Guarantees on loans in doubt

HOLDERS of Mozambique’s sovereign dollar bonds said yesterday that the government had no reason to honour guarantees on loans given to state-owned firms, which they said should be liquidated to clean up government finances. Debt-ridden Mozambique released on Saturday a forensic audit report into $2 billion (R26bn) worth of loans made to tuna fishing company Ematum, security firm Proindicus and Mozambique Asset Management. The report by risk management firm Kroll found around a quarter of the money remained unaccounted for. It said no evidence was provided that any assessment took place before government guarantees worth $1bn were signed. Conflict of interest issues were also identified, it added. Reacting to the report, the Global Group of Mozambique Bondholders said that it was “evident that there is no basis – in either Mozambican or English law – for the Mozambique government to honour the purported guarantees of the Proindicus and MAM loans.” – Reuters