Saturday 8 February 2025


Why is the French government not investigating Privinvest for its role in Moz’s “hidden debt” scandal?



By Radithebe Rammutle   

It was very easy to condemn terrorist groups like Ansar al-Sunna (ASWJ) for a series of violent acts in Cabo Delgado province in Mozambican with the harshest words and actions. Yet heads were buried in the sand when it was uncovered that government leaders and French businesspeople plunged Mozambique into yet another debt crisis just after the highly Indebted Poor Country (HIPC) $2,4 trillion debt was forgiven between 2004 and 2007. In the background, Mozambicans had a glimmer of hope that their country will finally be delivered from the clutches of poverty after the discovery of gas on February 18, 2021.  

According to the United States Energy Information Administration (EIA) it is estimated that Mozambique holds 100 trillion cubic feet (or 2.8 trillion cubic meters) of proven natural gas reserves. News of gas discovery by Anadarko Petroleum, a United States-based oil major now currently acquired by Occidental Petroleum, in Area 1 of the Rovuma Basin situated in the north-eastern brought, were celebrated near and far. Situated 25 miles from the shore, the 10525 square kilometer Rovuma Basin holds the largest share of gas reserves in Mozambique estimated to be 75 trillion cubic feet (or 2.1 trillion cubic meters). 

When the gas reserves were found investors poured billions of dollars hoping to cash in on the gas bonanza (see figure 1). The promise of the gas bonanza did not only attract investors but unsavoury characters that pushed Mozambique into another debt crisis. Overnight, the palpable sense of great expectations that prevailed in the early years of the last decade evaporated when the “hidden debt scandal” was revealed. Vast portions of the proceeds of these transactions were shared amongst government leaders in Mozambique.

In 2016 it was alleged that three parastatals had taken loans/sovereign bonds worth $2 billion from various international banks including Credit Suisse Securities Europe Ltd (CSSEL) and VTB bank of Russia. The loans financed the procurement of 30 trawlers and patrol boats from a French company Shipbuilder Constructions Mecaniques de Normandie (CMN) and arms from an unknown company. The shipbuilding company was part of a holding company, Privinvest, owned by Iskandar Safa, a Lebanese-born French businessman who at one time was charged to have had improper relations with senior officials within the French government. These charges were however dropped in 2009.

The deal was initiated during President Armando Guebuza administration and received blessings from former President Francois Hollande of France. At the time the current President of Mozambique, Filipe Nyusi was the Minister of Defence. The financial sources and structure of these transactions created uneasiness and suspicion in the business press, amongst civic organisations, and later amongst political parties, as well as the donor community before and after President Guebuza’s presidential visit to France in 2013. 

Perhaps on the strength of the impending windfalls of the gas discoveries, CSSEL, the financial institution responsible for structuring the bond issuance to purchase the trawlers and patrol boats was able to convince debt investors in Europe and the United States (US) to invest. They however ignored the creditworthiness of the companies that were issuing this security as well as the Mozambican government which was the guarantor in the transaction.

Fast forward to October 19, 2021, the US Department of Justice’s (DoJ) Eastern District Attorney’s Office announced that Andrew Pearce, Chief Executive Officer of CSSEL pleaded guilty to charges to defraud US investors using US wires and financial system. Case 18-CR-681 in which Pearse and others including Jean Baustani, the lead salesman and negotiator for Privinvest, and Manuel Chang, Former Finance Minister of Mozambique currently in SA government custody revealed the elaborate network of people that not only defrauded international investors but ruined the reputation of Mozambique amongst this community. 

To date, French company TotalEnergies has not lifted its force majeure that suspended the construction of the Afungi gas export facility in 2021.  This is against the backdrop of increasing gas prices in Europe from which Mozambique could have benefited and lifted young men and women who joined ASWJ because of poverty. 

To date, the French government has not condemned or bought charges of corruption against Iskandar Safa and his companies for their involvement in the “hidden debt” scandal.  Why?


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