Killing the goose that laid the golden eggs (Part 10)
Foreign accounts

An important form of fraud was to siphon money out of foreign accounts, without it being noted in the records in Maputo.

All banks have links with what are called "correspondent banks" in other countries and these banks carry out transactions on the instructions of the initiating bank - making payments and collecting cheques and other due items. Banks in small countries keep foreign reserves in accounts abroad, usually in correspondent or parent banks. In the 1980s and up to the mid-1990s, before electronic banking became common, transactions were done by telex and followed up by paper confirmations. Anyone who has ever dealt with foreign transfers will know there is a high error rate, so there are always a large number of items in suspense accounts, and reconciliation is a genuine nightmare, even with good will.

The basic fraud here is to order a payment from a foreign account - against a telex, letter of credit, cheque etc - but to ensure that the payment does not appear on the books in Maputo. A gap grows between the amount people in Maputo believe is in an account in, say, New York and the amount which actually is in the account. But if no proper audit or reconciliation is done, no one ever knows about the difference. Thus it is important that no audit was done when BCM and BPD were initially purchased.

The "ex director of BCM" claimed in Savana that in May 1995, he detected a gap of $12 million between the accounts abroad and records in Maputo, which the KPMG audit had not noticed because there was a counter-entry in the suspense accounts. Other bank officials I have spoken to suggest that the gap was larger, and there are strong suspicions that in the era of António Simões more money disappeared in this way. In 1997 BCM allowed its foreign reserves to run down, paying bills in dollars from foreign accounts, but not buying dollars to replace the payments made. Eventually BCM and did not have enough dollars abroad to actually cover dollar deposits in Mozambique.

It was possible to take money from foreign accounts partly because of the secrecy surrounding the banking system and the involvement of key senior figures in the corruption. The potential for problems continues with BdM, the central bank, which probably has accounts abroad. BdM is audited by KPMG which should do reconciliations. But these audits are only given to BdM and the government, and are not public. So far, both KPMG and BdM have refused to talk with us. And we note that there are repeated claims that KPMG missed gaps in the foreign accounts of BCM.

We have argued in this series for the integrity of BdM in this process, but the murder of Siba-Siba shows the danger of depending on a handful of honest people. We must recognise in Mozambique that heavy pressure can be brought to bear on the most honest officials. Carlos Cardoso always argued for transparency as the solution. He suggested that the KPMG reports should be published or submitted to some outside body, perhaps an independent public auditor.
(Joseph Hanlon)

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metical - archives 2001