In a landmark ruling at London’s High Court, Mozambique has substantially prevailed in its $3.1 billion lawsuit against the Emirati-Lebanese shipbuilder Privinvest. The case, rooted in allegations of systemic bribery and corruption, revolved around the decade-old “tuna bond” scandal, which has left deep scars on the southeast African nation’s economy.
Presiding over the case, Judge Robin Knowles issued a comprehensive written judgement, elucidating that Mozambique was entitled to a payment exceeding $825 million from the now deceased Iskandar Safa, owner of Privinvest, and associated companies within the group. Additionally, Mozambique is entitled to an indemnity relating to $1.5 billion in debt liabilities, mitigated by approximately $420 million already recouped.
The legal proceedings scrutinised transactions involving state-owned Mozambican enterprises and Privinvest, financed through loans and bonds from banks, notably Credit Suisse. These funds were purportedly allocated for acquiring fishing vessels and enhancing maritime security, underpinned by concealed state guarantees. However, the revelations of misappropriated funds—amounting to hundreds of millions of dollars—uncovered a financial maelstrom, precipitating a crisis of confidence, currency depreciation, and a temporary suspension of aid by the International Monetary Fund.
In his ruling, Judge Knowles was unequivocal in his criticism of the malfeasance perpetrated by both the international corporate entities and the Mozambican officials implicated. He characterised the nation’s plight as a consequence of exploitation by “highly developed institutions and corporations that should have known better.” The judgement particularly spotlighted the culpability of former Finance Minister Manuel Chang, who currently faces criminal charges in New York, and highlighted the systemic risk posed to Mozambique’s economic stability by the scandal.
The litigation originally encompassed allegations against Credit Suisse—now subsumed under UBS following a recent merger—alongside three former employees of the bank, all of whom have entered guilty pleas in the United States. A late-stage settlement was reached between Mozambique and Credit Suisse in October, extricating the latter from the ongoing trial, which continued to scrutinise the actions of Privinvest and Safa.
Mozambique’s legal team argued that Privinvest and Safa engaged in a deliberate campaign of bribery, including payments to key officials, to secure lucrative contracts for three major projects initiated in 2013 and 2014. These projects, allegedly designed to harness the nation’s tuna-rich coastal waters, instead culminated in a far-reaching economic debacle when undisclosed state debt guarantees were unveiled in 2016. The ensuing discovery triggered a cascade of financial fallout, including a cessation of international aid and a broader economic dislocation.
Judge Knowles poignantly remarked, “Mozambique was hustled to buy what it couldn’t use properly and didn’t need and wasn’t prepared for,” encapsulating the essence of the exploitative schemes perpetrated by the defendants.
In response, a spokesperson for Privinvest has signalled the company’s intention to appeal the court’s decision, contesting the assertion that bribes were paid to Chang and decrying the potential imposition of substantial damages.
This decision not only marks a significant victory for Mozambique but also serves as a sobering reminder of the vulnerabilities faced by developing nations in the labyrinthine world of international finance. The government has reiterated its commitment to combating corruption and holding accountable those responsible for transnational criminal activities.
The ramifications of the “tuna bond” scandal continue to resonate across jurisdictions, from Maputo to New York, as criminal investigations and legal proceedings persist, underscoring the far-reaching consequences of corruption and financial mismanagement.
For further insights, please refer to our in-depth analysis on the financial and legal implications of this ruling.
