Mozambique seeks $3 billion from Privinvest in ‘tuna bonds’ scandal

By Sam Tobin

LONDON (Reuters) – Mozambique is seeking more than $3 billion in damages from Emirati-Lebanese shipbuilder Privinvest over the decade-old “tuna bond” scandal, London’s High Court heard on Tuesday.

The republic’s lawyer, Jonathan Adkin, said the claim against Privinvest and its owner, French shipping magnate Iskandar Safa, is now valued at around $3.1 billion, comprising losses of $700 million and potential liabilities of $2.4 billion.

The trial had been delayed by the African country’s 11th-hour settlement with Credit Suisse’s new owner, UBS, prompting Mozambique to switch its focus to Privinvest.

Mozambique alleges Privinvest and Safa paid more than $136 million in bribes to officials and Credit Suisse bankers to secure favourable terms for contracts including one designed to exploit the republic’s tuna-rich coastal waters.

Safa and Privinvest deny any wrongdoing. Privinvest has said it delivered on its contractual obligations and any payments made were investments, consultancy payments, legitimate remuneration or political campaign contributions.

The case centres on deals struck by state-owned companies with Privinvest for loans and bonds from banks including Credit Suisse in 2013 and 2014 for fishing boats and maritime security. Those projects were backed by undisclosed state guarantees.

But hundreds of millions of dollars went missing and, when the government debt came to light in 2016, donors such as the International Monetary Fund temporarily halted support, triggering a currency collapse, defaults and financial turmoil.

Mozambique alleged Privinvest paid bribes on an “industrial scale”, involving the “grand corruption” of officials including Mozambique’s former Finance Minister Manuel Chang, court filings showed.

Chang was extradited to the U.S., where in July he pleaded not guilty to fraud and money laundering charges related to the tuna bonds scandal.

In London’s High Court, Adkin said Privinvest and two former Credit Suisse bankers concocted the Mozambique deals “with the sole objective of extracting as much money as they possibly could from the republic”.

Lawyers for Privinvest and Safa deny the allegations. They allege the deals were legitimate attempts to improve security, prevent illegal exploitation of Mozambique’s Exclusive Economic Zone and build a sustainable economy, court filings showed.

Privinvest said it was not its fault “the opportunity was squandered”.

(Reporting by Sam Tobin; additional reporting by Kirstin Ridley; Editing by Cynthia Osterman)