The Mozambican Government today assured that the various court rulings in favour of the State in the hidden debts case have helped to “restore the country’s international image” and that everything will be done to recover the US$1.9 billion.
“The successive court rulings have helped restore Mozambique’s international image and strengthen confidence in the markets. This process caused serious damage to the country’s image,” an official source from the Mozambican Government told Lusa when questioned.
The source added, recalling that the parties targeted in the legal proceedings in London are the companies belonging to the Privinvest group and the widow of businessman Iskandar Safa, the group’s founder, following his sons’ renunciation of the inheritance.
In the latest ruling in Mozambique’s favour, issued on 21 October and reported by Lusa, judges at the Court of Appeal of England and Wales rejected the appeal by Clara Martinez Thedy de Safa and upheld the lower court’s decision authorising her inclusion in the proceedings brought by the Mozambican State following the death, in January 2024, of French-Lebanese businessman Iskandar Safa.
The ruling, which may still be subject to a further appeal in London, allows Mozambique to pursue assets belonging to Iskandar Safa’s estate, in addition to those of the companies in the shipbuilding group, to satisfy the 2024 judgment, which was also in favour of the State.
“These appeals amounted to dilatory tactics. The facts have been established and payment is due,” a source from Mozambique’s legal team in the case, led by the Office of the Attorney-General, told Lusa, adding that the main judgment is final and binding, consolidating the obligation to compensate the State and demonstrating that the country was “the victim of a fraudulent banking scheme”.
In this case, Mozambique reached out-of-court settlements with the banks involved and reduced the country’s exposure to the debt incurred by 84%. For the Government, around a decade after the case began, this is helping to restore the country’s international “credibility” with markets and creditors.
The hidden debts case originated with the contracting, between 2013 and 2014, of loans worth more than US$2 billion (€1,789.07 million) from the banks Credit Suisse and VTB by state-owned companies Proindicus, EMATUM and MAM, backed by guarantees issued by the Mozambican State without the knowledge of Parliament and international partners.
The disclosure of these debts in 2016 triggered a severe financial crisis in Mozambique, leading several donors to suspend direct support to the State Budget and the country to default on its sovereign debt.
In the judgment handed down in July 2024 by the London Commercial Court, Judge Robin Knowles concluded that Iskandar Safa and companies belonging to the Privinvest group had participated in the corruption of Mozambican officials, including then Finance Minister Manuel Chang, who has since been convicted in the United States in the same case, in order to secure the issuance of State guarantees underpinning the loans.
Meanwhile, the appeal lodged by Privinvest companies against that judgment was dismissed after they failed to pay the security required by the Court of Appeal, making the judgment against those entities final.
The July 2024 judgment ordered the Privinvest group to pay compensation of approximately US$1.9 billion (€1,699.62 million) to the Republic of Mozambique. However, US$400 million (€357.81 million) will be deducted from this amount, corresponding to assets already recovered by Mozambique.
In addition to the favourable court rulings, the Mozambican Government announced out-of-court settlements in 2023 and 2025 with several banks, including Portugal’s BCP, in the London litigation over the hidden debts. These agreements provide for a reduction in the State’s exposure from US$1.4 billion (€1,252.35 million) to US$220 million (€196.80 million), a reduction of 84% in the amount claimed by the banks and 66% in the principal.
