Mozambique’s auction of ‘tuna bonds’ fleet fails to attract single bid

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Mozambique’s post-election unrest has scuppered attempts to sell the rusting fleet of fishing trawlers at the centre of the $2bn “tuna bonds” scandal that sank the southern African country’s economy, after protests scared off buyers.

The auctioneers failed to attract a single bid for the 24 fishing vessels moored in Maputo’s main port, rust crawling down their hulls.

Prospective buyers from South Africa and Namibia had cancelled planned boat inspections last week amid ongoing protests in which at least 72 people have been killed.

There had also been interest from local “entrepreneurs,” said David Leal, the auction manager at the Leilosoc auction house running the process on behalf of the Mozambique government.

“Although there’s rust on the boats, the engines are still good. This is a very good deal for anyone that has a fishing company or wants to start one,” Leal said, adding that new auctions would be held once the political situation had resolved.

The vessels are the wreckage of one of Africa’s worst graft scams that forced the country to default on its debt and prompted the IMF to suspend direct budget lending.

Even if Mozambique, one of the world’s poorest countries, had managed to sell all of them at the reserve prices, it would have recouped just $10.6mn, less than 1 per cent of the money from a fraud that embroiled local politicians, an Abu Dhabi shipbuilder and Credit Suisse, the now defunct investment bank.

The ships were listed for auction at reserve prices of between $270,000 and $1.4mn.

Once one of Africa’s fastest-growing economies, Mozambique is still reeling from the fraud, which ultimately led to a government debt default in 2016 and pushed millions into poverty. Anger at economic hardship and growing inequality has spurred weeks of post-electoral protests since polls on October 9, with anti-riot police parked on the streets of Maputo on Wednesday afternoon.

After the discovery of 100tn cubic feet of natural gas reserves off its coast in 2010, the government embarked on a borrowing spree through shell state companies.

Credit Suisse and Russia’s VTB Bank were among those who helped arrange state-backed loans of $2bn in 2013, supposedly to help transform the fishing industry of a country that borders the Indian Ocean.  

But costs were vastly inflated and projects then looted, with US prosecutors alleging that $200mn went to paying bribes and kickbacks. 

Some of the trawlers were bought by the government for $22mn, while a report by auditors at Kroll later found that figure to be eleven times their real value.

The Kroll report also revealed the $2bn black hole in government finances, prompting the IMF and other donors to pull loans.

Mozambique settled with Credit Suisse, and the bank separately paid $475mn in fines and agreed to forgive a part of the debt in 2021. Manuel Chang, the finance minister who underwrote the bogus investments, was convicted of fraud in August by a US court.

In July, a London High Court ruled “substantially in favour” of a claim that the country was defrauded, and awarded more than $825mn in damages from Privinvest, the Gulf shipbuilder that sold the tuna fleet to Mozambique. Privinvest said it would appeal against the “unfair and unjustified” ruling, which it said was marred by the failure of President Filipe Nyusi’s government to disclose critical documents to the court.

Nyusi is still protected by immunity as a head of state.

The president’s Frelimo party, which has ruled Mozambique since independence in 1975, claims to have won October polls with 70.6 per cent of the vote.

Supporters of the main opposition candidate, Venâncio Mondlane, on Wednesday brought the capital to a standstill as they began a week-long shutdown, the latest in a series that has cost the economy millions of dollars, shuttering businesses and halting cross-border trade.

“A few of (the boats) were taken out for a spin when they were brand new, but they’ve just been sitting there ever since,” said Jeremias Volante, a fisherman who was repairing his modest yellow canoe on the sandy banks opposite the port.

“It’s such a waste — nobody ever thought to even rent them out to us.”