be “a risk of injustice to the Republic (Mozambique), if the stay is granted”,

Furthermore, Privinvest took much more money from its supply contracts with the three fraudulent companies than it received. Thus, in the case of Proindicus, there was a profit margin of 447 million dollars – which is the difference between the payments made to Privinvest, and payments made by it under the sub-contracts.

The story was much the same with Ematum and MAM. Putting all three contracts together, the profit margin for Privinvest was a staggering 1.198 billion dollars.

“No account has been given of where those funds have gone”, the Mozambican legal team remarked.

So, is Privinvest really teetering on the edge of bankruptcy? Not according to one of Safa’s chief lieutenants, the Lebanese billionaire Jean Boustani, who gave evidence that Privinvest had “an order book of over four billion dollars” at the start of the Mozambican transactions. (PF)

Mozambique Opposes Leave to Appeal for Privinvest

Mozambique Receives Millions in Compensation for Damage Caused by Extreme Climatic Events

New Director Appointed for Central Anti-Corruption Agency

New Director Appointed for Central Anti-Corruption Agency

Search by categories

Category

Recent Posts

Newsletter

Welcome Back!

Retrieve your password

Add New Playlist

Are you sure want to unlock this post?

Are you sure want to cancel subscription?

Mozambique Opposes Leave to Appeal for Privinvest

Support authors and subscribe to content

Subscrição

Desbloquear

Mozambique Receives Millions in Compensation for Damage Caused by Extreme Climatic Events

New Director Appointed for Central Anti-Corruption Agency

New Director Appointed for Central Anti-Corruption Agency

Search by categories

Search from tags

Category

Recent Posts

Newsletter

Welcome Back!

Retrieve your password

Add New Playlist

Are you sure want to unlock this post?

Are you sure want to cancel subscription?