Wednesday, November 30, 2016


Former Mozambican President Armando Guebuza on Monday testified before the parliamentary commission of inquiry set up to investigate the enormous government guaranteed loans granted by the European banks Credit Suisse and VTB of Russia to the quasi-public companies Ematum (Mozambique Tuna Company), Proindicus and MAM (Mozambique Assets Management).The loans date from 2013 and 2014, at the end of Guebuza’s second term of office as President. Taken together, the three loans amounted to over two billion US dollars (850 million for Ematum, 622 million for Proindicus, and 535 million for MAM).Because of the government guarantees, these loans added 20 per cent to Mozambique’s foreign debt. 
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The short repayment payment periods and the high interest rates the loans bear have thrust the Mozambican debt over the sustainability threshold, forcing the Ministry of Economy and Finance to inform creditors that, since the country cannot possibly meet the repayment schedule, these debts must be restructured.Under an agreement reached with the International Monetary Fund (IMF), Ematum, Proindicus and MAM are to be audited by the US company Kroll (the world’s foremost forensic audit experts) to find out what the money was spent on.Even before agreement was reached on the audit, the Attorney-General’s Office had begun investigating the three loans, and assistant Attorney-General Taibo Mocubora told reporters that signs of criminal behavior has been found.He gave no details, but this may refer to violations of the 2013 and 2014 budget laws. Every year the budget law contains a clause limiting the amount of loans that the government can guarantee. In the 2013 law that ceiling was the equivalent of 6.5 million dollars, and in 2014 it was raised to the equivalent of 515 million dollars. Cleary, guarantees for over two billion dollars are massive breaches of these ceilings.The commission of inquiry questioned Guebuza behind closed doors, and the former president did not speak to reporters. He met with the commission for about an hour.Guebuza arrived at the country’s parliament, the Assembly of the Republic, with the police escort to which he is entitled, as a former head of state. He was accompanied by several advisers, including former transport minister Gabriel Muthisse and a former chairperson of Mozambican public television (TVM), Armindo Chavana. Guebuza is the last person to give evidence to the commission, which has already questioned former finance minister, Manuel Chang, who signed the government guarantees for the loans. The Commission must now deliver its report to the Assembly, and the deadline for this is Wednesday. The Commission of Inquiry, chaired by Eneas Comiche, head of the Assembly’s Plan and Budget Commission. consists of 11 members, ten from the ruling Frelimo Party, and one from the opposition Mozambique Democratic Movement (MDM). The main opposition party, the rebel movement Renamo, is boycotting the Commission.Renamo said it would not join the commission unless it also contained non-parliamentary figures from civil society. Frelimo and the MDM believe that a parliamentary commission of inquiry must consist solely of parliamentary deputies, as specified in the Assembly’s own standing orders.The result of the Renamo boycott is that the MDM’s Venancio Mondlane is the sole opposition voice on the commission. 


As November slips to its end, there is still no consensual proposal on decentralization from the joint commission between the Mozambican government and the rebel movement Renamo.The international mediating team had hoped to submit this proposal to the country’s parliament, the Assembly of the Republic before the end of the month. But on Tuesday, the coordinator of the mediating team, European Union representative Mario Raffaelli, admitted that it might only reach the Assembly’s hands in December.Raffaelli admitted this delay when he spoke to reporters after an internal meeting of the mediating team, at which the former President of Botswana, Ketumile Masire, who has been absent from recent sessions, was brought up to scratch on the latest development.“November is an indicative date”, said Raffaelli. “There’s no problem if the document is delayed by three days. We shall do everything to send it”.The mediators drew up a proposal on decentralization in late October, and then left the country for a short period while the government and Renamo analysed the proposal, which centres on the issue of provincial governance, and how provincial governors should be appointed or elected.This month, the government and Renamo made their counter-proposals, and the mediators’ task is to attempt to weave these together into something that will enjoy consensus. Raffaelli confirmed that the mediators are still working on harmonizing the counter-proposals.“If we had already harmonized them, then we would have a full meeting of the Joint Commisison”, he said. In recent weeks, there have been no plenary sessions of the Joint Commission. Instead, the mediators have held separate meetings with each of the two delegations.The decentralization proposal is supposed to lead to constitutional amendments and to new, or revised legislation, which must be approved by the Assembly.As the days pass, the likelihood that the Assembly will be able to approve any part of the decentralization package before the end of the year is diminishing. For the current sitting of the Assembly is due to end on 20 December, and has yet to deal with several items that cannot be delayed, such as the 2017 government plan and budget, and President Filipe Nyusi’s State of the Nation address. 

