U.S. businessman may invest in Ematum – AIM report
US businessman Erik Prince, chairperson of the Frontier Service Group, has pledged to invest in the bankrupt Mozambican Tuna Company, Ematum.
At a Maputo press conference on Wednesday (to which AIM was not invited) Prince declared that his company will enter the Mozambican fisheries sector through Ematum, but did not state how many money he is prepared to invest.
Cited by the independent television station STV, Prince said “we are here to work and finalise details of a joint venture with the Mozambican government to develop and improve its fishing capacity in a sustainable, professional and ethical manner”.
He added that FSG would work with Ematum “in training operations and changes in logistics so that we link Mozambique to the international fisheries market”.
Prince said he also hoped to improve the protection of Mozambican marine resources against illegal operators.
“We know there’s a lot of illegal fishing”, he said. “We hope to improve Mozambique’s capacity to protect its fisheries. We have agreements in this direction, but the details have not yet been finalised, although we are very close to doing so. We shall also look at other investment areas in Mozambique”.
The largest shareholder in FSG s the Citic Group, an investment fund owned and controlled by the Chinese government. FSG has signed contracts to support China’s “One Belt, One Road” initiative. This is a strategy proposed by Chinese President Xi Jinping, which is supposed to promote cooperation between countries of the Eurasian land mass.
Prince is a founder of the US security company Blackwater (now known as Academi). Prince founded Blackwater in 1997 and was its chief Executive Office until 2010. It achieved notoriety in 2007 when a US court convicted four Blackwater employees of massacring 14 Iraqi civilians in Nisour Square, Baghdad.
Also Read: New China link to Ematum – Hanlon
Ematum is one of three companies (the others being Proindicus and MAM, Mozambique Assets Management) which benefitted from loans of over two billion US dollars from the European banks Credit Suisse and VTB of Russia in 2013 and 2014. These loans were illicitly guaranteed by the Mozambican government of the time, headed by President Armando Guebuza. The guarantees were illegal because they smashed through the ceilings on government guarantees laid down in the 2013 and 2014 budget laws.
Despite this huge injection of funds, the companies are not functioning and cannot possibly repay the loans. Under pressure from the International Monetary Fund (IMF), the government accepted an independent international audit of the three companies, undertaken by Kroll Associates, reputedly the world’s foremost forensic auditing company, earlier this year.
Kroll’s audit report is a damning indictment. It revealed invoicing procedures that were grossly inadequate. The invoices for the assets and services provided by the Lebanese Privinvest Group to each of the three companies were just a page long.
Kroll says it spoke to an industry expert who said invoices should include a clear and detailed description of all the assets and services provided. “The invoices provided to Kroll do not supply sufficient detail to gain comfort that the documents accurately reflect the true price of these assets and services, and therefore do not allow accurate accounting records to be maintained by the company”, the audit report notes.
There was no sign that the inventory of assets required by the Mozambican Commercial Code had been kept, and the companies failed to provide Kroll with reliable balance sheet records – in breach of Article 60 of the Code which requires companies “to prepare an annual balance sheet of assets and liabilities during the first three months of the immediately following year, to enter it into the inventory and balance sheet records, and to duly sign it”.
Regardless of the Kroll audit, the three companies had a legal duty to publish audited accounts every year. There are accounts for Ematum for the 2013 and 2014 financial years, but nothing for 2015 or 2016 (and nothing at all for the other two companies).
Kroll checked the state of the assets and found that, while they had mostly been delivered, they were not functioning properly. Ematum had a fleet of 24 fishing boats (21 longliners and three trawlers) “but none of the assets are fully operational for several reasons, including a lack of trained crew, and the limitation on available working capital”, Kroll said.
As a resultEmatum has done hardly any fishing, and has struggled to pay wages to its workers.
The government’s Economic and Social Plan for 2018, discussed earlier this week in the Mozambican parliament, the Assembly of the Republic, predicts that commercial vessels (i.e. Ematum) will fish 1,000 tonnes of tuna in 2018. The projection for artisanal fishermen, who do not have state-of-the-art fishing vessels builT in European shipyards, and have not benefitted from gigantic loans from European banks, is that they will bring in 2,870 tonnes of tuna.
Currently the Ematum vessels are not putting out to sea, but are lying idle in Maputo fishing port.