Learn from Mozambique

This week a court in Mozambique began handing down verdicts in what is called the ‘corruption trial of the century in Africa’ in which the country’s Government was accused of covering up a massive debt scandal. 19 high-profile officials, including the son of an ex-president, faced charges ranging from money laundering to bribery and blackmail related to a $ 2 billion scandal that crashed the nation’s economy.

According to court documents, in 2013-2014, state-owned companies in Mozambique illicitly borrowed over $ 2 billion from international banks to buy a tuna-fishing fleet. These were world-renowned banks including Credit Suisse. The Government masked the loans from parliament and the public, later claiming the money was for purchasing military vessels.  

When the “hidden debt” finally surfaced in 2016, donors including the International Monetary Fund (IMF) cut off financial support, triggering a sovereign debt default and currency collapse. An independent audit found $ 500 million of the loans had been diverted. To date, the money remains unaccounted for. 

Former Finance Minister Manuel Chang – who signed off the loans – has been held in South Africa since 2018, pending extradition to the United States for allegedly using the US financial system to carry out the fraudulent scheme. Former President Armando Guebuza, who was in office when the loans were contracted, testified at the trial. He was not charged himself, but his eldest son Ndambi was in the dock along with the 18 other defendants.

Other than an actual trial taking place and those accused of this heinous financial crime being brought to justice, what had happened in Mozambique is eerily like Sri Lanka’s own economic collapse. 

While some part of the current crisis can be contributed to incompetence and bad policy decisions by the previous Gotabaya Rajapaksa government, much of the current economic woes of the country can be attributed to the criminality and corruption of those who ran the economy for the last 20 years. The difference however is that the criminal cartel that brought about total economic collapse is still functioning in Sri Lanka with new faces being used as fronts while in Mozambique those responsible for such crimes are being held accountable.

In 2020 the UK’s Serious Fraud Office (SFO) discovered a massive financial fraud by Airbus Industries which exposed that the airline company had paid huge bribes to SriLankan Airlines officials between July 2011 and June 2015 to finalise an aircraft procurement deal completely unfavourable to the national carrier. 

Over a year ago the International Consortium of Investigative Journalists (ICIJ) uncovered the financial secrets revealed that former minister Nirupama Rajapaksa and her husband, Thirukumar Nadesan together controlled a shell company used to buy luxury apartments abroad. Nadesan is said to have set up other shell companies and trusts in secret jurisdictions and used them to obtain lucrative consulting contracts from foreign companies doing business with the Sri Lankan Government. The amount of money stashed in these offshore accounts by the Sri Lankan duo is in the range of $ 160 million.   

Recently an Australia Broadcasting Corporation’s (ABC) investigation revealed how a little-known private healthcare firm named Aspen Medical received over AUD 1 billion in taxpayer-funded contracts while embroiled in a money-laundering probe in Sri Lanka involving high profile political and business figures.

The list of such examples is long, involving many prominent figures. None to date have seen the inside of a courtroom for their alleged crimes. Even worse, they continue to hold positions of power and control over State finances. The politico-business patronage system that is well-established, has ensured impunity for the businessmen and the politicians involved in these financial crimes. The courts, the Attorney General and the Police are either complacent, silent or in on these crimes themselves for they have been glaringly incompetent in bringing the culprits to justice.

While the financial crimes committed in Mozambique that bankrupted that nation and dragged over two million people into poverty are appalling, there is at least accountability for those responsible. Such justice is a far cry in Sri Lanka if not equal, worse financial crimes have been committed.