Mozambique: Hidden debts – Former intelligence chief caught lying
Maputo – The Maputo Municipal Court on Tuesday arrested Gregorio Leao, the former head of the Security and Intelligence Service (SISE), in a blatant lie about whether Proindicus, one of the fraudulent companies created under the Mozambique’s “hidden debts” scandal, had never been operational.
Last week, when testifying for four consecutive days, Leao repeatedly claimed that Proindicus, a company that should have provided security for Mozambique’s exclusive economic zone, had done its job properly.
“The means had been acquired and were operational. We had respected what we had planned,” said Leao on Friday.
But on Tuesday, although the court should have moved on to the next of the defendants, former SISE Economic Intelligence chief Antonio do Rosario Judge Efigenio Baptista instead recalled Leao – because he found a letter in the trial files, signed by Leao, who categorically contradicts this assertion.
The letter was a request, addressed to then Finance Minister Manuel Chang, on November 3, 2014, requesting a state loan guarantee for a second company, Mozambique Asset Management (MAM) for $ 750 million ( although the loan granted to MAM, by the Russian bank VTB, was only 535 million dollars).
The collateral was to be sent to Palomar Capital, which is effectively part of the Abu Dhabi-based Privinvest group.
Palomar was rotten with corruption from the start, having been created by former Credit Suisse banker Andrew Pearse, in partnership with Privinvest founder Iskandar Safa.
At Credit Suisse, Pearse had worked on Mozambican loans and pocketed millions of dollars in bribes from Privinvest. He admitted the bribes during a sentence negotiation with a New York court in 2019. So there was a revolving door between Credit Suisse and Privinvest.
By the time of Leao’s November 2014 letter to Chang, the government had already issued guarantees to cover Credit Suisse’s $ 622 million loan to Privinvest. Additional collateral was needed, Leao wrote, as the assets were not operational – MAM was supposed to operate shipyards in Maputo and Pemba that would maintain the boats of Proindicus and the third fraudulent company, Ematum (Mozambique Tuna Company).
The companies were not generating revenue, but the March 31, 2015 deadline was fast approaching when the first loan interest payment of $ 90 million was due. A new guarantee was therefore necessary in order to avoid the activation of the previous guarantee, which would have “negative consequences”, Leao wrote.
The conclusion seemed inevitable: at the end of March 2015, the date on which the first interest payment fell due, neither Proindicus nor MAM were operational. Leao’s claims last week were therefore false.
Baptista asked Leao if he now accepts that, at least in March 2015, Proindicus is not working. “You signed this letter,” he stressed.
“I don’t know when it became operational.” said Lea.
“The prosecution says it was never operational,” Baptista retorted.
Leao then said the letter must be wrong because in 2015 Manuel Chang was no longer Minister of Finance. True, but the letter was dated November 3, 2014, when Chang was still head of the Ministry of Finance. The government appointed by the new president, Filipe Nyusi (with Adriano Maleiane as finance minister), only took office in January 2015.
Leao’s letter to Chang cited “bureaucratic problems” in the implementation of the Proindicus concession on the maritime protection plan. But what “bureaucratic problems” could they possibly be, Baptista wonders, since the Proindicus concession contract came into effect on November 2, 2014, the day before the letter to Chang?
As for the new loan guarantee, did that mean that Leao was prepared to take on more debt in order to pay off a previous debt? Leao had no answer to these questions.
Leao insisted that Baptista write in the minutes his claim that in 2016 Nyusi, at a meeting of the Joint Command of the Defense and Security Forces, rejected an attempt to involve an unidentified foreign interest. in coastal protection because he believed that “the solution is that Proindicus must be made operational”.
He gave no details, and no one corroborated this story (which Leao repeated repeatedly in her testimony). If Nyusi said this, the meeting must have taken place before April 2016, when the hidden debts became public, and Mozambique’s foreign partners, furious at being denied the truth about the country’s external debt, have withdrew their support for the Mozambican state budget, plunging the country into a deep economic crisis.
Leao also defended SISE’s refusal to cooperate with Kroll, the independent company that audited Proindicus, Ematum and MAM in 2017. As he said last week, Leao insisted that Kroll was “a foreign body. “to which SISE could not provide” information “.
But Kroll was hired to audit companies, not by a foreign agency, but by the Mozambique Attorney General’s Office (PGR), which is part of the same Mozambican state that SISE has sworn to defend.