Mozambique
The Hidden Debt case is the major asset recovery case in Mozambique and one of the largest in Sub-Saharan Africa. It involves a concealed USD 2 billion loan from the UK branches of the Swiss Bank Credit Suisse and the Russian Bank VTB Capital to partially state-owned companies in Mozambique, which received a state guarantee on the loan. Since 2019, CiFAR has been engaged with Mozambican CSOs towards the advancement of asset recovery in the country.
Overview
The Hidden-Debt scandal was a defining moment for the anti-corruption effort in Mozambique. The government, development partners and some civil society organisations turned their attention to asset recovery in contrast to corruption investigations. Reforms included the passage of the 2019 Mutual Legal Assistance Law, which empowers the Minister of Justice to decide on extradition requests and coordinate asset recovery efforts through a dedicated office for asset recovery. The legislation assigns the judiciary to extradite people sought by other countries’ justice authorities for being suspected of having committed crimes.
The tracing of the stolen assets has been exceptionally difficult, due to limited cooperation amongst implicated parties and only a fraction of the assets from the hidden-debt scandal have been traced so far.
Nevertheless, 2021 saw the long-awaited trial for this case finally begin. Among eighteen others, Ndamdi Guebuza, son of the past President, Gregorio Leao, former Head of Intelligence, and Antonio do Rosario, chairperson of all three involved companies, are facing charges. In a separate, US indictment, three Credit Suisse employees in London–including the Managing Director and two other senior bank staff, the former Mozambican Finance Minister Manuel Chang, Teofilo Nhangumele from the Office of the President of Mozambique, Lebanese national Jean Boustani, and Najib Allam– were charged as lead conspirators.
In the same year, Crédit Suisse pled guilty to “conspiracy to wire fraud” and agreed to a settlement of USD 475 million in fines with the U.S. and U.K. authorities, as well as to write off USD 200 million in Mozambique’s debt.
Our work in Mozambique
Since 2019, CiFAR has been engaged with Mozambican civil society organisations in developing learning and knowledge exchange towards the advancement of asset recovery in the country. The Hidden Debt scandal galvanized civil society groups in Mozambique in demanding from the government not only progress on the repatriation of assets, but also sustained efforts to stop grand corruption and increase transparency and accountability.
Together with our partners in Mozambique, we identifyed the following strategic priorities, driving our work in the country:
Supporting civil society organisations to promote the enforcement of domestic laws by empowering the Asset Recovery Office, advocating for the necessary financial resources, and enhancing its technical capacity through cooperation with NGOs, sharing best practices and providing technical guidance;
Supporting civil society groups to promote improving the efficiency and transparency in returned asset management, with the active involvement of civil society in decision-making processes on how the assets are to be used for social purposes, as well as in monitoring the (social) re-use of the assets;
Contributing to tracing assets related to the Hidden Debt case and pushing authorities and law enforcement in Mozambique to progress in cases, namely through civil society led-advocacy on the importance of investigating and prosecuting at home and abroad;
Promoting stronger involvement of civil society in asset recovery , especially regarding the Hidden Debt case, by providing them with targeted support aimed at increased collaboration, technical capacity and knowledge on asset recovery processes, and increased networking opportunities on asset recovery, both at the national and international levels.
Promoting knowledge and strategic planning to advance international anti-corruption sanctions as a tool to advance asset recovery in Mozambique.