Will FRELIMO Betray the Mozambican People to Protect Its Own?

FRELIMO, Mozambique’s governing party, is at a historic crossroads. A party once known for the integrity of its leaders and its commitment to the welfare of all Mozambicans must choose: Pursue a lawsuit to recoup damages from the “hidden debt scandal” that will expose the role of Felipe Nyusi, its leader and the country’s president, in the corruption. Or scrap the suit to protect him.

The scandal arose from some $150 million Dubai-based shipbuilder Privinvest paid Mozambican officials to approve $2.1 billion in contracts to supply it with coastal patrol vessels, tuna boats, and a shipyard to maintain them. Privinvest kicked back $50 million from the deal to Credit Suisse executives in return for their arranging financing for the purchases. The loans they secured were not disclosed: either to the Mozambique parliament, as required by law, or to the IMF, as required under the terms of an IMF bailout loan. When the Wall Street Journal revealed them, donors cut funding, foreign investors pulled out, and the economy tanked.  

This hidden debt scandal may well go down as the most damaging corruption scam in modern history. According to a recent estimate by a team from Mozambique’s Centro de Integridade Pública and Norway’s Chr. Michelsen Institute, the damages from the scandal over the 2016-2019 period alone equals $11 billion, $403 for every man, woman, and child in Mozambique. At the same time, the World Bank ranks it as the world’s third poorest nation with a GDP per capita for 2020 of a little over $1200.

Mozambique’s only chance to recover the enormous damage the scandal has done is a civil law suit the government filed against Privinvest, Credit Suisse, and many of the individuals involved.  Privinvest has now countered. At paragraph 22.5 of its defense, the shipbuilder claims Nyusi was “fully aware of, and/or participated, in [the corruption], and indeed was at the heart of the matters now complained of by the Republic.”

The threat is now on the table. If Mozambique continues to press the suit, Privinvest will produce in excruciating detail evidence of Nyusi’s involvement. The only way to avoid the likely discrediting of the party’s ruling elite is for Mozambique to scrap the suit.

Will a party once led by the likes of Eduardo Mondlane and Samora Machel sell out the Mozambican people to maintain its grip on power? Will those party members who were their colleagues and those whom they inspired with their dream of a free and prosperous Mozambique stand up?

New Podcast Episode, Featuring Kate Bateman

A new episode of KickBack: The Global Anticorruption Podcast is now available. In this week’s episode, I interview Kate Bateman, currently a senior expert at the United States Institute of Peace’s Afghanistan Program, and previously the Project Lead for the “Lessons Learned” program with the Special Inspector General for Afghanistan Reconstruction (SIGAR). Our conversation, which in many ways complements our previous episode’s interview with Jodi Vittori, focuses on the role that corruption played in the failure of the U.S.-led mission in Afghanistan and the collapse of the Afghan government that the U.S. and its allies supported, as well as the lessons that can be learned both from the overall experience and, more specifically, from SIGAR’s work. You can also find both this episode and an archive of prior episodes at the following locations: KickBack is a collaborative effort between GAB and the ICRN. If you like it, please subscribe/follow, and tell all your friends! And if you have suggestions for voices you’d like to hear on the podcast, just send me a message and let me know.

Announcement: Call for Papers for Special Issue on the Political Economy of Corruption and Racism

Today’s guest announcement is from Professor Michael Johnston of the Colgate University Department of Political Science.

Corruption, in its various forms, has allowed racism to flourish in many ways; arguably racism can drive and facilitate corruption as well. The social and economic consequences of these intertwined problems can be devastating, not only for their immediate victims but also for communities at large.

Because of the many possible intersections of racism and corruption, and because academic debates on those connections are very much in flux, the Journal of Economics, Race, and Policy (JERP) invites submissions for a special issue devoted to this topic. Contributions might be empirical or conceptual, could focus on a range of issues, cases, groups, and places (not just the United States), and could take historical or comparative, as well as contemporary, approaches. Papers can explore the economic costs that arise when racism and corruption interact, corrupt incentives that help sustain racism – or other incentives that might inhibit it – and the ways in which economic and social policies might illuminate the workings of both sets of problems when they become institutionalized.

We believe this special issue of JERP can be the starting point for some important and productive debates.

Submissions are subject to the usual length and style requirements of JERP and would be evaluated through its normal refereeing process, as well as by the guest editors. Abstracts for the special issue can be emailed to the guest editors below, anytime until November 15, 2021.  A deadline of June 15, 2022 for submissions to the special issue can be made online via JERP’s online submission portal. The issue would likely appear in mid 2023.

