Bank sues Mozambique state firm for $ 2bn debt scandal
VTB has filed a lawsuit in the UK High Court against a Mozambican government company, which it has loaned huge amounts of money for a project that is now at the center of a $ 2 billion debt scandal, according to the court’s online statement..
In a statement dated December 23, Mozambique and the Mozambique Asset Authority were identified as defendants, which took out a $ 535 million loan from VTB as part of a costly project that US authorities believed was a complex scheme for bribery and kickbacks..
The statement says that the case concerns «general commercial contracts and agreements», but details are not specified. No further information is provided other than that VTB Capital, a division of the investment bank VTB, is represented by Freshfields Bruckhaus Deringer law firm.
It is not specified whether the case relates to a loan that Mozambique and VTB have already tried to restructure. The Deputy Head of the Legal Department of VTB Capital said that in October the loan was «significant risk», which needed to be repaid.
VTB did not immediately respond to an email request for comment, and a spokesman for the Attorney General’s Office of Mozambique did not immediately respond to an email requesting comments outside of business hours..
The debt scandal has already sparked a series of lawsuits that have swept London, New York and South Africa, affecting global investment bank Credit Suisse, three of its former bankers, a former finance minister of Mozambique and the former president’s son..
However, this is the first case involving VTB. Russia and Mozambique strengthened ties throughout 2019, the President of the African country Philip Nyusy visited Russia in August.
Credit Suisse and VTB provided loans and financed a total of about US $ 2 billion for a project covering tuna fishing, a maritime safety program and shipyard development. Hundreds of millions of dollars went missing and the benefits were never realized.
Mozambique did not disclose information on some of the loans that were guaranteed by the government. The International Monetary Fund and other donors ended support for the country when they emerged in 2016, leading to a currency crash and a sovereign debt default.
The country remains on the hook for debt, most of which is now in restructured Eurobonds. Mozambique tries to challenge guarantees related to $ 622 million loan from Credit Suisse in London court.