Thursday, November 17, 2016

Mozambican exports to the US

Resultado de imagem para porta contentoresThe United States of America this week expressed its interest in continuing to support the Mozambican private sector in identifying and removing barriers that hinder exports to the North American market.Such was the sentiment expressed by the US African Export and Administration Policy Coordinator Florizelle Liser at a meeting with the Mozambican private sector in Maputo aimed at finding ways to overcome difficulties that domestic companies face exporting products to the North American market.Under the African Growth and Opportunity Act (AGOA), a US Government program to boost the sale of goods and goods produced in Africa, Mozambique can export 6,500 different products to the American market, but has taken little advantage of this opportunity opened by the American Government because of a number of factors.Among these, Paulo Fumane, a CTA adviser, singles out technical constraints related to the export chain itself and the demanding sanitary requirements imposed by the American market.
“In recent years, some sectors have reduced or almost stopped exporting to the American market. It is necessary to reactivate trade relations by seeking ways to remove the barriers, which are not tariffs but rather technical requirements in the export chain itself, together,” said Fumane.
He said that included in this perspective were processed as well as fresh products.
Fumane said that the US was willing to support the Mozambican private sector in removing barriers in order to increase in the volume of exports, and the US African Export and Administration Policy coordinator Florizelle Liser reaffirmed the US Government’s willingness to support the Mozambican private sector, noting that Mozambique had many products that it could export to the US duty-free but was not taking the opportunity.As a result, she said: “We had a meeting to see what we could do with the Mozambican government and private sector in order to increase the levels of trade relations.”A day before the meeting with the private sector the US representative met members of the Mozambican government to define a joint action plan aimed at promoting American investment in Mozambique and increasing trade between the two countries.The national director of external trade at the Ministry of Industry and Trade, Amílcar Arone, said that the government was continuing to work with the private sector to remove barriers and improve the business environment.

Capital for Montepuez graphite

The Australian company Metals of Africa on Monday announced that has raised just under seven million US dollars through a share placement to fund the development of its graphite projects in the northern Mozambican province of Cabo Delgado.In a statement, the company said that the shares were priced at an 8.2 per cent discount on the last closing share price. The funds will be used, among other things, for a feasibility study, early earthworks and mining camp construction, and pilot plant test work.
Resultado de imagem para montepuezAccording to the company’s managing director, Cherie Leeden, “this was a very heavily oversubscribed raising, which was strongly supported by existing shareholders. The high level of demand for the placement is a big tick for the work we’ve done to date at our graphite assets in Mozambique”.

She added, “the potential of the battery minerals industry is enormous and graphite is a key ingredient in all lithium-ion batteries, arguably the most important battery of our time. We are advancing high-quality projects in the best graphite province in the world”.Leeden also announced that the feasibility study at the Montepuez project will be completed in December.The Montepuez project contains an estimated 6.3 million tonnes of graphite and 163,000 tonnes of vanadium oxide. In addition, the nearby Balama project holds an estimated 1.7 million tonnes of graphite and 34,000 tonnes of vanadium oxide.Graphite is a form of carbon that is highly valued due to its properties as a conductor of electricity. It is used in batteries and fuel cells and is the basis for the “miracle material” graphene, which is the strongest material ever measured, with vast potential for use in the electronics industries.