The editors of the special issue are:

Oguzhan Dincer, PhD  odincer@ilstu.edu
Department of Economics
Illinois State University

Michael Johnston, PhD mjohnston@colgate.edu
Department of Political Science
Colgate University

All inquiries should be directed to the guest editors.

New Podcast Episode, Featuring Jodi Vittori

After a couple of month off for summer vacation, I’m happy to announce that a new episode of KickBack: The Global Anticorruption Podcast is now available. In this week’s episode, I interview Jodi Vittori, Professor of Practice and Concentration Co-Chair for Global Politics and Security at Georgetown University’s School of Foreign Service. Professor Vittori is an expert in the relationship between corruption and military affairs and security, and much of our conversation focuses on the role of corruption in the failure of the U.S.-led military intervention in Afghanistan and the collapse of the Afghan government that the U.S. and its allies had supported. In addition to the specific issues in Afghanistan, our conversation also addresses more broadly how military strategists, commanders, and diplomats ought to respond to corruption risks. You can also find both this episode and an archive of prior episodes at the following locations: KickBack is a collaborative effort between GAB and the ICRN. If you like it, please subscribe/follow, and tell all your friends! And if you have suggestions for voices you’d like to hear on the podcast, just send me a message and let me know.

Guest Post. Effective AML Strategy: A Small Country Perspective

Smaller states are often thought to be more vulnerable to money laundering: less resources, fewer personnel, a lackadaisical attitude towards others’ problems. But as Charles Littrell explains in today’s guest post, even the smallest jurisdictions can prevent money laundering if there is the will to do so, and those don’t care or think they will benefit by turning a blind eye towards it are inviting a particularly virulent strain of cancer into their society.  Mr. Littrell is head of bank and trust company supervision for the Central Bank of The Bahamas, including AML supervision.  He was formerly an executive at the Australian Prudential Regulation Authority, and a member of the Basel Committee on Banking Supervision. He founded and is the Convener of the International Research Conference on Empirical Approaches to Anti-Money Laundering. This post represents Mr. Littrell’s personal views.

This post outlines a suggested strategy for small states to engage in the international money laundering movement.  The strategy comprises three elements:

  • Know what you don’t want—which is engagement with dirty money and the people associated with dirty money.
  • Deploy locally successful AML tactics in a globally unsuccessful world.
  • Proactively manage the FATF relationship.

Despising dirty money and dirty people

The core element in a successful small state AML strategy is sincere and comprehensive rejection of foreign illicit money, and the people associated with that money. The world’s major league criminals and their financial facilitators are among the least attractive and most dangerous human beings on the planet, and a successful small state will absolutely not welcome such people, their money, or their activities.

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With a Dad’s Help? Home Mozambique President Filipe Nyusi’s Son Bought

Not every 21-year-old has the means to buy a luxury house in one of Cape Town’s toniest neighborhoods. But somehow Jacinto Nyusi of Mozambique managed, plopping down 3.9 million rand, $350,000, for the home pictured above. In cash no less.  

While he isn’t saying where he got the money, many Mozambicans allege his father helped. The July 2014 purchase was made while father Felipe Nyusi was Minister of Defense and shortly after he had been tapped as ruling party FRELIMO’s candidate for president, guaranteeing victory at the January 2015 election. More significant, say many Mozambicans, is the house was bought while the country was swimming in money Middle East shipbuilding giant Privinest was allegedly doling out to Nyusi père and other senior officials to seal the deal on the hidden debt scandal, a corruption case which has wreaked more harm on more people than any in decades.

Thanks to sleuths from Mozambique’s Center for Public Integrity, CIP after its initials in Portuguese, the records documenting Jacinto’s purchase of the house are circulating freely in Maputo. Click here for them and for more on why so many think dad helped him buy it.

 

Proposed Method for Assessing the Transparency, Accountability, and Inclusiveness of the Return of Stolen Assets: Comments Requested

France recently enacted an asset repatriation law enshrining GFAR-inspired principles of transparency, accountability, and inclusivity. Now that the principles are law, the French chapter of Transparency International has set out to ensure they are observed in practice.

To that end, it has developed a method for evaluating the return process on each of the three dimensions using indicators for each as shown in the diagram.

The organization plans to publish its methodology, alongside concrete examples from past restitution processes of good and weak practices, as a handbook. Publication is now scheduled for the beginning of October.

TI-France welcomes feedback and comments on its methodology. Click here for the French version of the paper explaining it and here for the English translation. The group would be pleased to receive thoughts and suggestions by September 10th.  They should be directed to Sara Brimbeuf and Rahima Zitoumbi at sara.brimbeuf@transparency-france.org and rahima.zitoumbi@transparency-france.org.