Banks are turning a blind eye to Mozambique gas field graft
When it comes to Mozambique's liquid natural gas industry, the global fossil fuel industry, state financiers and private banks seem to have a saviour complex.
It's a nice thought, especially for the five confirmed SA financiers of the Mozambique Liquid Natural Gas (LNG) project in Cabo Delgado province. But none of the mainstream media’s fawning, nor the banks’ PR about the supposed development of Mozambique and benefits of the industry to both countries’ economies, acknowledges the glaring reality of Mozambique’s state corruption, the violence and oppressive militarisation in the gas region, the disappearances of journalists and the lack of any clear pathway for the gas income to benefit its population.
This month, the Total-led Mozambique LNG project, one of three confirmed projects to have a piece of the 150-trillion feet of gas in the Rovuma Basin, will announce its final investment decision. Standard Bank has always been one of the largest financiers and the financial vehicle for its 20% owner, the Industrial Commercial Bank of China. Rand Merchant Bank, Absa and the Export Credit Insurance Corporation (ECIC) are also partly financing the $24bn Total needs for the project, alongside HSBC and the US Export Import Bank.
The banks should not be blindly applauded — they should be interrogated by the SA media and shareholders on why they are investing billions of dollars, including taxpayers’ money through the ECIC, in a government that has no interest in benefiting its public or economy.
We have asked this question to several players in the Mozambique gas industry, including Standard Bank, Sasol, BNP Paribas and Danske Bank, but each gave the same response: as long as they abide by the contract with the Mozambican state, it’s not their problem what the government does with that money.
This nonchalant attitude to corruption is terrifying. There are really only two explanations for their choices to invest. One, these banks know exactly what will happen once the government has received its gas revenues — the money will go straight into the coffers of politicians and a few elites — but invest nonetheless. Or two, they are oblivious, even with the regular global and SA mainstream media coverage of Mozambique's corruption, and with disgraced former finance minister Manuel Chang in custody merely 30km away from their offices.
It is irresponsible for these banks to put their trust in the Mozambican government to work for its people when near-historical facts show this is not regular practice. We’re talking about a government with deeply corrupt processes, like the 2016 debt scandal where it illegally borrowed $2bn from Credit Suisse and VTB Bank, which led to fraud and money-laundering charges against three Credit Suisse bankers, and a prison sentence for one. The government was exposed for planning to spend the loan on weapons and repay it with gas revenues, and thrust the country into billions of dollars of debt.
It’s also a government that reacted to the violence in Cabo Delgado that has killed more than 1,000 local people by bringing in foreign “consultants” to provide combat support to the army, including SA’s Dyck Advisory Group (DAG) and the dreaded Putin-linked Wagner Group, a Russian paramilitary organisation notorious for its shady involvement in combat in Syria, Libya and the Central African Republic.
Thousands of soldiers have been deployed in Cabo Delgado to fight the insurgency. Locals believe their mandate is to protect the industry, not the communities, and earlier this year extra troops were deployed specifically at the request of ExxonMobil and Total. Over the last two years there has only been one attack on a company. Community members live in as much fear of the army as the insurgents. They have told us of soldiers imposing random curfews and assaulting them.
The banks’ talk of local employment is hot air. Three years after Anadarko began construction of the Afungi LNG Park, a project now taken over by Total, which will provide crucial facilities for industry players like ExxonMobil, Eni and Shell, the only jobs created for locals have been menial, like cooking, cleaning and basic construction.
The vague “trickle down” theory that the banks ride on does not apply. There is absolutely no evidence that Mozambique’s fossil fuel industry has boosted the local economy or raised the general population out of poverty. It has been an energy producer and exporter for many years yet remains the sixth most unequal country in the world and, ironically, only a third of people have access to electricity.
The banks also ignore the detention and arrests of journalists reporting on the gas region in a way not favourable to the government. Right now, community journalist Ibrahimo Abu Mbaruco, who disappeared on April 7, is still missing. His last communication was a text to a colleague saying the army was approaching him.
The Mozambican government has shown itself time and again to be untrustworthy. By investing in the gas industry Standard Bank, Absa, RMB and ECIC are worsening the suppression of Mozambique’s economy by continuing its dependence on fossil fuel exports to the developed world. They are rewarding the state for its corruption and normalising a culture of impunity.
The next time these banks and the SA government want to reprimand any other state for corruption, they will not have a leg to stand on.
• Rawoot works for Justiça Ambiental/Friends of the Earth Mozambique as co-ordinator of the No to Gas! campaign