Monthly Archives: August 2021

The trial of Mozambique’s “hidden debt case”: the omnipresent absence of Filipe Nyusi

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As the corruption trial of the decade if not the century enters its fifth day in a Mozambique court, guest commentator Marcelo Mosse, editor and publisher of the independent online outlet Carta de Mozambique, notes that the presence in the courtroom of a very large elephant remains unremarked. During the first days of the trial, witnesses have identified those responsible for a scheme saddling one of the world’s poorest nations with $2.1 billion of debt and driving millions into poverty. Mosse explains that the culprits have been identified by name and by the office held when the scheme was hatched and executed. With one exception. His own translation of his commentary from Carta de Mozambique on the significance of that exception is below.

Almost 20 years ago, at the time of the trial of the murder of journalist Carlos Cardoso, Mozambican society witnessed a judicial process that hit the presidential family to the core, due to the suspected involvement of Nyimpine Chissano [son of the then president] in the crime. This involvement was never proven. However, incriminating “nuances” of various kinds remained engraved in the imagination of the Mozambicans.

In addition, the trial was conducted within a tacit agreement among the interveners: everything was acceptable, except directly tweaking [then president] Joaquim Chissano. Bringing his name out at the hearings was like striking at the heart of the State, shattering our Mozambicanity, emptying the last stronghold of the beloved homeland, draining out its blood. Although the son ended up somewhat hit by the unraveling of his calls, the father, Joaquim, came out unscathed. Mozambicans would not be the ones to bury their own Father, even if hostile forces wanted to. Moreover, the administration of Justice was able to achieve this desideratum.

Twenty years later, history repeats itself, with the due distinctions of circumstance. The first four days of the trial of the “hidden debts” showed that we are facing the same tacit understanding: no one has yet mentioned Filipe Nyusi‘s name, but everyone mentions the Minister of Defense at the time. However, nobody asked for the name of the Minister at the time. Neither Judge Baptista nor the prosecutor Sheila Marrengula. Much less the Bar Association [participating in the case as assistant to the prosecution].

The Bar Association demanded that the former Minister of Finance, Manuel Chang, be required to come and testify as a declarant. The request followed several mentions made by the defendants Cipriano Mutota and Teófilo Nhangumele about his presence in decision-making meetings on the coastal protection project for which some of the debt was incurred.

However, just as Chang’s name was mentioned, the Minister of Defense was also mentioned several times, but never by name. We emphasize: no one wanted to know the name of this minister, much less his role in the various meetings where he would have been invested with his decision-making power on the subject. Several ministers of the time were addressed by name; the former President of the Republic, Armando Guebuza, was as well.

Why has no one mentioned Nyusi by name? Neither the judge nor the prosecutor asks about the role of this so-called Minister of defense. Why? That is the question.

The trial is still in its beginning stages. And our assertion may be refuted as the days go by, especially with the long awaited testimony of Antonio do Rosário, the second “mastermind” of the default. It is very likely that he will call a spade a spade. However, this taboo regarding Filipe Nyusi’s name shows that ultimately, and as we wrote a few days ago, we are facing the ultimate trial of Guebuzaism. And Nyusi will probably get off without being tweaked. Nyusi is still the President of Mozambique.

 Editor’s note: The trial is live streaming on Mozambican public television. Links here and (Facebook link) here. Excerpts can viewed on YouTube by searching “television moçambique dividas ocultas.”

Mozambique Hidden Debt Case: South Africa Must Say Why It Thinks Chang Will Face Justice; Trial Summary

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Earlier today, August 27, the South African High Court blocked the extradition of former Mozambican Finance Minister Manuel Chang to Mozambique.

The order (here) came in response to an urgent request (here) by the Forum De Monitoria Do Orçamento, a coalition of Mozambican civil society groups, raising serious doubts that were Chang, a senior member of Mozambique’s ruling party, returned he would face justice for his part in a scheme that drove millions of fellow citizens into poverty and cost the impoverished nation billions of dollars in lost GDP (here).

The United States is also seeking Chang’s extradition for participating in the hidden debt scheme, and there is a widespread belief he is far more likely to face justice if extradited there.  South African law bars the government from picking Mozambique over the United States if it does not think Change will be tried, or if tried, the trial will be anything more than theatre. The court has ordered South African Minister of Justice and Correctional Services Ronald Lamola to produce the documents justifying his choice of Mozambique by August 30. A hearing on the decision is set for September 17. If the court finds the evidence supporting the decision insufficient, “irrational” in South African legal terms, it will vacate the extradition order.

