Killing the goose that laid the golden eggs (Part 7)
Who would take Banco Austral?

Following the contested decision not to simply close Banco Austral, the central bank (BdM) intervened and took over its operation, appointing a new board (Conselho de Administração). The new president (chair) was António Siba-Siba Macuácua, BdM director of the department of banking supervision. Arlete Georgete Jonasse Patel, the government nominee on the old board, was retained on the new board. Siba-Siba was a highly respected economist. But arguably these are the people who should have been watching more closely to ensure that the crisis did not occur, and who should have intervened earlier.

Adriano Maleiane told a press conference on 3 April 2001 that Banco Austral needed a recapitalisation of Mt 2800 bn, then about $150 mn. Acting head Siba-Siba moved quickly. On 19 June Banco Austral published in the daily Notícias a list of more than 1000 individuals and companies with overdue loans. No such list was ever published for BCM. But the Banco Austral list did not contain the names of any important political figures, even ones who had been on the KPMG list.

BdM advertised for a foreign bank to take over 80% of Banco Austral - all but the 20% reserved for employees - which would leave nothing for the state or Mozambican investors. The bidders were ABSA (Amalgamated Banks of South Africa) and Banco Comercial e de Investimentos (BCI), a Mozambican bank headed by former finance minister Abdul Magid Osman and partly owned by Caixa Geral dos Depositos of Portugal, which had been a bidder for BCM.

The Council of Ministers was split, but eventually preferred ABSA rather than allow the entire financial sector to be controlled by Portuguese banks. ABSA has experience with Commercial Bank of Zimbabwe (CBZ), which had a similar history to Banco Austral, including the need to more than double bad debt provision. In 1998 ABSA became a 26% shareholder of CBZ and provides technical support. The Zimbabwean government retains 20% of the bank and the International Finance Corporation (part of the World Bank) took 15%. ABSA turned the bank around, and Euromoney magazine twice voted CBZ the best domestic bank in Zimbabwe. CBZ maintains very close links to President Robert Mugabe. CBZ chief executive (CEO) is Gideon Gono, who said in August 2001 that "our role as CBZ is founded on deep roots of patriotism". Gono is described by the Financial Gazette as "the government's trouble shooter". He is head of the University of Zimbabwe, was recently appointed chair of the Zimbabwe Broadcasting Corporation, and is chair of Zimbabwe Children's Rehabilitation Trust, founded by first lady Grace Mugabe.

Neither ABSA nor BCI was actually proposing to take over the entire bank, as is. They did not want the burden of chasing up past debtors and thieves. In effect, they proposed to take the deposits, property and staff, but not the bulk of the loan portfolio.

The question is what happens to the rest. Those who robbed the bank, through fraud and bad loans, clearly hoped for closure of the bank, or the same deal as was done over BCM. Draw a curtain over the past, fill the hole, and begin anew. But Siba-Siba had been pursuing some of the better known bad debtors who had not been on the Notícias list.

On Saturday 11 August 2001 António Siba-Siba Macuácua was murdered and thrown down the stairwell of the bank's headquarters. Nevertheless, ABSA began its due diligence audit on schedule on Monday 13 August.

Siba-Siba and ABSA found evidence of corruption a high levels in the bank, and there were rumours of possible criminal prosecutions. It appears that Siba-Siba's attempts to clean up the bank had been too diligent, and someone was afraid he was not prepared to draw a curtain over the past. But what will be done with ABSA's new evidence?

There seems to have been corruption on both sides. The main records were kept on SBB's computer in Malaysia and as of early 2001, BdM still did not have access to them. Thus it is impossible to do a full reconciliation, and there are rumours that Malaysian interests may have siphoned off money from the bank. On the Mozambican side, one former banking official told us: "Banco Austral was run politically. There were bad loans, letters of credit without cover, transfers of money to ministers, and many favours to people. Decisions were taken by officials outside their mandates and which violated rules and procedures, and perhaps the law."

"In both Banco Austral and BCM, it is impossible for the board of directors not to know that frauds were occurring. This is public money, and there is a criminal responsibility," this senior banker said.
(Joseph Hanlon)

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metical - archives 2001