Mozambique’s $3.1bn lawsuit against Privinvest politically motivated, UK court hears

Mozambique’s $3.1bn (R59.18bn) lawsuit against Emirati-Lebanese shipbuilder Privinvest is a politically motivated attack to deflect blame for the failure of economic projects, the company’s lawyers told the London high court on Thursday.

Mozambique is suing Privinvest and its owner Iskandar Safa over the fallout from the decade-old “tuna bond” scandal that devastated the economy of one of the world’s poorest countries.

Mozambique alleges Privinvest and Safa paid bribes on an “industrial scale” in relation to three projects in 2013 and 2014, including one to exploit its tuna-rich coastal waters.

Its lawyers said in court filings Privinvest chose the assets and services to be provided for the three projects to justify the level of lending to be provided, “not based on any genuine need for those services”.

But Privinvest and Safa, which deny wrongdoing, argue Mozambique squandered the economic potential of the projects and is seeking to escape its financial obligations.

Duncan Matthews, opening Privinvest and Safa’s case on Thursday, said: “The republic presents this case as the betrayal of the people of Mozambique — and they may be right. But it is not a betrayal by my clients.”

He said the country had a “sound plan to enable Mozambique to stand politically and economically on its own feet”, but its ministers failed to make the projects work.

“Then, only when they found it in their own political and economic interests, they have turned on the people who tried to make the projects possible,” Matthews argued.

The trial began in earnest this week after a delay caused by Mozambique’s 11th-hour settlement with UBS, Credit Suisse’s new owner.

Mozambique has since switched its focus to Privinvest and, though it has dropped an $830m claim for economic losses, is seeking to recoup losses of $700m and potential liabilities of $2.4bn.

Its case centres on deals struck by state-owned companies with Privinvest for loans and bonds from banks including Credit Suisse, backed by undisclosed state guarantees.

Hundreds of millions of dollars went missing and, when the government debt came to light in 2016, donors such as the IMF temporarily halted support, triggering a currency collapse, defaults and financial turmoil.

Reuters