The fossil fuel industry and its financiers are notorious for deep corruption, bribery and tax fraud on a major scale, and with the Mozambican government regularly involved in its own shocking economic scandals, this does not make for a good combination.
The most recent major public disgrace in Mozambique was the ‘tuna bonds’ scandal in 2017, in which the Mozambican government was exposed for secretly arranging $2 billion worth of loans and bonds, facilitated by Swiss bank Credit Suisse and Russian bank VTB Group, without securing mandatory parliamentary approval in 2013 and 2014. Mozambique is still recovering from this debt crisis which resulted in the suspension of all general budget support by donors and brought the country into a deep financial and economic crisis.
Three Credit Suisse bankers face money laundering charges, and the former finance minister, Manuel Chang is in custody in South Africa, where the courts have ruled that he will not yet be extradited to Mozambique, as the chances of him actually facing justice are slim.
The Mozambique government agreed to repay the banks with revenues from the gas projects. Though the investments were supposedly to pay for boats to catch tuna, the bonds actually paid primarily for military equipment. The government has admitted that it wanted to use the military equipment to protect the gas reserves and provide investment in related projects and companies.
The US Federal Bureau of Investigation (FBI) and US Department of Justice (DOJ), UK government and Swiss regulator have been investigating the banks for improper payments and deceiving investors.
And now 19 people, including current President Felipe Nyusi are defendants in Mozambique’s biggest corruption trial in history, which began in August 2021. But little is expected to result, due to the impunity of the political elites.
According to the IMF, Mozambique won’t be able to make payments for years on these loans. The international organization thus expects Mozambique to default on external debt until 2023, when the gas projects are supposed to start producing. And now with Total’s force majeure claim in April 2021, when it put its Mozambique LNG project on hold, gas production will be significantly delayed.
This massive debt is holding Mozambique hostage to the corporations and foreign states and financiers exploiting the gas, and keeping it dependent on any potential revenues, if any appear at all.
According to the World Bank, only about 30% of the Mozambican population has access to electricity, even though it is a major energy producing country for decades. South African company Sasol’s Pande and Temane projects in Inhambane province, are a major power source for south Africa, yet the province of inhambane has had an increase in electricity access that is lower than the national average. Hence, it is quite clear that the benefits of the extractive industry do not filter down to the Mozambican population.
So when Eni, ExxonMobil, Total and all the other companies and financiers in the industry insist that the gas will benefit the people and economy, this simply cannot be taken seriously – it has never happened before so there is no reason to believe it will be different with this industry now.
Some good articles to read more
The ‘Unaccountable’ series by Open Secrets (and Mamello Mosiana), originally published in the Daily Maverick’:
Corruption scandals of gas industry players
The fossil fuel industry is no stranger to corruption, bribery, tax evasion and fraud, and the players in Mozambique are no different. It’s important to remember that governments do not corrupt themselves and companies need to be held equally responsible for this corruption.
In 2018, ExxonMobil was exposed for a $120 million deal for an oil block in Liberia, knowing that the payment for the purchase would go into the pockets of former Liberian politicians, and structured it in a way to avoid having to comply with US anti-corruption laws.
More information in this Global Witness report:
Catch me if you can: Exxon’s complicity in Liberian oil sector corruption and how its Washington lobbyists fight to keep oil deals secret
In 2021, Exxon was also found to not be in compliance with a core standard of anti-corruption body Extractive Industries Transparency Initiative (EITI), by outright refusing to publicly disclose taxes it had pai to certain governments.
More information here
Eni is no stranger to corruption either – in March 2021, the company made a settlement of $14 million dollars to avoid a legal investigation into corruption allegations that it bribed Congo-Brazzaville politicians when renewing the rights to an oil block.
For more info
And financier HSBC was exposed for its part in an $80 million ponzi scheme in 2020, which included facilitating flows of money to Mexican drug cartels. This was just a year after HSBC was fined $1.9 billion in the US for money-laundering.
Read more here:
These are only a few examples of corruption in the gas companies and financiers involved in the Mozambique gas industry. Here are some more:
- Judge issues arrest warrant for ExxonMobil Nigeria chief
- Oil giant Total fined in France for Iran corruption
- BNP Paribas charged in France for laundering assets linked to Gabon
- Report: Gas in mozambique: A windfall for the industry, a curse for the country (Friends of the Earth France, JA!, Friends of the Earth International)
- Letter from civil society to Japan Bank for International Cooperation (JBIC), 2 April 2018
- New Fossil Gas Terminals: Profit over People (Gastivists and Lingo)
** Images credit: @Carr0000t