The Mozambique Budget Monitoring Forum has lodged a petition with the country’s Constitutional Council challenging the legality of the $850 million secret loan arranged by Credit Suisse to the Mozambican company Ematum.
The loan was given a government guarantee in 2013, but this was not included in the state budget and therefore not approved by parliament. In 2016, the debt was belatedly brought into the state budget. The petition is challenging the legality of this decision, calling for a review by the constitutional court.
The inclusion of an additional $1.1 billion of secret loans arranged by Credit Suisse and VTB Capital in the state’s accounts has been initially approved by Mozambique’s parliament but the required legislation is yet to be published. As and when this is made public, the Budget Monitoring Forum intends to lodge a further petition challenging the legality of the government guarantees for those loans as well.
Denise Namburete from the Budget Monitoring Forum said:
“The government guarantees for these loans were given in secret without the parliamentary approval required by law and the constitution. Ordinary Mozambicans should not have to repay one dollar of these loans.”
A summary of an independent audit into the loans was released on 24 June. Mozambican civil society organisations have called for the full audit to be made public. The publication of the summary audit has led the Financial Times to describe the secret debts as “odious”.
The audit raises huge questions of the loans, including the roles played by Credit Suisse and VTB Capital, including:
- Why did Credit Suisse drop its condition that the Bank of Mozambique had to approve the loans before they were given?
- Why did Credit Suisse and VTB Capital give or arrange loans to three companies which had no revenue, and without the contracts in place to suggest that they would generate revenue in the future?
- Why is there is an unexplained difference of $683 million to $714 million on what was paid for equipment bought by the loans, and its expected cost?
The loans were given or arranged by the London branches of Credit Suisse and VTB Capital, and issued under English law. The Jubilee Debt Campaign in the UK are calling for a proper investigation of the role of the banks, and changes to UK law so that loans to governments under English law or issued by UK banks are transparent and follow the laws of the country concerned.
Sarah-Jayne Clifton, Director of the Jubilee Debt Campaign said:
“None of the costs of these odious debts should fall on the shoulders of ordinary people in Mozambique. Both the government officials involved and the lenders must be held to account for their actions. And the UK parliament needs to act to ensure that a scandal like this, involving London-based banks and loans issued under UK law, can never happen again.”