- 100 MPs sign motion which expresses concern about secret loans and calls for new transparency measures
- Mozambique government meeting creditors in London on 20 March
On 20 March the Mozambique government will meet private creditors in London to discuss debt restructuring proposals. Mozambique began defaulting on the $2 billion debts in 2016, most of which were originally given in secret. The loans were issued to three state companies with no revenue, and at least $700 million of the loans have not been accounted for. The loans were given by two London based banks, Credit Suisse and VTB, and are owed under English law.
100 UK MPs have signed a motion which “expresses concern about the alleged secret loans given by London-based banks in 2013 to Mozambican companies, with Mozambique Government guarantees, and without approval of the Mozambique parliament”.
Sarah-Jayne Clifton, Director of the Jubilee Debt Campaign, said:
“The lenders and government officials behind these outrageous deals need to be held to account for their actions. The people of Mozambique should not have to pay one cent on these secret debts. Any creditors who feel mislead should seek recompense from the banks which arranged the secret loans, Credit Suisse and VTB, and from any individuals who may have profited from the deals.”
The UK parliamentary motion signed by 100 MPs also “calls for measures to ensure that all loans under UK law given to governments or with government guarantees are disclosed publicly at the time they are made and comply with the law of the country concerned”.
Roger Godsiff MP who tabled the motion said:
“It is very concerning that loans were given without the proper parliamentary oversight in Mozambique. In the UK we need to recognize our role in this scandal. The Financial Conduct Authority must use all means at its disposal to hold the London-based banks to account. And we need new measures to ensure all loans to governments given by UK-based financial institutions, or loans given under UK law, are publicly disclosed.”
The $2 billion of loans were issued in 2013, but two of the three loans did not come to light until 2016. The loans were given to three state owned companies in Mozambique. An audit into the deals last year found that:
• A condition of Credit Suisse to get the loans signed off by the Bank of Mozambique was dropped in order for the loans to be given.
• Credit Suisse and VTB gave or arranged loans to three companies which had no revenue, and without the contracts in place to suggest that they would generate revenue in the future.
• There is an unexplained difference of between $683 million and $714 million on what was paid for equipment bought by the loans, and its expected cost.
The loans were guaranteed by then Mozambican Finance Minister Manuel Chang, but were not approved by the Mozambique parliament, despite this being a requirement of the Mozambique constitution. All three of the state-owned companies are in default on the loans, but no creditor has brought legal action against Mozambique and no creditor has made a claim against the government guarantee. Because the loans were issued under English law, if legal action was brought by creditors against Mozambique, the case would be heard in the UK.