Mozambique will pursue around $1.5bn in damages at a trial next month over the $2bn ‘tuna bond’ alleged fraud that wrecked the southern African nation’s finances in the past decade, after the UK’s highest court approved bringing a civil claim in London over the scandal.
In 2013 Mozambican state companies issued debts under guarantee by one of the world’s poorest nations, ostensibly to fund tuna fishing and other projects, but the loans soon collapsed in default over the alleged looting of hundreds of millions of dollars.
On Wednesday the UK Supreme Court ruled that Mozambique could press ahead with seeking to recoup losses from Privinvest, a Gulf-based shipbuilder that supplied boats and other kit under the deal, and Credit Suisse, which arranged much of the debt. They deny the claim.
The court overturned an earlier Court of Appeal ruling in Privinvest’s favour that the case should be arbitrated, setting the stage for a complex trial from October 3 to shed light on one of Africa’s biggest ever corruption cases.
The case is also one of the biggest inherited headaches for UBS, the new owner of Credit Suisse, which already paid $475mn and agreed to forgive $200mn of Mozambican debt in a 2021 settlement with US, UK and Swiss regulators.
The true size of the tuna bond debt was not disclosed until 2016, prompting the IMF and international donors to cut budgetary support to Mozambique’s government, setting off a financial crisis the effects of which still linger.
As part of the claim Mozambique is accusing Privinvest of paying $136mn in bribes to state officials and Credit Suisse bankers working on the debt. Three former Credit Suisse bankers pleaded guilty for receiving kickbacks on the debt issue in US criminal cases over the scandal.
Privinvest has denied paying bribes and said it only made legitimate payments, such as donations to Mozambique’s President Filipe Nyusi and his ruling party.
As well as damages for the alleged bribes, Mozambique’s claim includes more than $1bn over the withdrawal of international financial support, over $260mn for higher debt costs, and about $100mn in fees on the loans, the Supreme Court said in its judgment on Wednesday.
“These are substantial sums but they have to be seen in the context of a dispute in which the republic is seeking to extricate itself from or obtain damages for a potential liability under the guarantees of approximately $2bn,” Lord Hodge, deputy president of the court, said.
UBS declined to comment. Privinvest did not immediately respond to a request for comment.
This month the Mozambican government fended off a bid by Privinvest to add Nyusi as a party to the lawsuit to cancel the $2bn debt guarantees and seek damages. The UK High Court ruled that Nyusi was entitled to immunity as a foreign head of state.
In a reflection of the scandal’s continuing fallout, last week Mozambique’s annual interest payments almost doubled on a sovereign bond that it issued in 2019 to restructure the old tuna debt.