Mozambique & Tanzania “transform global LNG market”

Imagem relacionadaOver the next five years, capital expenditure is to be cut by US$100 bn in Sub-Saharan Africa, including exploration cuts will contribute to 46% oil production decline by 2030.According to Wood Mackenzie’s latest report on upstream activity in the region, capital investment in the oil and gas industry in Sub-Saharan Africa has been cut by US$100 billion over the next five years. Major oil companies are heavily invested in Sub-Saharan Africa and account for the bulk of cuts. Governments in Sub-Saharan Africa need to revive the industry with attractive fiscal terms but so far, East Africa’s emergence as a major global gas region is the industry’s biggest recent success in Sub-Saharan Africa. Femi Oso, senior research manager for Sub-Saharan Africa at Wood Mackenzie, says: “Exploration cuts in the region will also contribute to a longer-term production slump as explorers have shied away from greenfield prospects, in favour of appraising known discoveries. However, the confirmation of the giant Owowo discovery in deepwater Nigeria shows the quality of resources Sub-Saharan Africa still has to offer.” Wood Mackenzie expects a slow recovery for exploration. Operators will benefit from cost deflation and will improve efficiency through streamlining project design.
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Governments in Sub-Saharan Africa need to revive the upstream oil and gas industry by offering attractive fiscal terms rather than look to increase state revenues in the current climate,” says Oso.Mozambique and Tanzania. The biggest upstream success story in Sub-Saharan Africa is East Africa’s emergence as a gas region of global importance. With over 168 trillion cubic feet of gas found and limited regional demand, East Africa is on track to become a major global LNG supplier and various export projects are awaiting final investment decision.According to Wood Mackenzie’s research, Mozambique and Tanzania gas project economics are resilient and will “transform the global LNG market”.“Mozambique and Tanzania’s LNG projects have remained relatively unscathed by cuts and will be timed to align with global LNG demand growth to achieve a better price,” explains Oso. “The projects will appeal to buyers looking to diversify their portfolios and BP has already committed to offtake all volumes from Eni’s Coral FLNG,” he adds.“The expected increase in gas production in Sub-Saharan Africa, from 6 bn cubic feet a day (bcfd) currently to 13 bcfd next decade, is very good news for the region.”

Airlink extends connections

Airlink has confirmed it will be extending its Lowveld ‘Lodge Link’ safari lodge network in partnership with andBeyond.The airline says its extensive network will provide daily connections between a number of andBeyond properties in Timbavati, Sabi Sand and Phinda Private Game Reserve.The Lodge Network will also provide direct connections with Airlink’s regional services from Nelspruit KMIA to Mozambique and Livingstone in Zambia, which provides access to andBeyond Matetsi Private Game Reserve.Seamless connections can be made from Cape Town and Johannesburg on Airlink to Nelspruit KMIA or Skukuza Airport with a short apron transfer connecting guests onwards to Airlink’s Lodge Link service direct to their safari destination, minimizing lengthy road transfers.

Resultado de imagem para interior Cessna Grand Caravan 208BEX Added to this the airline says the IATA booking codes will be available for travel agents to facilitate booking from New York to Ngala and Paris, giving added flexibility for multi-sector international traveller’s to include Cape Town, Kruger, Victoria Falls and the Okavango Delta.The flights were made available for booking on 7 November 2016 for operations commencing 2 June 2017, which due to the extensive advance booking window of African safaris will allow sufficient time for planning of itineraries and packages.Airlink says its Lodge Link flights are operated with brand new twin pilot Cessna Grand Caravan 208BEX 12 seater turbo-prop aircraft, which are equipped with advanced avionics essential to achieving reliable performance during the low cloud weather for which the Lowveld is renowned.

Inhambane aerodrome at risk of being closed

The National Civil Aviation Institute may, at any moment, close Inhambane city’s aerodrome due to lack of security for landing and takeoff of aircraft, reports Noticias.The reason is the invasion of the airport surrounds, which are reserved for the aerodrome,  by the local population for the purpose of building houses.According to provincial director of Transport and Communications, Acissa Márcia Carimo, more than 400 homes, ranging from conventional houses to shacks, have been built nearby, compromising the view of the runway.Following visits to the airport, Carimo told the governor of Inhambane province, Daniel Chapo, on Thursday that the security department of the Civil Aviation Institute had expressed concern over the untrammelled occupation of the reserved and prohibited area as a threat to the security of aircraft manoeuvres.
Resultado de imagem para aeródromo inhambane“The Inhambane airport is in serious danger of being banned because of the danger resulting from the proliferation of homes. There are many facilities around, for which the owners are now requesting the supply of electricity and water,” Carimo complained.The Inhambane governor promised to launch awareness-raising among the institutions involved to avoid the transfer of land and granting of housing construction permits in the area.Chapo said that everything would be done to prevent the city of Inhambane, one of the tourism hotspots of the country and the region, from having domestic and regional air connections cut.“The institutions managing urban land will be urged to correct mistakes and take urgent measures to discourage anything which jeopardizes security at Inhambane airport,” the governor promised.Data obtained by ‘Noticias’ and confirmed by the airport manager, indicates that 3,000 meticais is being charged for land for housing in the reserved airport surrounds, and that the alleged vendors of plots live in the area and have connections with some Inhambane Municipal Council officials.