Separately, Centro para Democracia e Desenvolvimento, a Mozambican civil society organization and FMO member, has released English language summaries of the first four days of the hidden debt trial.  Click on the day to see: Day 1, day 2, day 3, day 4.

Mozambique Hidden Debt Scandal UPDATE: Two Presidents Implicated/Crony’s Return Temporarily Blocked

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The government of Mozambique took two hits at the second day of what could well be the corruption trial of the decade. Defendant Cipriano Mutota, a former intelligence official, testified that both the country’s current president and his predecessor were deeply involved in the corruption, a scheme where officials approved $2.1 billion in secret loans for dodgy projects in return for $150 million in bribes. His gripping testimony, captured in a screen grab circulating on Mozambican social media, appears below.

Separately, the Budget Monitoring Forum, or FMO after its initials in Portuguese, has filed an emergency motion to prevent South Africa from extraditing Manual Chang, who signed off on the loans as Finance Minister, to Mozambique. Chang has been jailed in South Africa for two years pending the government’s decision on whether to extradite him to the U.S. or Mozambique. Both want him, the U.S. because American investors lost millions thanks to the secret debts, Mozambique to stand trial for his role in the corruption.

Screenshot, Hidden debt trial, August 24, 2021

The government of South Africa has agreed to delay returning Chang to Mozambique pending a hearing on its legality Friday at 10:00 AM. Along with South Africa’s Minister of Justice, the government of Mozambique will appear and argue in support of the decision. FMO’s draft order, which the court accepted and issued, is here.

FMO filed the emergency request Tuesday evening after the South African government refused to consent to a brief delay in Chang’s return to allow an orderly consideration of whether the decision complied with South African and international law. In its filing, the group, an umbrella organization whose 22 civil society organizations serve virtually every impoverished or low income Mozambican, argues that the evidence shows the government will not really put such a senior figure on trial for corruption. Or if it does, he will get a most a slap on the wrist for a scheme that threw millions into poverty and by one estimate shaved $10 billion off the GDP.

FMO cites a previous Mozambique extradition request (here) that had every appearance of a put-up job, initiated not to bring Chang to justice but from a fear that were he sent to the U.S. he would spill the beans on cronies in return for leniency. Rumors circulating in Maputo that Chang’s relatives have planned a lavish welcome home party have only stoked concerns he has little to fear from a trial in Mozambique.

FMO chair Adriano Nuvunga has called South Africa’s decision to send Chang to Mozambique, “a victory of impunity” and has urged “all southern Africa CSO movements to come together to stop the triumph of impunity.” FMO’s papers seeking a temporary delay in Chang’s return pending a full hearing are here. The Gauteng Division of the High Court may act on the request as early as Wednesday morning South African time.

On Corruption

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Taking a break from his GAB duties, our indefatigable editor-in-chief Matthew Stephenson provides readers of Liberties, a leading American journal on culture and politics, a tutorial on corruption. GAB readers will not want to miss it. For in less than 10,000 words, his essay not only make sense of the (tens of? hundreds of?) millions of words written on the topic but provides corruption fighters an order of battle.

Citing passages from the Hebrew Bible and the great Indian text on governance the Arthaśāstra, Matthew reminds that corruption has always been with us and always tolerated — if only grudgingly. What’s new is the extraordinary international consensus that has formed over the past quarter century to end that toleration. Matthew explains how that consensus developed and the opposition it has had to overcome. From those who argue that in some societies corruption is culturally acceptable, from those who believe corruption fosters economic development, and from those think nothing can be done to combat it.

He calls each of these claims a “quasi-myth,” for each contains a kernel of truth, just enough to make a debater’s point. He crushes each, with the cultural determinate one quoting Edmund Burke’s pithy response that the claim of “geographical morality” simply doesn’t stand up to scrutiny.  

The research on corruption has exploded over the past two decades. Matthew’s bibliography is now at 720 pages! He seems to have read every one of the articles, for he brings their findings to bear on the pros and cons of the various solutions that have been proposed — “wise king,” “moment of crisis,” “long slog” — interweaving stories how Denmark, Sweden, and the United States overcame entrenched corruption. He admits that taming corruption is no easy task, especially where it involves persuading corrupt elites reform is critical (“bit like trying to convince turkeys to support Thanksgiving”), but he concludes that while history shows the cancer of corruption can never be fully eradicated “progress against this chronic disease of the body politic is possible, so long as those engaged in the fight do not lose heart.”

