UK court ruling a setback for Mozambique in $2bn debt scandal

0
132

MOZAMBIQUE’S claims against shipbuilder Privinvest, at the centre of a $2bn debt scandal, fall under an ongoing arbitration process, Britain’s appeals court found on Thursday, in a blow to Mozambique’s efforts to remove its liability for part of the money.

Mozambique is suing Privinvest, its billionaire CEO Iskandar Safa, and Credit Suisse in London’s high court over $2bn in government-guaranteed loans raised in 2013 and 2014, a hefty chunk of which went missing according to authorities.

Privinvest, the sole contractor to a series of projects the money was ostensibly raised for, has separately launched arbitration proceedings against three state-owned companies in Mozambique at the centre of the affair, claiming compensation for breach of contract.

Britain’s high court recently rejected Privinvest’s arguments for a stay on proceedings because Mozambique’s claims against it, namely that Privinvest paid hefty bribes to officials to secure the deal, were covered by the arbitration process. But on Thursday, another court upheld Privinvest’s appeal against the high court’s decision.

‘The republic’s claims against the Privinvest companies fall within the scope of the arbitration agreements,’ the written judgment said.

Mozambique’s attorney-general’s office did not immediately respond to a message seeking comment.

The debt scandal prompted donors including the International Monetary Fund to cut off support to Mozambique, triggering a currency collapse and debt default in 2016.

The country remains on the hook for the money, with Thursday’s decision at least delaying Mozambique’s efforts to remove its liability for the debt.

It is using the case to try to get a government guarantee for a $622 million loan made by Credit Suisse revoked, which can’t be achieved via the narrower arbitration process with Privinvest.

Credit Suisse, along with Russia’s state-owned VTB, provided or arranged the loans for the projects. Three former Credit Suisse bankers pleaded guilty to charges including conspiracy to violate US anti-bribery laws in a separate case launched by US authorities.

Credit Suisse, which declined to comment on Thursday, has issued a counter claim in London against Mozambique and previously said the former employees hid their contacts from the bank.

A Privinvest spokesman welcomed the decision, saying it reflected Privinvest’s view that the claims should never have been brought in the London courts and the ‘artificiality’ of Mozambique’s case.

‘Privinvest continues to reject the [Mozambique’s] meritless claims,’ he added. Privinvest argues it delivered on all of its obligations under the contracts — though Mozambique failed to make use of boats and other assets it provided — and any payments it made were legal under Mozambique law.

 

LEAVE A REPLY

Please enter your comment!
Please enter your name here