Mozambique agrees to pay corrupt Brazil debt -in exchange for support for Security Council seat

Mozambique has agreed to repay $224 mn in corrupt loans from Brazil, apparently in exchange for Brazilian support for Mozambique to be elected in 2022 to one of the non-permanent seats on the UN Security Council. The deal was made in a internet meeting on 11 February between the Mozambican foreign minister, Verónica Macamo, and her Brazilian counterpart Ernesto Araújo. Interestingly, it appears that Finance and Justice ministry people were not present. The meeting concluded with statements that Brazil would support Mozambique for the Security Council seat, and Mozambique would repay if the debt was restructured to have a longer repayment time and no extra interest for defaulting.

Mozambique refused to repay loans to the Brazilian development bank BNDES for two major projects with contractors caught up in the lava jato (car wash) scandal - Odebrecht and Andrade Gutierrez. Both were considered in default, and Brazil's Export Guarantee Fund began paying BNDES in 2017.

One non-payment is for $177 mn for Nacala airport, now an unused white elephant. The project was promoted and constructed by the Brazilian company Odebrecht, which has admitted in a settlement with US authorities it paid a $900,000 bribe to Mozambicans to gain agreement and 0.1% of the value of the contract to an official of the Brazilian president's foreign trade office to gain approval of the BNDES loan. Details of the Odebrecht US settlement showed how cheap it is to bribe Mozambicans, who cost less than any other country Odebrecht was dealing with. The bribe was 0.5% of the airport's inflated costs. Former Transport Minister Paulo Zucula has been charged with accepting $315,000 in bribes. Former Finance Minister Manuel Chang, still in detention in South Africa as part of competing extradition requests, is charged with taking a bribe of $250,000.

The other non-payment is for the Moamba Major dam, now paralyzed because the Brazilians halted the work because of Andrade Gutierrez. Ironically the dam is urgently needed to provide water to Maputo, and there are no suggestions of corruption on the Mozambican side, but Gutierrez was heavily involved in corruption in Brazil. On 29 October 2020 President Filipe Nyusi said the government was still trying to find the funds to resume work on the dam. But it appears China has turned down requests for funding.

For more than a year, Mozambique has been quietly lobbying for one of the African seats on the Security Council, and now appears to have the backing of the African Union. President Nyusi told the African Union virtual summit on 6 February that Mozambique had applied for the place.

(Lusa 13 Feb; Noticias 8 Feb; MOPHRH 29 Oct 2020; this newsletter 393, 399, 461)

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