Maputo — The Mozambican NGO, the Budgetary Monitoring Forum (FMO), has urged President Filipe Nyusi, in his capacity as guarantor of the Mozambican constitution, to intervene to prevent the Ministry of Economy and Finance from entering intro further negotiations with creditors over the illicit bonds initially issued by the fraudulent company Ematum (Mozambique Tuna Company).
In its letter to Nyusi, cited in Friday’s issue of the independent newssheet “Carta de Mocambique”, the FMO reminds the President that the country’s highest body in matters of constitutional law, the Constitutional Council, has already ruled that the Ematum loan, and the government guarantee for that loan, are null and void.
Under the Constitution, there can be no appeal against rulings by the Constitutional Council, and compliance with Council rulings is obligatory for all Mozambican bodies, including the government.
It was the FMO which, along with the ombudsman, Isaque Chande, and 2,000 signatories to a petition, requested the Council to rule on whether the Ematum loan and guarantee violated the Constitution. The Council found in their favour on 31 May.
The Ematum loan took the form of the issue, in 2013, of 850 million dollars worth of bonds, by the banks Credit Suisse and VTB of Russia, on the European market. The proceeds were supposed to go towards purchasing fishing boats and other equipment for Ematum, and for coastal protection.
This was illegal right from the start, since it was not authorised by the Budget Law of 2013. That law set a ceiling of 183.5 million meticais (equivalent at the time to about five million dollars) on the loan guarantees that the government could legally issue. A guarantee for a loan of 850 million dollars smashed through that ceiling.
The government, the Constitutional Council said, had “completely disrespected” both the Constitution and the law by contracting the Ematum debt. The loan and guarantee were thus null and void. All the acts “inherent to the loan” were declared null, “with all the legal consequences”.
The fact that the bonds have changed their name, and no longer mention the word Ematum should make no difference. They result from the same illegal loan and guarantee of 2013.
Nonetheless, the Ministry of Economy and Finance is acting as if the Constitutional Council ruling did not exist. On Tuesday it issued a “consent solicitation”, concerning its offer at the end of May under which the ex-Ematum bondholders will exchange their existing bonds for new bonds, for 900 million US dollars, with an accrual date of 15 July this year, and maturing on 15 September 2031.
The May agreement in principle was reached with 60 per cent of the bondholders. The Ministry is now asking the bondholders to give formal consent to the May arrangements by 6 September.
If bondholders representing at least 75 per cent of the bond value give their consent, the restructuring of the bonds is expected to occur on 30 September.
The FMO finds repugnant the idea that the government should negotiate payment of a debt which has already been declared illegal and unconstitutional.
“How could the government of a state which claims to be ruled by law persist in paying a debt which the Constitutional Council of that same state has declared null and void, precisely because it seriously violates the Constitution and the Mozambican legal order?”, the FMO asks in its letter to Nyusi.
“Is not one sovereign body (the Constitutional Council) giving something with one hand which another sovereign body, the government, is taking away with the other?”, the FMO added.
It urged Nyusi to give “clear, precise and unconditional instructions to his government to abandon its policy of ignoring the Constitutional Council ruling”.