Friday, November 11, 2016

Tobacco Control

Resultado de imagem para CIGARRO MOCAMBIQUEThe Mozambican parliament, the Assembly of the Republic, on Wednesday voted unanimously to ratify the World Health Organisation’s Framework Convention on Tobacco Control.The Convention dates from 2003, and Mozambique signed it in that year. But of the African signatories to the convention, all, except Mozambique and Ethiopia, have ratified it by now. Of all the 15 member states of the Southern African Development Community (SADC), only Malawi has not signed the convention.To date, 179 countries have ratified the convention, including major tobacco producers such as Zimbabwe and Brazil.Introducing the ratification proposal, Health Minister Nazira Abdula said “tobacco is the only legal product which kills half the people who use it”.She said that, despite its delay in ratifying the convention, Mozambique had taken a series of measures intended to reduce smoking – these include a ban on smoking in all public places, and a ban on tobacco advertising. The current estimate if that 16.7 per cent of adult Mozambicans smoke.In recent years tobacco has become a significant cash crop in Mozambique. Despite this, the cigarette industry in Mozambique, Abdula said, is not opposed to ratifying the convention. She added this did not mean that the government was in discussions with the cigarette industry or had any connection with it.One aspect covered by the convention is the provision of alternative activities work people dependent on the tobacco industry. Abdula said this would mean alternative crops, offering the same level of income to farmers as tobacco.The Convention urges all its signatories to take measures to reduce tobacco consumption, including pricing and taxation measures, advertising bans, and health warnings on cigarette packets.The ratification proposal was entirely uncontroversial, and was thus passed unanimously and by acclamation.

“Mozambique needs to eliminate ‘hate walls’”

Resultado de imagem para graça machelOn Thursday 27 October, social activist and former first lady of Mozambique, Graça Machel, argued that Mozambique needs to eliminate the “hate walls” in society, warning that political intolerance has already begun to enter the villages and it is “extremely dangerous”.
“This conflict, the way it is being unleashed, especially in recent times, when you kill a secretary of the neighbourhood, it is no longer only on a political level, is already entering the village and this is extremely dangerous”, said Machel.Stressing the need for the country to start paving the way for reconciliation as a way to end the political and military crisis, Machel said that Mozambicans need learn to live with differences.
Resultado de imagem para graça machel“When we disagree, we shall say so, but we will not kill each other”, said the first minister of Education in Mozambique after independence, adding that to overcome the political crisis, the country will need to do the impossible.
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“We have to look at each other with the same sense of common belonging and destiny”, said Machel, reiterating the need to immediately stop military confrontations, which have already killed an unknown number of people.For Machel, Mozambique needs to reinvent its own social models, respecting the dynamics and demands of new times, in a climate of tolerance and transparency to ensure the future of Mozambicans.On the subject of the current economic challenges facing the country, Machel said that the issue of hidden debt,contracted between 2013 and 2014, reached “alarming proportions”, calling attention to the fact that the political leaders in Mozambique are becoming increasingly distanced from the people. “From a certain point, we tolerate this way of doing things [corruption] and accepted this way of life as normal”, lamented the Mozambican activist, adding that under these conditions, it will take the country more than 50 years to emerge from poverty.

Kimberley Process looking to add Mozambique as... .

