Mozambique 2022

Mozambique ranks 147^th out of 180 countries on Transparency International’s 2021 Corruption Perceptions Index,¹ indicating that corruption is perceived to be a major challenge in the country. It similarly ranks near the top of the Basel Institute’s Anti Money Laundering Index 2022, indicating a high risk of money laundering and terrorist financing.²

The Eastern and Southern Africa Anti-Money Laundering Group’s 2021 mutual evaluation report identifies that while Mozambique has made progress in recent years, risks of money laundering remain high. The report highlighted notably the lack of a National Risk Assessment for money laundering and terrorism financing, a lack of investigations following risks identified by the Financial Intelligence Unit, and a failure to routinely start financial investigations to trace the proceeds of crime. Overall, the report points out a range of deficiencies, including in investigation, prosecution, conviction and, eventually, confiscation of laundered money, and in anti-terrorism financing, including low capacity and lack of operational independence of law enforcement agencies.³

In the same vein, Transparency International and its Mozambican counterpart Centro de Integridade Publica (CIP) have lamented the country’s stagnation in terms of legal action taken against officials, despite the revelations that came out of the Hidden Debt scandal, and which bruised trust in public bodies and greatly destabilised the country’s economy.⁴

Domestic CSOs working on governance issues have a relative operational freedom but face administrative obstacles, threats and, in limited incidences, violence. According to CIVICUS, journalists also face ongoing attacks. CIVICUS ranks the civil society space as ‘obstructed’,⁵ while Freedom House ranks Mozambique as ‘partly free’. Due to the conflict in the Capo Delgabo region, the presence of several armed groups, a ruling party in power for nearly 30 years and the high numbers of internally displaced persons, political tensions in the country are increasing the pressure for transparency and accountability.⁶

In recent years, Mozambique has made some progress in developing a legal and institutional anti-corruption framework, especially regarding asset recovery. With the support of the International Center for Asset Recovery and of the Office of the Attorney General, a new law on asset recovery was passed in 2021, representing an important step toward empowering the prosecutors to understand and access data as well as enabling Mozambique to recover illicit assets. The law provides, for example, for the extended confiscation of assets of persons accused of corruption.⁷

Various institutions tackle the topic of asset recovery, corruption and money laundering in the country. This includes the Central Office for Fighting Corruption/ Gabinete Central de Combate à Corrupção (GCCC), the Ministry of State Administration and Public Service, the Central Ethics Commission, the Financial Intelligence Unit of Mozambique (GIFiM), and the Central Bank of Mozambique. The GCCC has bilateral cooperation agreements with counterparts from the UK, several Portuguese-speaking countries, and neighbouring countries.

The Hidden Debt case is the major asset recovery case in Mozambique. 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. Of this loan, USD 850 million was provided to Empressa Moçambica de Atum, USD 622 million to ProIndicus and €535 million to Mozambique Asset Management between 2013 and 2014. Confusion and dispute exist regarding the original purpose of the loans, but what later became clear was that the larger part of it was earmarked for maritime security. However and despite legislative requirements, parliament was not informed of these loans, with details only becoming public following a statement from Mozambican authorities that they were unable to service their debts.⁸ Further, it appears that the three companies were only established shortly before the banks provided the loans and that they all had the same CEO, at the time a senior officer in the security services.⁹ The GDP of Mozambique was USD 11 billion in 2016, meaning that the loan represented a substantial amount of money for the country.¹⁰

An audit of the loans conducted by Kroll in 2016 assessed that:

• • Approximately USD 500 million remained unaccounted for by their auditors.
  • There is a suspected inconsistency of approximately USD 713 million between the cost of equipment purchased for maritime security and the costs that should be incurred according to an independent expert.
  • An undisclosed bank account held by the firm Empressa Moçambica de Atum and a payment to Credit Suisse of USD 51 million needed more explanation.¹¹

The Hidden-Debt scandal was a defining moment for the anti-corruption effort. The government, development partners and some CSOs 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.¹²

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.¹³ 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.¹⁴

In the same year, Crédit Suisse plead 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.¹⁵

Mozambique has been a member of the Asset Recovery Inter-Agency Network of Southern Africa (ARINSA) since 2017. This network is a regional informal network that seeks to exchange information, as well as best practice, on asset forfeiture, confiscation and money laundering in Southern Africa.¹⁶

Mozambique is also a member of Eastern and Southern Africa Anti-Money Laundering Group (ESAAMLG), which is a regional body implementing the FATF Forty Recommendations.