The Republic of Mozambique has substantially won its lengthy $2bn (£1.5bn) High Court battle with an Emirati-Lebanese shipping company Privinvest over allegations it paid bribes in relation to what has become known as the ‘tuna bond’ scandal.
The country sued Privinvest and its late owner Iskandar Safa for allegedly paying bribes Mozambican officials and Credit Suisse bankers to secure favourable terms on three projects in 2013 and 2014, one of which was designed to exploit Mozambique’s tuna-rich coastal waters.
Hundreds of millions of dollars linked to these projects went missing and, when the government debt came to light in 2016, donors such as the International Monetary Fund temporarily halted support, crashing the country’s currency.
The fallout sparked a wave of criminal, civil and regulatory proceedings throughout the world.
Several parties were originally named as defendants in this lawsuit taking at the High Court, including Credit Suisse. However, Credit Suisse and a number of other banks who were syndicated lenders reached a settlement with Mozambique just before the trial started.
The High Court handed down its judgment on the long-running lawsuit on Monday, ruling that Mozambique is entitled to over $825m (£643m) from shipping group Privinvest and Safa. It also said it is entitled to an indemnity linked to $1.5 billion it is liable to pay lenders and bondholders.
In his 123-page judgment, Justice Robin Knowles described what happened as “nothing short of a tragedy”, with the project focused on what “banking could make out of Mozambique” rather than helping the nation grow.
The court criticised the “overall lack of standards” by those who “set their sights on self interest and personal financial reward” in a way that enabled “ultimate consequences that were truly serious”.
The case was forced to go to the Supreme Court last year after Privinvest unsuccessfully argued that the supply contracts it entered into are governed under Swiss law, meaning the case should be heard in the International Court of Arbitration in Paris and not at the High Court in London.
Commenting on today’s ruling, Helen Taylor, senior legal researcher at Spotlight on Corruption said: “Today’s ruling puts beyond doubt that an unjust debt was inflicted on the Mozambican people through a corrupt conspiracy designed to benefit a handful of political elites, international bankers and greedy businessmen.
“While the judgment is a significant victory for Mozambique, this case has brought only partial accountability and partial compensation for the devastating harms caused to the country’s economy and its people.”
“The court’s scathing criticism of the bankers who pursued their own profit while enabling grand corruption should be a wake-up call about the need for stronger safeguards in public loans to high-risk countries.”