Hidden Debts: Credit Suisse asks London court to dismiss lawsuit brought by Mozambique

The term “hidden debts” refers to loans of over two billion dollars granted by Credit Suisse and VTB of Russia in 2013 and 2014 to three fraudulent, security linked Mozambican companies, Proindicus, Ematum (Mozambican Tuna Company) and MAM (Mozambique Asset Management).

Although all three fake companies were run by the Mozambican security service, SISE, the banks lent them the money, on the basis of illegal loan guarantees signed by the Finance Minister of the time, Manuel Chang. By signing the guarantees, Chang violated the budget laws, which set a ceiling on loan guarantees.

As was all too predictable, the three companies soon went bankrupt, and the banks want the Mozambican state to pay up. What had been hidden loans became hidden debts.

The loans were entirely corrupt. The Abu Dhabi based group Privinvest, which became the sole contractor for the three companies, bribed Mozambican officials, including Chang, and Credit Suisse bankers to secure the contracts.

There is no doubt about this: the three Credit Suisse officials who negotiated the loans, Andrew Pearse, Detelina Subeva and Surjan Singh, all confessed to a court in New York that they had taken bribes from Privinvest.

Credit Suisse has now been taken over by another Swiss bank, UBS, which has inherited the Credit Suisse lawsuits, including Mozambique’s demand that the loan guarantees be declared null and void, and that Credit Suisse pay compensation.

A trial is due to start in the London High Court in September, but Credit Suisse wants the lawsuit dismissed, claiming that the Mozambican government’s failure to disclose documents means there cannot be a fair trial.

In its application to the High Court, cited in the London “Financial Times”, Credit Suisse alleged that the failure to disclose documents from the office of Mozambican President Filipe Nyusi, as well as from SISE, means that a fair trial will not be possible.

The lawyer for Credit Suisse, Andrew Scott, told the court that the breaches were “serious” and were the result of choices made by Mozambique “on what disclosure it will provide”.

But Mozambique’s lawyers told the hearing it was “not accurate or fair to characterize the Republic as a recalcitrant litigant which has set its face against giving proper disclosure”.

In its written arguments, Mozambique said there had been “strenuous efforts” to obtain documents and the Credit Suisse application “gives no weight to the substantial efforts made by the Republic to meet and overcome the momentous challenges in giving disclosure which it has had to face”.

Mozambique’s legal team added that “the assertion that there is a substantial body of relevant documents likely to be missing” from disclosure “is overblown and wrong”.

“It would be wrong, at this stage, to assume that there is a substantial body of material missing as the applicants contend and that thus a fair trial is not possible”, the lawyers said.

Jonathan Adkin, the barrister for Mozambique, said in written submissions that a trial should go ahead because the case involves “an international fraud and official corruption on a vast scale”, and the court can determine at trial “whether there is ‘missing’ material as alleged”.

(AIM)