Limited charges on $2 bn hidden debt

In a surprise move, the Attorney General (PGR) has passed part of the $2 bn hidden debt case to the Audit Court (TA), and it appears penalties would be only financial, with jail unlikely.

In a statement issued today, the PRG (Procuradoria-Geral da Republica) said it had submitted to the TA (Tribunal Administrativo) "a complaint regarding the financial accountability of public managers and public companies" with respect to violations of law with respect to government guarantees, contracting of external finance, and signing contracts without authorization. The statement is on http://bit.ly/2BAIMAc

No names are given, but this suggests that the charges could be limited to the three companies - Ematum, MAM, and ProIndicus - and to three people - the head of the three companies Antonio Carlos do Rosario and the two people who signed the guarantees, Manuel Chang (then Finance Minister) and Isaltina Lucas (then treasury director and now Deputy Finance Minister).

The statement continues that "investigations continue in terms of identifying possible criminal infractions and those responsible", but the PRG complains about the failure of some foreign countries to provide information.

(The PRG has still not published the full Kroll audit report, which we have made available on http://bit.ly/Kroll-Moz-full)

Comment: It does look like a slap on the wrist for a few scapegoats. The PGR is only moving on "financial infractions" and blames lack of cooperation of unnamed foreign governments and "obscurities, deficiencies, and contradictions" in the law for a failure to bring criminal charges, although investigations continue.

President Filipe Nyusi told diplomats on 22 January that under separation of powers in the constitution, it was up to the legal authorities to deal with the hidden debt, and that "we will not tolerate any affronts to our state of democratic rights or any disrespect to legitimate institutional power." The speech is on http://bit.ly/2BCJdK3

And he accused donors of a "generalised impatience" in pushing Mozambique to combat corruption. It is a priority, he stressed, and there is "intense work" and the number of cases exposed is increasing - but it will take time.

Nyusi is saying don't put pressure on me or on the PRG. And a week later the PRG says only "financial infractions" linked to the secret debt can be prosecuted. Criminal investigations continue, but as with the looting of Banco Austral in 2000, such prosecutions will be quietly dropped after a few years.

Clearly Frelimo has reached the limit of what it can offer up to donors and the Mozambican people.

But the President's statement to diplomats again pointed to a broader deal. He stressed that he expected "soon" to submit to parliament an agreement with Renamo. And Nyusi told diplomats that this agreement would include "a restructuring of the armed forces based on consensus" - in other words, major concessions to Renamo generals.

Taken together, this points to at least an implicit deal. Part of the $2 bn hidden debt was used to build up the military, and many of those who benefitted have military links and have taken a hard line against concessions to Renamo on high level military integration. In exchange for the hard liners agreeing to Renamo integration and a weakening of the armed forces, has Nyusi agreed not to name or prosecute those who benefitted from the hidden loans? And in a coded way, is Nyusi asking diplomats to not rock the boat?   Jh

Source: News reports & clippings
 29 January 2018