- Case brought by campaigners says Mozambique law was not followed
- Campaigners call for English High Court to also declare the debts void
In a verdict released today, the Mozambique Constitutional Court has declared $1.4 billion of debt contracted by two state–owned companies void. The ruling says that the government guarantees given to the loans were illegal and therefore the Mozambique government does not owe the debts. The case was brought to the Constitutional Court by the Mozambique Budget Monitoring Forum, a coalition of Mozambique civil society organisations working on public finance transparency and accountability.
The two separate loans were given in 2013 and 2014, the first by Credit Suisse and VTB to the state–owned company Proindicus, and the second by VTB to the state–owned company Mozambique Asset Management (MAM). Both loans were not public knowledge until 2016. Then Finance Minister Manuel Chang signed the government guarantees when the loans were first given. However, the government guarantees were not agreed by the Mozambique parliament, making them illegal under Mozambique law [1].
The loans are governed by English law, and both are in default. There are currently three separate cases lodged with the High Court in London concerning their validity. The Mozambique government has brought a case seeking to declare the Proindicus loan void under English law. VTB have brought a case seeking payment by the Mozambique government of the MAM loan, as has Portuguese bank BCP which bought some of the MAM debt.
Commenting on the ruling, Adriano Nuvunga, Coordinator of the Mozambique Budget Monitoring Forum said:
“We welcome this decision which recognizes the law was not properly following in Mozambique. The debts are not owed by the people of Mozambique, so we should not have to repay them. International action is needed to prevent loans being given in secret in future.”
Sarah-Jayne Clifton, Director of Jubilee Debt Campaign said:
“This is a key victory for campaigners in Mozambique, who have worked tirelessly to get these loans declared void. The people of Mozambique had no say over, and no benefit from the loans, and should not have to repay one cent. We now need legal recognition here in the UK that Mozambique local law was not followed and a declaration that the debts are void. And the UK Government should change the law, so that in future all loans to governments have to be publicly declared when they are given.”
Notes
[1] Manuel Chang is currently being held in South Africa with both the United States and Mozambique requesting his extradition to face charges of receiving kickbacks through the deals.