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Mozambique is set to recoup more than $825mn from the $2bn “tuna bonds” fraud that wrecked the southern African nation’s finances and triggered one of Africa’s biggest graft scandals.
One of the world’s poorest nations was awarded more than $825mn in damages from Privinvest, a Gulf shipbuilder, in a London court on Monday. The High Court ruled “substantially in favour” of a claim that the country was defrauded in loans used to fund tuna boats and other maritime projects.
The boats supplied by Privinvest rusted in harbour and the projects were looted of hundreds of millions of dollars after Mozambican state companies used sovereign guarantees to issue debt arranged by Credit Suisse and other banks from 2013.
The borrowing spree collapsed after its full extent was revealed in 2016, unleashing a financial crisis and ultimately a government debt default as the IMF and key donors to Mozambique pulled direct budget funding.
Mozambique had sued Credit Suisse in the same case, but settled with the bank before the trial started last year. The bank separately paid $475mn in fines and agreed to forgive a part of the debt in 2021. The country also recently settled with Russia’s VTB, another arranger of the borrowing.
“Mozambique was hustled to buy what it couldn’t use properly and didn’t need and wasn’t prepared for,” Justice Robin Knowles said, finding that Privinvest had bribed Manuel Chang, a former finance minister, to approve loans.
Mozambican claims of bribes to other key officials and politicians could not be substantiated but Iskandar Safa, Privinvest’s late chief executive and co-founder, “was the individual ultimately behind each promise and payment” to Chang, he said.
Safa, who also owned a right-wing media empire in France, died in January. Chang, who denies wrongdoing, is currently awaiting trial in New York over a US criminal prosecution into the scandal.
In addition to the damages from Privinvest, Mozambique was also awarded a $1.5bn indemnity over remaining payments on the tuna bond debts.
In a statement on Monday, Privinvest said it would appeal an “unfair and unjustified” ruling that it said was marred by the failure of President Filipe Nyusi’s government to disclose critical documents to the court.
The company has denied bribing any Mozambican official, including Chang, and has said that any payments were part of lawful investments.
“Privinvest trusts that more senior courts will correct what Privinvest perceives as a trial having taken place in circumstances that the Republic failed so completely to fulfil its own obligations and ignored orders of the court,” it said.
“While the judgment is a significant victory for Mozambique, this case has brought only partial accountability and partial compensation for the devastating harms caused to the country’s economy and its people,” said Helen Taylor, senior legal researcher at Spotlight on Corruption, a UK watchdog.
While this had been “a case of Mozambique as a developing nation being exploited by highly developed institutions and corporations that should know better”, no senior official in the country “stood up for Mozambique and challenged or tested what was or might be going on”, the judge said.
Nyusi had state immunity in the case, but Privinvest said on Monday that it intended to sue him after he steps down as president next year.
“This reflects the fact that the English judge has recognised the abject failures of President Nyusi and his political elite to act in the best interests of the people they (for now) serve,” it said.