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courage is contagious
Viewing cable 10MAPUTO86, XXXXXXXXXXXX TALKS OF CORRUPTION AT THE
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Reference ID | Created | Released | Classification | Origin |
---|---|---|---|---|
10MAPUTO86 | 2010-01-28 06:21 | 2010-12-08 21:00 | SECRET//NOFORN | Embassy Maputo |
VZCZCXRO0006
RR RUEHBZ RUEHDU RUEHMR RUEHRN
DE RUEHTO #0086/01 0280621
ZNY SSSSS ZZH
R 280621Z JAN 10
FM AMEMBASSY MAPUTO
TO RUEHC/SECSTATE WASHDC 1221
INFO RUCNSAD/SOUTHERN AFRICAN DEVELOPMENT COMMUNITY
RUEHLO/AMEMBASSY LONDON 0605
RUEHLMC/MILLENNIUM CHALLENGE CORP WASHINGTON DC
RHEFDIA/DIA WASHDC
RHEHNSC/NSC WASHDC
RUEAIIA/CIA WASHDC
S E C R E T SECTION 01 OF 03 MAPUTO 000086
NOFORN
SIPDIS
E.O. 12958: DECL: 01/28/2020
TAGS: PREL PGOV KDEM KMCA MCC SNAR EINV MZ
SUBJECT: XXXXXXXXXXXX TALKS OF CORRUPTION AT THE
HIGHEST LEVELS OF GOVERNMENT
REF: A. MAPUTO 80
¶B. 07 MAPUTO 1395
MAPUTO 00000086 001.2 OF 003
Classified By: Charge d'Affaires Todd Chapman for reasons 1.4 (b+d)
¶1. (S/NF) SUMMARY: The Charge recently met with XXXXXXXXXXXX
--("the source") who described his frustrations with FRELIMO, President
Guebuza, and Mohamed Bashir Suleiman (MBS). He complained that
they exercise complete control over the licit and illicit economy of
Mozambique. The source, who has excellent connections within
the Government of Mozambique (GRM), including the private number
of the President, as well as a personal relationship with MBS,
said "I do not want to do business anymore in Mozambique
“ because of this triumverate of control. He is liquidating his
assets and leaving Mozambique, and says that he now sees
the "malaise" in Mozambique as if "he had cataracts
but now see it all."
¶2. (S/NF) The source describes President Guebuza, who he
has known and befriended for the past twenty years as a
"vicious scorpion who will sting you," and has an even more
grav assessment of MBS. He cautions that FRELIMO is not
interested in bettering the life of Mozambique's citizens,
but rather its self-enrichment. In the licit economy, the
ruling party, FRELIMO, and MBS work in tandem to control the
legal and illegal economies and restrict the space for
private sector growth by demanding a cut of all significant
business transactions. In the illicit economy, MBS dominates
money laundering and drug transshipment, providing kickbacks
to FRELIMO. Other key players involved in pressuring the
business community for bribes or percentage stakes, according
to the source, are Domingos Tivane, head of Customs, and
former Prime Minister Luisa Diogo. END SUMMARY.
-----------------------------------
MOHAMED BASHIR SULEIMAN AND GUEBUZA
-----------------------------------
¶3. (S/NF) The source XXXXXXXXXXXX. He speculated that
over the next term Guebuza would use his business proxies
to amass a still larger personal fortune. Guebuza manages his
business interests through several front companies, including
Celso Ismael Correia's Insitec and Salimo Abdullah's Intelec
Holdings. The source said that MBS meets directly with
President Guebuza, who has direct knowledge of MBS' funding
to both the FRELIMO party (underwriting the recent election
campaign) and Guebuza's front companies. The source, who
described Correia as a "30 year-old pipsqueak," stated that
Correia has no business experience or university degree, but
shows great loyalty to Guebuza.
¶4. (C) Guebuza's business interests in Mozambique are
legion. They include stakes in Mocambique Gestores (MG),
Maputo Port Development Company (MPDC) which runs Maputo
Port, Focus 21, Navique, Vodacom, and SASOL. Guebuza also
has a share in Maputo Corridor Logistics Initiative (MCLI)
which controls the toll road from Maputo to South Africa,
according to the source. Guebuza has shares in a significant
number of banks, including BCI Fomento (where Correia is
Chairman), Mocambique Capitais, Moza Banco, and Geocapital.
Through family members, Guebuza also controls Intelec
Business Advisory and Consulting, Beira Grain Terminal, MBT
Construction Ltd, Englob Consultants Ltd, Mozambique Power
Industries, Macequece Ltd, and Mozambique Natural Resources
Corp.
¶5. (S/NF) One new area that Guebuza appears to be
interested in is the gaming industry. The source says that
Guebuza forced the Constitutional Council (CC) to review and
declare a recent law liberalizing the gaming industry as
"constitutional" even though it calls for all casino assets
to revert to the state after a defined period of time, in
direct contravention of private property laws enshrined in
the Constitution. The judges of the CC, who also ruled in
favor of decisions during the elections to invalidate large
numbers of opposition candidates in the legislative and
presidential races, complained of the unconstitutionality of
the new law, but were told to give it a favorable ruling,
which they did.
