Tuna Boats At Heart of $2 Billion Mozambique Scandal Up For Auction

By Matthew Hill

Nov 15, 2024 (Bloomberg) –The tuna fishing fleet at the center of a $2 billion corruption scandal, which scuttled Mozambique’s economy and triggered court cases across three continents, is up for auction.

The 24 vessels, which have been rusting away for a decade in a port in Maputo, the capital, put the southeast nation on the hook for a $900 million bond that it’s still battling to repay. 

The economic harm continues to reverberate, increasing social tensions which have spilled into deadly protests in the aftermath of disputed elections last month.The majority of the vessels have never gone fishing and some have operated as few as 10 hours, according to the auctioneer’s website. 

If all sold for the base price — the site shows there aren’t any bids yet — the proceeds would be $10.6 million. Mozambique’s finance ministry confirmed the auction without commenting further.

The boats gave the name to the nation’s so-called tuna bond scandal, and became emblematic of corruption risks when one of the world’s poorest countries strikes vast natural gas riches.

Credit Suisse Group AG bankers helped arrange about $2 billion in debt to finance the fleet and related assets, with US prosecutors alleging $200 million of that went to paying bribes and kickbacks.

The son of Mozambique’s former president has been imprisoned for his role, and ex-finance minister Manuel Chang is due for sentencing in a New York court later this month. The judge this week denied Chang’s request for acquittal and a fresh trial. Three former Credit Suisse bankers already pleaded guilty to US charges.The Mozambican state-owned company that in August 2013 signed the $785.4 million supply deal with shipbuilder Abu Dhabi Mar — part of the Privinvest group of companies — was incorporated on the same day. That loan has since been twice restructured, eventually into a $900 million eurobond due 2031.

The government of the southeast African nation had denied the existence of the bulk of the $2 billion in debt to the International Monetary Fund as required. When it finally owned up in 2016, the Washington-based lender halted a finance program and donors also suspended funding. 

Economic growth halved, the currency plunged, inflation soared. Millions of people were pushed into poverty, and Mozambique defaulted on the tuna bond before reaching a restructuring deal with investors in 2019.

Deadly Fallout

The economic fallout has led to increased social tensions in the nation of nearly 35 million, where the median age is about 17. One in three young people are out of employment or school.

A dispute following Oct. 9 elections has triggered a wave of deadly protests across the nation, halting trade and business. The turmoil is straining Mozambique’s already tight state finances, and any revenues from the sale of the tuna fleet could provide a welcome boost.

On the auctioneer’s website, the boats are listed as “like new, with all equipment in excellent condition, although there are some signs of rust on the hull.” The sale ends Dec. 4.

© 2024 Bloomberg L.P.

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