Finance Minister Adriano Maleiane tells court he only learned of the Proindicus and MAM debts when creditors started asking questions around the Ematum bond restructure

Current and former senior government ministers last week blamed the Mozambican secret service SISE and former finance minister Manuel Chang for engineering the so-called ‘hidden debts’ that saw the country borrow more than $2 billion to spend on an offshore security project it has never used.

SISE was the body that drew up the proposal and presented it to the other sectors of the government, and it was also up to them to implement it, former interior minister Alberto Mondlane told the court on Thursday during his hearing.

According to him, it was former SISE chief Gregório Leão who first presented the proposal to the operative command, which consisted of Mondlane as interior minister, current president Filipe Nyusi as defence minister, and Leão himself.

Once approved at that level, Mondlane explained, the project was presented to the joint command, a wider group which included the then Mozambican president Armando Guebuza, as well as other key ministries for the implementation of the project such as fisheries and transport.

Asked who in the operative command approved the project before it went to the joint command, Mondlane replied that there was no specific person, but that it was a consensual decision given the threats facing the country, especially piracy, illegal fishing, and threats of terrorism — which is now a reality.

The unknown Ematum and MAM

The former number two at SISE, António Carlos do Rosário, told an earlier hearing in the trial that establishing the three companies involved in the ‘hidden debts’ — namely maritime defence company Proindicus, industrial tuna fishing company Ematum, and ship repair company MAM — was discussed by the operative command.

However, Mondlane said that both in the operative command and joint command, SISE presented the offshore security project — known by the acronym SIMP — as comprising only Proindicus, not knowing where Ematum and MAM came from.

“I only learned about Ematum and MAM in a meeting at SISE premises, long after we had approved the implementation of Proindicus,” said Mondlane. “I knew absolutely nothing about these companies.

“Proindicus on its own was a big challenge for the Defence and Security Forces, and it was not going to be easy for the company to function and fulfil its mission,” he said. “Imagine with two more big companies.”

Mondlane added that he did not know at the time how Proindicus was funded, as SISE basically presented the essentials of the project to the two commands, without going into details. He said that SISE dealt with the financial issues of the project with the then finance minister, Manuel Chang.

The complicity of Manuel Chang

Chang’s successor, current finance minister Adriano Maleiane, told the court on Friday that when he took office in 2015 he was only informed about the existence of the sovereign guarantee and debt of Ematum, and information about Proindicus and MAM was withheld.

Maleiane said that only Ematum was registered in the national treasury, and that he learnt about the other two companies in 2015 after the respective financing banks came to his office to present the situation when they learnt that the government was restructuring Ematum’s debt.

After that, he said, he met with his predecessor Manuel Chang to seek clarification, and he confirmed that in fact the Mozambican state had also guaranteed the debts of Proindicus and MAM — but they were not registered with the treasury, because it was classified information. Chang said the details and files of the two companies were under the purview of SISE, Maleiane said, adding that this was later confirmed by SISE director Gregório Leão.

“That is why the debts of Proindicus and MAM that we call today undeclared we are not paying at all,” Maleiane said. “The one we are paying is from Ematum.”

Ematum borrowed $850m. According to Maleiane, $350m of that is related to the commercial side of fishing, and the remaining $500m with everything else that is on the invoice, not related to fishing. He did not explain what exactly it is that does not have to do with fishing, but said it is related to defence.

Asked by the Mozambique Bar Association why Mozambique is paying a debt already considered null and unconstitutional by the Constitutional Council, Maleiane said it was the best option to save the country’s honour.

“The country’s name was tarnished internationally and it was necessary, in our view, to safeguard the good image of the country,” he said. “When we don’t pay the debt, the country’s rating in the financial rating agencies falls,” he said, which “damages the state’s capacity to borrow.”

Strange funding

Mondlane said he was surprised at how quickly SISE found funding for Proindicus, for “a project as complex” as that one. The expectation, he said, was that Proindicus board members would take a long time looking for internal and external funders.

“It was very strange to see strong partners alongside Proindicus … I couldn’t have imagined it would happen as it did,” he said. “It was a lot of money in a short time.”

Proindicus was valued at $622m and was funded by Credit Suisse and Russian bank VTB. Mondlane made the court aware that he had not imagined that while SISE was convincing the government to approve the project on the one hand, it was mobilising funding together with Jean Boustani of Privinvest — the entity that supplied the equipment to the three companies — on the other.

Mondlane said he was surprised when he learned through the press that the three companies were financed in a hidden scheme.

“In the joint and operative command there was never talk of Privinvest, of Jean Boustani, of [the head of Privinvest]Iskandar Safa … there was never talk of those names” he said. “I was surprised when in the end I learned about the so-called hidden debts.”

Fragile secret services

Mondlane used the session to launch a criticism of SISE for its weakness, and the way it allowed the “enemy to capture state security”.

“Today I stand here as a victim, and the Mozambican people too, of SISE’s failures,” he said.  “I feel that I was not protected by state security, and indeed many of the people who are here as defendants and declarants should have been protected by SISE, but it did not happen.

“I never imagined that a Jean Boustani could come here and go around handing out money,” he said, adding that “SISE did not rigorously perform its duty and instead opted for withholding information. We were not alerted by those who should have done so,” he said.

Mondlane also said that during his time as interior minister, from 2010 to 2015, he did not receive any material linked to Proindicus, apart from a vehicle offered by António Carlos do Rosário, which he returned when he left office and was appointed governor of Manica province.

“The interior ministry received nothing,” he said. “Neither means nor money — and neither did it know about these things that are being talked about in the trial.”

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