Dutch company to pay fine for facilitating Mozambique debt scandal
A Dutch appeals court has upheld a decision to fine a Netherlands-based company for issuing bonds to Mozambique linked to a $2-billion loan scandal that plunged the southeast African country into financial crisis.
Dutch financial regulator De Nederlandsche Bank (DNB) in 2018 charged TMF Management B.V. with "serious" violations of trust and fined the company 594,000 euros ($716,000) for its involvement in Mozambique's 2013-2014 "hidden debt scandal".
TMF took the case to a Dutch appeals tribunal for business, which upheld a 10 percent lower fine on Monday.
"The appellant's argument that DNB was not reasonably able to impose an administrative fine for violation of the sanctions regulations failed," the court ruling said.
Mozambique in 2013 and 2014 secretly borrowed $2 billion (1.7 billion euros) from global investors to finance a tuna-fishing fleet and a coastal surveillance project.
Hundreds of millions of dollars went missing and the project never materialised.
TMF, which provides financial and legal services for multinationals, issued eurobonds to a Mozambican state-owned tuna company in 2013 and 2016.
During a 2020 appeals hearing, TMF admitted the Mozambique dossier was not adequately monitored but argued it could not be held responsible for the use of funds it helped raise.
Mozambique's hidden borrowing came to light in 2016, prompting donors like the International Monetary fund to cut off support.
The country -- which relies on foreign aid and is one of the world's poorest -- subsequently defaulted on the loans and plunged into its deepest ever financial crisis.
Mozambique is still struggling to restructure its finances.
Hopes for multi-billion-dollar investments in offshore natural gas deposits in the country's north were recently thwarted by the escalation of a jihadist insurgency operating in the area.
"TMF helped facilitate a significant international fraud that is contributing to the collapse of the Mozambican state and society," Mozambican activist Adriano Nuvunga said in a statement late on Monday.
"And a hopeless future makes recruitment for violent extremism attractive to youth," he added.