The full text of Matthew Stephenson, “Honey and Poison: On Corruption,” Liberties, Summer 2021 is here.

Anticorruption Bibliography–August 2021 Update

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An updated version of my anticorruption bibliography is available from my faculty webpage. A direct link to the pdf of the full bibliography is here, and a list of the new sources added in this update is here. Additionally, the bibliography is available in more user-friendly, searchable from at Global Integrity’s Anti-Corruption Corpus website. As always, I welcome suggestions for other sources that are not yet included, including any papers GAB readers have written.

A Cautious Challenge to Constitutionalizing Anticorruption Commissions

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Anticorruption commissions (ACCs) have had a turbulent history as a mechanism for fighting corruption. While some, such as those in Hong Kong and Singapore, have effectively executed their mandate to investigate and prosecute instances of graft, bribery, and other forms of corruption, others ACCs have been criticized as toothless, inefficient, or themselves corrupt. The failure of most African ACCs, in particular, has left some wondering whether these institutions were worth the trouble.

One influential view holds that the key to making ACCs more effective is constitutionalizing them. While a handful of countries began incorporating constitutional provisions on ACCs back in the 1980s, the trend towards constitutionalization accelerated in the 2010s. This practice reflected an emerging consensus in the anticorruption community. The 2012 Jakarta Statement on Principles for Anti-Corruption Agencies, for example, recommended that in order to ensure “independence and effectiveness,” ACCs should “be established by proper and stable legal framework, such as the Constitution.” Transparency International highlighted constitutionalization as a best practice in ACC design in 2014. That same year, a joint report by International IDEA, the Center for Constitutional Transitions, and the UN Development Programme (UNDP) cited a “growing international consensus” around the wisdom of enshrining ACCs in the constitution. And in the seven years since that report, some of the most high-profile, internationalized constitutional processes—including those in Tunisia (2014), Nepal (2015), Yemen (2015) Sudan (2019), and Algeria (2020)—have included an ACC in their interim or permanent constitutions. By my count, the number of countries that have an explicit constitutional provision mandating an ACC now stands at 23 and counting.

Does constitutionalizing the ACC help in the way that proponents hope? Are the benefits of constitutionalizing these institutions large enough to justify their inclusion in such a diverse range of constitutional processes? Possibly—but possibly not. The evidence is murky and inconclusive, but there are some reasons to doubt whether constitutionalization can overcome the obstacles that have limited the effectiveness of ACCs in the past.

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Major League Soccer: A Prime Target for Organized Crime Groups?

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Sports corruption, though not a new problem, has been an ever-increasing source of concern and attention in both the sporting world and the anticorruption community. In the United States, much of the attention regarding this issue has focused on corruption scandals in the most popular U.S. sports, such as college football, college basketball, and professional basketball. But other less high-profile sports may be even more at risk of corruption. Indeed, in surveying the landscape of sports in America, the league that stands out as very high-risk for corruption is Major League Soccer (MLS).

This may seem surprising. Although soccer is considered to be the most corrupt sport in the world, there have not, to my knowledge, been any reports of significant corruption in MLS to date. Indeed, back in 2015 MLS commissioner Don Garber declared that MLS is “one hundred thousand percent” clean. But just because corruption hasn’t (yet) been uncovered doesn’t mean it isn’t there, or that it won’t arise in the future. My concerns for corruption in the MLS arises from my observation that MLS has several of the risk factors that investigations of sports corruption in other contexts have identified. Three such risk factors in particular stand out:

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Why Guatemala’s Experiment with Fighting Grand Corruption Was Not a Failure

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The July 23 firing of Juan Francisco Sandoval, Guatemala’s top corruption prosecutor, seemed to put paid to the nation’s extraordinary experiment in fighting grand corruption.  Sandoval’s office was established to prosecute cases developed by the Commission Against Impunity, or CICIG after its Spanish initials. CICIG was a U.N. entity the Guatemalan government accepted as the price for international assistance after the civil war ended. It was tasked with investigating gross human rights abuses and grand corruption; recognizing how powerful Guatemalan elites were and how weak the judiciary was, it was staffed by non-Guatemalan investigators and prosecutors.

As Matthew described here, in 2019 an unholy alliance of Guatemalan elites and Trump cronies succeeded in pulling U.S. support for CICIG, allowing the elites to kill it off. With its demise, all that stood in the way of their looting the country was Sandoval’s office.  