¶6. (S/NF) The source elaborated on the depth of Guebuza's
business interests, which range across the economy. He said
MAPUTO 00000086 002.2 OF 003
that Guebuza is in on almost all of the "mega-project"
multi-million dollar deals via contractual stipulations to
work with the Mozambican private sector. One example is
Guebuza's involvement in the 2007 purchase of Cahora Bassa
Hydroelectric Dam (HCB) from the Portuguese Government for
$950 million. $700 million of this was paid by a private
consortium of banks, which was arranged by a Guebuza proxy,
for which Guebuza received, while he was a sitting president,
an estimated commission of between $35 and $50 million. The
Portuguese bank which arranged the financing turned over its
shares in BCI Fomento, one of the largest Mozambican
commercial banks, to a Guebuza-controlled company.
---------------
MBS AND FRELIMO
---------------
¶7. (S/NF) The source, says that FRELIMO brazenly squeezes
the business community for kickbacks. As an example, the
source said that he has personally seen Manuel Tome, former
FRELIMO Secretary General, senior member of the National
Assembly, and relative of President Chissano, in MBS' office
receiving pay-offs quite openly. Head of Customs Domingos
Tivane openly demands and receives payoffs from importers,
including MBS. The source stated that one business contact
remarked to him that when visiting Tivane's expansive home to
deliver a bribe he noticed that the bureaucrat had solid gold
fixtures in his bathroom. The source also stated that former
Prime Minister Luisa Diogo, until she was removed from the
Cabinet (septel), was heavily involved in taking bribes for
FRELIMO, of which she kept a percentage. Similar allegations
were raised in the 21 January issue of Zambeze, regarding
soft loans paid to Diogo's husband Albano Silva, purchases of
houses and buildings for a fraction of their value, as well
as Diogo's close ties to officials such as Diodino Cambaza,
whose corruption trial is ongoing.
¶8. (S/NF) At the ports, the source commented that FRELIMO
has its own clearing agent that handles FRELIMO and MBS
business. The clearing agent chronically under-invoices
items, avoids the 17% VAT, and also has an arrangement with
Tivane's Customs authorities to bypass the ports' mandatory
scanning. The source has documentary proof of the
under-invoicing by MBS, and poloff has seen MBS' trucks drive
through the port without being scanned. Nonetheless, the
source said that Government of Mozambique (GRM) officials
routinely describe MBS as an "untouchable" due to his
connections to Tivane and Guebuza, a situation which is
reported to irk a cash-strapped Tax Authority (AT) President
Rosario Fernandes.
-------------------------
MBS AND OTHER BUSINESSMEN
-------------------------
¶9. (S/NF) Regarding MBS' retail operation, the source
states that MBS does not tolerate competition. The source's
milk processing facility was threatened by MBS who used
VAT-avoidance and under-invoicing to dump vast quantities of
imported condensed milk on the market in order to put the
source out of business. Only after the source made an
agreement with MBS for exclusive distribution of his milk
products, with a 10% kickback on all sales to MBS, did MBS
stop his dumping practices. Other businessmen have
complained about similar practices in other commodities to
include edible oil. The source complained that "even those
who bribe" MBS or FRELIMO cannot make a profit under such
conditions.
------------------------------
NARCOTICS AND MONEY LAUNDERING
------------------------------
¶10. (S/NF) The source says he only has second hand
knowledge of drug trafficking and money laundering in
Mozambique. He said that "MBS and the 'Nacala dealers' all
have offices in Dubai" to facilitate money laundering
operations in Mozambique. It is through these operations
that after 15 years in business in Mozambique, MBS was able
to pay $30 million in cash to establish his shopping plaza
downtown, Maputo Shopping, which opened in 2007. The source
said that he asked prominent Ismaili/Aga Khan businessman
Mustaque Ali how MBS became so rich so fast, and Ali's wry
answer was "Johnson's baby powder," a euphemism for drugs.
The source noted that the sometimes erratic changes in
MAPUTO 00000086 003.2 OF 003
Mozambique's foreign exchange position are due to sudden
multi-million dollar transfers of cash overseas tied to money
laundering. The source commented that in the past few years
there have been several embarrassing situations in which
shiploads of drugs, primarily hashish and heroin have washed
ashore; however, the media is usually afraid to report on
such incidents because no one wants to become another Carlos
Cardoso, the courageous Mozambican journalist who was
murdered in 2000 while investigating a massive bank fraud
tied to then-President Chissano's family.
---------------------------------------------
COMMENT: CANDID COMMENTS FROM A CONNECTED MAN
---------------------------------------------
¶11. (S/NF) The source, XXXXXXXXXXXX While he has an axe to
grind because he is frustrated with the scope and depth of
corruption in Mozambique, his statements corroborate what we
have learned from other sources (Ref A). Ties with MBS and
other known money launders and narcotraffickers by senior GRM
officials are disturbing and demonstrate a short-sighted
focus on self-enrichment. The source cautions against
building long term relationships with FRELIMO, and fears
that, having allowed the illicit economy to prosper, and
having advertised Mozambique as a money laundering
destination and drug transshipment hotspot, the ruling party
will no longer be able to control the nefarious activities
within its borders. Rumors and stories of corruption abound
in Mozambique, but rarely will a successful well-connected
XXXXXXXXXXXX be willing to share specific practices based
on first-hand knowledge and participation in these practices.
CHAPMAN