Security guards patrol past the EMATUM fishing fleet docked in Maputo, Mozambique, May 3, 2016. REUTERS/Grant Lee Neuenburg - RTX2D3ZS
Tuna boats have remained unused in Maputo's harbour for years © Reuters

Mozambique’s ruling party has closed ranks since US officials indicted the southern African nation’s former finance minister and former Credit Suisse bankers over a $2bn hidden loans and bribery scandal.

Under President Filipe Nyusi, the Frelimo party has been largely silent since Manuel Chang was detained and sought for US extradition over one of Africa’s biggest corruption cases.

An indictment this month accused Mr Chang, a sitting Frelimo MP, of approving a scheme for government officials to siphon at least $200m from a series of international borrowings by front companies, including a tuna fishing company, which took advantage of investor enthusiasm for vast offshore gas finds.

But it is unlikely that Mr Nyusi will follow the examples of Malaysia, which is trying to claw back billions of dollars from its 1MDB scandal, or Angola, whose president has unexpectedly pursued the former ruling family over allegations of corruption.

“I don’t see him cleaning the system like the Malaysians or the Angolans, but rather a survival strategy,” said Adriano Nuvunga, head of ADS, a Mozambican civil society group. “Here we are discussing the survival of Frelimo as a political party and as a government. You have to take that into account.”

Analysts and activists see Frelimo, which has governed Mozambique since its independence in 1975, as more likely to maintain an omerta-like system of loyalty and patronage than to punish its own ahead of polls this year.

Under pressure over its inaction compared with the US, last week Mozambique’s public prosecutor named individuals it was investigating over the debts.

But the list shows why it might not ask too many tough questions. The names include a former central bank governor, intelligence chiefs and civil servants who served under Armando Guebuza, president when the hidden debts were issued. He remains a powerbroker overshadowing Mr Nyusi.

Mozambique's former finance minister Manuel Chang appears in court during an extradition hearing in Johannesburg, South Africa, January 8, 2019. REUTERS/Shafiek Tassiem
Manuel Chang has been accused of approving a scheme for government officials to siphon off at least $200m from a series of international borrowings by front companies © Reuters

Only financial penalties are being sought, as opposed to criminal charges. Mozambique is opposing Mr Chang’s extradition in favour of trying him at home — something few believe Frelimo would actually allow.

The origins of the scandal point to the opportunities for corruption that were created when a poor country discovered gas in 2009.

Just two years later one of the world’s largest shipbuilders, Abu Dhabi-based Privinvest, pitched officials an ambitious project to secure the country’s shores. The plan would eventually span coastal radar and patrol vessels, as well as tuna boats.

Mozambique has one of Africa’s longest coastlines — and plentiful tuna. But it also has security forces that are politicised, opaque, and welded to Frelimo patronage by the legacy of the country’s long post-independence civil conflict.

The US indictment describes an unnamed official telling Jean Boustani, an agent of Privinvest: “There will be other players whose interest will have to be looked after eg ministry of defence, ministry of interior, air force, etc . . . In democratic countries like ours people come and go, and everyone will want to have his/her share of the deal while in office, because once out of the office it will be difficult.”

Mr Boustani arranged bribes worth $50m for officials, according to the indictment. They were allegedly clumsily concealed as 50m “chickens”. Even this sum was only part of the kickbacks and bribes that were eventually laundered with the help of the Credit Suisse bankers, according to US prosecutors.

The $200m is probably an understatement of the level of looting. A forensic report by the risk consultancy Kroll in 2017 could not account for where $500m of the amount raised by the loans had gone. The tuna boats have lain rusting in a harbour in Maputo, the capital, for years.

Privinvest has denied overpayment, and is examining the allegations made by the US, its spokesperson said. Mr Boustani denies wrongdoing, his lawyer told a US judge.

There has been speculation in Mozambique that Mr Nyusi, a defence minister under Mr Guebuza, must have known of the looting. “There is no way that he can distinguish himself vis-à-vis the people implicated,” Mr Nuvunga said. Mr Nyusi denies wrongdoing.

At stake is repairing the economic damage left by the hidden loans. The IMF, a major funder, cut ties when the debt’s full extent was uncovered in 2016. It set off a financial crisis. The debts went into default. The government has made progress on a restructuring programme, seen as crucial to unlocking financing for gas development where international majors such as Exxon and Anadarko are investors.

But the US case has revived uncertainty. “No one hinted that this would be a scenario,” said Alex Vines, Africa director at Chatham House. “It’s too soon to say whether this strengthens or weakens the president. Potentially it would strengthen him, but the politics are unpredictable.”

While Frelimo is likely to back Mr Nyusi to run again in this year’s poll, analysts say Mr Guebuza retains the loyalty of many of its members in parliament, which ruled the hidden debts were legal in 2017.

Outsiders may also have an interest in avoiding a divided Frelimo.

Mr Vines added that the US was unlikely to pursue Mr Guebuza directly lest it risk retaliation against the US firms that are increasingly betting on the country’s gas. “Mozambique has become much more strategic to the United States,” he said.

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