The original plan had been for CICIG to both investigate and prosecute cases themselves.  But after the Guatemalan Supreme Court ruled that only the public prosecution office (Ministerio Publico) could prosecute, CICIG’s first head, Carlos Castresana, worked out arrangement with the then Attorney General to assign ten young, “clean,” newly recruited lawyers to an office that would be responsible for CICIG’s cases.  Given how far the elites’ tentacles reached into Guatemala’s middle class, Castresana doubted “clean” recruits could be found.  Or if they were clean, they would stay that way if faced with the notorious choice between plata o pluma, taking a bribe to drop the case or being killed. One of the great parts of the CICIG story, and as far as I can tell one still untold, is how those like Sandoval, from a new generation of Guatemalans, rose to the challenge.

The creation of CICIG and its early successes developing cases against powerful military and civilian leaders that Sandoval’s office successfully prosecuted provided a hopeful example of what an alliance between the international community and a nation’s citizenry could achieve. Its end, and now Sandoval’s firing, show the limits of the approach.  At the same time, it shows the effort is worth emulating.  Sandoval’s firing prompted international and condemnation and will lead to sanctions likely to create divisions between at least some in the business class and the politicians.  The governing body of the judiciary has demanded an explanation for his termination, and his initial replacement stepped down after less than days in office (here). Sandoval and like-minded lawyers and public servants aren’t going away, and many are now moving up the ranks in the judiciary and prosecution service.  

In a fine article for PlazaPublica, former U.S. Ambassador to Guatemala Stephen McFarland explains what the U.S. and others in the international community can do in light of Sandoval’s firing to combat corruption in Guatemala.  That whatever they do, they have in-country allies like Sandoval is why the CICIG experiment should not be treated as a one-off failure.  

Fighting Corruption Isn’t Rocket Science

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Space, the final frontier, sure is expensive to explore. Every launch, every mission, can cost billions of dollars in research, materials, and overhead. And partly because of this, government space agencies may be especially susceptible to corruption. After all, these agencies are responsible for enormous projects with thousands of moving parts (literally and figuratively), but are monitored principally by committees that lack the scientific knowhow to conduct effective oversight. Embezzlement, overspending, bribery, and other crimes are easy to miss. Not only is corruption easily buried by bureaucratic or technical minutiae, it’s also extremely costly, as mistakes can result in the loss of valuable equipment or even human life. Even when corruption causes things to go wrong, the fact that space missions are inherently risky and complex may make it difficult to recognize when a malfunction is due to malfeasance.

Roscosmos, the Russian state corporation responsible for space flights, serves as a cautionary tale. For years, Roscosmos funds have been embezzled though contracting bids— officials were bribed to make fake deals and artificially inflate costs, allowing hundreds of millions of dollars to evaporate and a few Soyuz rockets to accidentally explode. (In 2014 alone, corruption and other malfeasance caused Roscosmos to lose roughly US$1.8 billion.) After Russian anticorruption activist Alexei Navalny called out the “astronomic” levels of corruption and mismanagement at the Vostochny space center (one of President Putin’s pet projects), multiple criminal investigations resulted in the conviction and sentencing of fifty-eight officials for fraud and abuse of office.

Though the record of the U.S. National Aeronautics and Space Administration (NASA) is not nearly as egregious, neither is it pristine. Suspicions regarding bribes by private contractors to NASA officials have existed for decades. For instance, back in the mid-1990s, a controversial FBI sting operation implicated dozens of contractors that allegedly paid bribes to NASA employees in hopes of determining which commercial experiments would be selected for the International Space Station. Representative John Conyers, who chaired the Committee on Government Operations in the House of Representatives at the time, pinned the blame on “NASA’s dismal record of contract mismanagement and faulty financial controls.” And the problems haven’t gone away: just last year, NASA’s associate administrator for human spaceflight Doug Loverro resigned amid allegations for improper contacts with Boeing regarding the contracts for NASA’s moon lander program. NASA’s Office of the Inspector General (OIG) has raised numerous concerns about NASA’s procurement system, and NASA attributed the Taurus XL launch failures, worth $700 million, to faulty materials provided by a contractor that falsified thousands of certifications for their aluminum products.

Though NASA has since taken some measures to curb against the potential for this sort of corruption (such as the installation of a Chief Financial Officer and the Acquisition Integrity Program), the risks are still significant, especially as NASA ponders a return to crewed missions by way of billion dollar contracts. These risks are further exacerbated by the agency’s even greater reliance on private sector contractors to compensate for the decline in the agency’s budget. There are therefore several additional steps that NASA can and should take to further safeguard integrity in the procurement process.

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