Peter Knox KC, Daniel Goldblatt and Charlotte Pope-Williams (instructed by Leverets Group) (the 3rd and 4th Defendants in CL-2019-000127)
Robin Knowles J, CBE:
Introduction
Around the world, these disputes have attracted the shorthand name of the “Tuna Bonds” affair or the “Hidden Debts” affair. They concern alleged corruption, within business and state.
In 1975, independence was declared in Mozambique. The Government of the Republic is and has been formed by a political party known as the FRELIMO party. The position at the head of Government is that of President. The Assembly of the Republic of Mozambique is its Legislature.
Mozambique enjoys a substantial coastline on the eastern side of the continent of Africa. With this, and a related Exclusive Economic Zone (EEZ) extending 200 nautical miles from its coast, comes commercial opportunities for fishing and for energy. In 2010, a natural gas field was discovered in the Rovuma Basin.
In turn, with those opportunities come increased issues of maritime security, and of the resources required to realise the opportunities. Before the chapter in Mozambique’s life with which this trial is concerned, Mozambique explored engaging with China over some of the infrastructure required.
Mozambique’s National Report to the Scientific Committee of the Indian Ocean Tuna Commission of 2011 recorded that for the reporting periods ending 30 December 2010 and 30 June 2011 “the country has only foreign fleet”. By 2011, the Government was also looking to develop a naval industry to reduce its dependency on foreign sourcing of naval repair and maintenance.
Then in 2013 and 2014 three freshly incorporated state-owned enterprises (variously “SOEs” or “SPVs”) entered into supply contracts with members of the Privinvest group of companies, led by Mr Iskandar Safa. On the face of things, the first supply contract was for the supply of radar stations, boats and aircraft for monitoring and protecting the EEZ, including from piracy. The second was for the supply of a fishing fleet to fish tuna in the EEZ. The third supply contract was for the supply of shipyard facilities, including for shipbuilding and repair.
After change orders and increases, a total of approaching US$2 billion, or more than 12% of GDP, was payable for the supplies contracted under these three supply contracts. Loan facilities of US$622 million (later increased to US$900 million), and US$850 million were agreed by members of the Credit Suisse banking group in relation to the first two. And of US$540 million by a member of the Russian banking group VTB, in relation to the third. On the face of things, Mozambique, as sovereign, guaranteed the lending under these facilities.
The ambition for protection, fishing and shipbuilding and repair was one thing. But the evidence at trial made me sure that Mozambique, by its Government, did not, by any measure, have the experience, expertise or organisational strength to put successfully to work what was to be supplied. There were projections that were not worth the name, not founded on scoping or preparation or strategy, and which were simply “made to fit.”
Mozambique contends that corruption underlays these three projects (“the Projects”). Behind the Projects were a number of individuals, including those working for Privinvest, Credit Suisse or VTB group companies, and a number of senior officials or those holding senior public office within Mozambique. Their focus was on themselves rather their responsibilities to others. This self-interest drove activity, including a focus on the money that was to be provided by lending rather than on what was to be supplied. No-one looked out for the interests of Mozambique and its people.
The litigation
Regulatory and criminal proceedings have followed in various parts of the world, and in Mozambique itself. They continue in the United States. There have been arbitration proceedings too, including in Switzerland.
The litigation that has come to trial in this Court was commenced between 2019 and 2021, by way of 12 separate sets of proceedings. These have been closely case managed on what has been termed a “unitary” basis over the two years from 2021 to the commencement of trial in October 2023.
The lead claim (“the Republic Claim”) is that of Mozambique. It seeks to hold a number of parties liable for damage done to Mozambique. Members of the Credit Suisse group of companies were First, Second and Eleventh Defendants to the Republic Claim (together “Credit Suisse”), and three of their employees (“the Credit Suisse Deal Team”) were Third to Fifth Defendants. Member companies (“the Privinvest Companies”) of the Privinvest group of companies (“the Privinvest Group”) are Sixth to Tenth Defendants to the Republic Claim, and their Chairman, Mr Safa, is the Twelfth Defendant.
A number of officials or those holding public office in Mozambique (including its former President) are Third Parties to the Republic Claim. Over the summer leading to the trial, the current President of Mozambique (and former Defence Minister, a Fourth Party joined by Mr Safa and the Privinvest Companies to these proceedings) made a successful claim to immunity from the proceedings whilst he is Head of State (see Republic of Mozambique v Credit Suisse and Others (Nyusi, Fourth Party) [2023] EWHC 2215 (Comm) and, on appeal as Privinvest Shipbuilding (Holding) SAL and Others v Nyusi [2024] EWCA Civ 184).
Mozambique’s liability under the guarantees was also the subject of claims brought by other banks including members of the VTB banking group, and a number of syndicated lenders including the Portuguese bank Banco Commercial Portugues (“BCP”), and the African banks, United Bank of Africa and Banco Internacionalde Moçambique. These claims became known as the “Immunity Proceedings” because of a challenge by Mozambique that it enjoyed sovereign immunity, a challenge that potentially involved a wide factual compass and was included in the trial. As formulated by Mozambique, the preliminary question for the Court was whether Mozambique was entitled to assert its presumptive sovereign immunity under section 1 of the State Immunity Act 1978, or whether the exceptions in that Act under section 2 (submission to the jurisdiction) and section 3 (commercial transaction) applied to the claims.
There are other parties.
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