Millennium BCP takes state, MAM to court

  • Lusa
  • 16 April 2020

BCP filed a lawsuit in London against the State of Mozambique and the public company Mozambique Asset Management (MAM) to be reimbursed for part of the so-called 'hidden debt'.

Millennium BCP has filed a lawsuit in London against the state of Mozambique and the state-owned Mozambique Asset Management (MAM) to be reimbursed for part of the so-called ‘hidden debt’ purchased in the secondary market.

Asked by Lusa about the objectives of the lawsuit and the amount that the Portuguese bank expects to get back by judicial means, an official source of BCP replied that the bank has the best institutional relations with the Mozambican state and has nothing to comment on the aforementioned lawsuit, refusing to make further comments.

In October last year, in the trial held in New York over the corruption and bribery scheme known as the case of the hidden debt, a witness said that BCP participated with about $100 million, about €90 million, in the $535 million (€480 million) loan contracted by MAM from the London branch of the Russian bank VTB.

According to the witness, BCP had a funded sub-participation in the structured loan by VTB Capital of London which delivered a total of $535 million to MAM in 2014.

The deposition was made in October last year in court by Cicely Leemhuis, deputy director of the legal department of VTB bank in London and one of the people responsible for VTB’s loan agreement with MAM.

In 2014, VTB Capital of London secured $435 million of the loan to MAM and received an additional $100 million from the Portuguese bank as a sub-participant.

In this type of agreement, the Portuguese bank had to deliver the money to the lender of the loan, VTB. Thus, the return of the money to BCP is dependent on VTB bank, although the lawsuit filed in the London court was delivered against the government of Mozambique as a guarantor of the original loan and MAM as the loan holder.

The guarantee from the government of Mozambique was signed by the then minister of finance, Manuel Chang, and required that any dispute between the parties be exclusively within the jurisdiction of England because VTB bank is based in London.

According to the guarantor, the guarantee gives the creditor the right to take legal action against the state of Mozambique to recover the money lent to MAM.

The case concerns loans taken out illegally by Mozambican companies MAM, Ematum and Proindicus, with guarantees signed by the Ministry of Finance of Mozambique, but without the knowledge or authorisation of parliament.

The companies stopped paying creditors and thus opened a hidden debt of $2.2 billion (€2 million) in the state accounts.

The Mozambican government has also filed a lawsuit in the London court to be compensated not only for the missing amount but also for the economic damage caused by these financial operations that caused the country to go into financial default in the eyes of the rating agencies and to see financial aid suspended by international donors, unbalancing the country’s budget.

Several analysts and international institutions have argued that the state should not pay these hidden debts since they were illegal as they were not approved by parliament.