Moza govt urged to declare “hidden debts” unconstitutional

Maputo July 5, 2017 -A coalition of Mozambican civil society organisations, the Budget Monitoring Forum (FMO) on Wednesday submitted a request to the Constitutional Council, the highest body in matters of constitutional law, to declare unconstitutional the inclusion of the country’s “hidden debts” in the General State Accounts (CGE).

The Mozambique government has recently been embroiled in controversy over loans for over US$2 billion to security related companies Ematum (Mozambique Tuna Company), Proindicus and MAM (Mozambique Asset Management) (which have come to be referred to as “hidden debts”) obtained from the European banks Credit Suisse and VTB of Russia in 2013 and 2014 that the administration of former President Armando Guebuza illicitly guaranteed.

In April this year the Mozambican Parliament, the Assembly of the Republic, approved the CGE for 2015, in which the government included the Proindicus and MAM guarantees.

For the government and the ruling Frelimo party, including the guarantees was merely a statement of fact, but opposition parties denounced it as a way of legalizing illegal and unconstitutional debts.

The opposition parties called for the 2015 CGE to be declared unconstitutional, and also the 2014 CGE which had included the guarantee for Ematum, the same conclusion that the FMO had also reached.

For a civil society organisation to request a ruling from the Constitutional Council it should submit a petition signed by at least 2 000 citizens and the FMO has since collected the requisite number and submitted the petition on Wednesday morning.

Speaking at a press conference later in the day, FMO representative Denise Namburete said she expected that by Thursday the Council would notify the FMO as to whether there were any irregularities in the request, so that they could be corrected.

Namburete also demanded that the government should make a public undertaking that it would not use tax revenue to pay the “hidden debts”.

Since mid-2016, Proindicus and MAM have been defaulting on the debts, and the government has not stepped in to pay. Neither has the government paid interest owed to the Ematum bondholders, even though the original Ematum bond was replaced by government sovereign bonds.

“We want the Constitutional Council to declare that including the hidden debts in the CGEs of 2014 and 2015 was unconstitutional,” said Namburete.

However, the current petition to the Council only specifically mentions the Ematum debt, since the 2015 GCE, with its references to the Proindicus and MAM debts, has not yet been published in the official gazette, the “Boletim da Republica”.

But Namburete promised that, when the 2015 CGE did appear in the gazette, her organisation would lodge a second petition with the Council.

The FMO is also demanding that the full audit report by the company Kroll should be published and made accessible to all Mozambicans.

Kroll was hired by the Attorney-General’s Office (PGR) to audit Ematum, Proindicus and MAM, and the PGR published the executive summary of its report on 24 June this year. The full report should be made public within 90 days.

“The FMO questions the public usefulness of Ematum, MAM and Proindicus”, declared Namburete, “and repudiates the acts and attitudes of the actors described in the Kroll report. We stress that no assets belonging to Mozambicans – whether they are financial, or natural resources, or any other type – should be used to pay criminal debts”.

The FMO noted that the Kroll report suggested that the financial engineering involved in setting up the three companies was not linked to any coherent national development project.

July 2017
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