Killing the goose that laid the golden eggs (Part 9)
Foreign dealings and money laundering

What would be the interest of a foreign bank in taking over an existing Mozambican bank, or even of setting up a local bank? Mozambique is a tiny market compared to Portugal, South Africa or Malaysia, so there are few obvious short term profits to be made from normal banking operations.

There are three legal ways to profit from owning a bank in Mozambique. First is by the parent bank selling "technical assistance" to the Mozambican subsidiary. Second is by holding the foreign deposits of the Mozambican subsidiary, and paying less than the market interest rates. This makes a bank like BCM somewhat more interesting than it might otherwise be.

Foreign deposits 31 Dec 2000 (Mt 17,000 = $1)

Third is that the profit of all Mozambican banks comes from foreign exchange transactions, generated by the very high aid levels to Mozambique. For three profitable banks which published full reports, their entire profit came from foreign exchange dealings, and other operations lost money:

Profit from forex operations, 2000 (Year av. Mt 15,000 = $1)

Closely linked to foreign exchange operations is transfers of illegal money, known as "money laundering", and this is an important aspect of Mozambican bank corruption, according to all of the former bank officials we talked with.

"Laundering" is converting "dirty" or illegal money - bribes and kickbacks, money skimmed from aid contracts, income not declared for tax purposes, profits from drug dealing, and money stolen from the banks - into "clean" or legal money, eventually depositing it in a bank account, preferably abroad, where the money can actually be used. The millions of dollars from the Mt 144 bn fraud allegedly deposited in London had been "laundered", because it could be drawn from an account in a major British bank.

Money laundering is a major international issue, and banks are supposed to know that the source of large deposits and large transfers is legitimate before they are accepted. But a former bank official told us: "If you want to make a deposit, no one in Maputo will ask you where the money comes from."

Some of the money is initially in cash and so passes through the exchange bureaus, which are an important focus of bank corruption. Indeed, Mozambique imports $10 mn per week in banknotes, and some of it is exported in cash, literally carried out in suitcases. Diamantino dos Santos, the corrupt Maputo city prosecutor, alleged that Alberto Calú was selling "substantial quantities of forex to individuals in violation of exchange control laws." Calú was responsible for foreign exchange in BCM before privatisation and in the Simões era.

Money laundering and illegal transfers of money abroad have been an issue since the mid-1980s. One common form of money laundering, according to a senior bank official, is for a company to present an import document for, say, $2 mn. Money is legitimately authorised to be transferred abroad to pay the charges. But for a commission, the bank declines to stamp the original of the import document, so the importer can then go to another bank and make the same payment again, and then to a third bank. One bank actually questioned such a transaction by a well known trading company seen as being close to Frelimo, and the office of President Chissano intervened to resolve the problem, the banker said.

Writing in Savana (7 Apr 2000), an un-named ex-director of BCM claimed that in the early 1990s, BCM was involved in illegal transfers of funds abroad and in money laundering. Bankers also point to Banco Austral. Its main computer was the SBB computer in Malaysia; having the main computer outside the control of the Mozambican authorities would facilitate money laundering.

But it was violence in 1997 linked to Mozambique's first new private bank, Banco Internacional de Moçambique (BIM), that brought home the importance of the issue. BIM, which opened in 1995, is owned 50% by Banco Comercial Português (BCP), 25% by the World Bank's International Finance Corporation, 22.5% by the Mozambican state (Estado Moçambicano 8.75%, INSS - Instituto Nacional de Segurança Social 7.5%, EMOSE - Empresa Moçambicana de Seguros 6.25%), and 2.5% by Graça Machel's Fundação para o Desenvolvimento da Comunidade (FDC). BIM's President (PCA) is former Prime Minister Mário Fernandes da Graça Machungo and its Managing Director was from BCP, José Alberto de Lima Félix. Banking sources say that although Machungo is in overall control, most key day-to-day decisions are taken by Portuguese staff named by BCP.

"Private banking" is a branch of banking in which wealthy customers receive personal treatment and are helped to use offshore tax havens and other devices. Experts consider private banking one of the financial services most vulnerable to money laundering. Jorge Correia Rijo was director of private banking for BCP in Portugal, but he was dismissed in March 1997 and charged with fraud in August 1997. He is said to have diverted hundreds of millions of dollars, particularly from Angolans but also Mozambicans. He issued what looked like BCP receipts, but in fact kept the money for himself. The head of one Mozambican trading company is said to have lost $5 mn. Surprisingly, Rijo fled to Mozambique, where he seemed to be protected. In October 1997 he was involved in a suspicious accident when his car overturned near Xinavane. The ambulance that was moving him to a Maputo hospital was itself then involved in an accident.

The newly established BIM had quickly attracted substantial foreign currency deposits, in part because it was the first bank to allow withdrawals from non-metical accounts without advance notice. But the Rijo case raised questions about possible money laundering at BCP and BIM. The BCP-appointed Managing Director of BIM, José Alberto de Lima Félix, began looking more closely at this issue, and at the beginning of December found things which worried him. He was shot and killed in front of a friend's house on Av. Armando Tivane at 20.20 on 2 December 1997 - before he was able to tell anyone else what he had found. Three people were convicted of the killing, which was blamed on a botched car hijacking. Friends of Lima Félix and senior banking officials reject this and say he was killed because he had discovered something about money laundering.
(Joseph Hanlon)

[next article]
[back to the Introduction]

metical - archives 2001