Kimberley Process (KP) chairperson Ahmed Bin Sulayem, has met with Mozambique President Filipe Nyusi to discuss the country’s compliance with KP requirements, as well as best practices in rough diamond valuation.Mozambique is not currently a member of the KP, but has been an aspiring candidate since it presented its membership portfolio in 2012. Following the discovery of diamonds earlier this year in the Massangena district of the Gaza province, local authorities have undertaken efforts to garner more support for its KP candidacy to get clearance to export conflict-free diamonds.While the country’s economy remains heavily dependent on agriculture, accounting for around 25% of gross domestic product, the export of precious metals and gemstones is emerging as one of the country’s major economic pillars. The discovery of diamonds will add to this vibrant sector, but the size of the Mozambican diamond resources remains undeclared for security reasons.The country currently faces difficult headwinds that are further aggravated by a regional drought, falling investments levels and rising debt levels.
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According to the ‘Mozambique Economic Update’ report, foreign direct investment (FDI) fell by 24% in 2015, exports declined by 14%, and growth decelerated to 6.3%. There is a need for FDI to accelerate the country’s significant, untapped potential.Several international mining companies have joined the country’s diamond exploration rush and, as such, receiving the KP stamp of approval would allow the country to export diamonds and spur its economic growth.“For years, the precious metals and gemstones sectors have been among the main drivers of the country’s growth and given the challenging economic conditions today, it is now more important than ever to extend our support to the Mozambican leaders to help them meet the KP Certification Scheme requirements.“At this stage, it is critical to ensure they have a firm understanding of best practices in rough diamond valuation thus stimulating better returns for the local population and miners, as well as provide them with a fair share of the country’s newly-found wealth,” said Bin Sulayem.In a bid to strengthen the country’s KP candidacy and support its application, the Maputo government has approved a number of measures that will come into effect on November 20. These include the creation of a supervising agency, the KP management unit, and a decree which regulates diamond, precious metals and gemstone sales.Bin Sulayem is currently traversing the continent to enter into dialogue with African countries around the rough diamond trade and strengthening the KP’s mandate.

Assembly passes bill on Cinema

The Mozambican parliament, the Assembly of the Republic, on Thursday unanimously passed a government bill on cinema and audio-visual production.In its justification for the bill, the government said that existing legislation did not stipulate what obligations the state and private business have towards cinema “in the face of the multiple and recurrent transformations, resulting from the development of new information technologies”.Without local support, Mozambican filmmakers resort to foreign sponsorship or international co-productions. The government noted that this “puts conditions on the content of films, thus limiting the freedom and creativity of our directors”.The bill thus declares that the state will promote Mozambican cinema and other audio-visual arts. It will create incentives, and promote investment in small and medium enterprises in this area.
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The state, the bill says, must also “create support mechanisms for the distribution and promotion of Mozambican audiovisual and cinema works on the national and international markets”.
The distribution, sale or rent of films or other audio-visual materials for commercial purposes will be subject to a licence issued by the National Audiovisual and Cinema Institute (INAC). To prevent piracy all audiovisual works must bear a sticker and a hologram, and the companies distributing videos, DVDs and the like will be subject to regular inspection to ensure that their wares bear the sticker and the hologram.Many of the bill’s provisions (including the sticker and hologram) are already in force, as the result of scattered earlier regulations. But they have proven ineffective in preventing informal vendors from hawking unlicensed DVDs on the streets.

The bill does not even mention the internet – but nowadays the main problem filmmakers face is that people download videos from the internet at almost zero cost. It is this that has driven once thriving video clubs out of business, and there is little that the cinema business or the government can do about it.One Mozambican filmmaker, interviewed by AIM, gave the bill a cautious welcome, since it will at least compel the state to provide some support for the Mozambican cinema industry.The bill was entirely uncontroversial and so passed its first reading unanimously and by acclamation. It will now be amended in committee, before a second and final vote in the Assembly plenary next week.

Wednesday, November 9, 2016


A senior official in the Mozambican Ministry of Mineral Resources and Energy has denied rumours that the country is about to run out of fuel.Speaking to reporters on Monday, in an interval during a regional seminar on reducing the sulphur content of liquid fuels, the National Director of Hydrocarbons and Fuel, Moises Paulino, dismissed rumours in social media that the country’s reserves of fuel will soon be exhausted because the importing companies cannot pay the suppliers.Paulino said there is plenty of fuel in the reserves in the country’s three main ports, and resupplying is continuing to occur normally.“In the Maputo oceanic terminal we have a reserve margin of 20 to 25 days until the next resupply ships arrive”, he said. “In Beira there are reserves for 15 to 20 days, and in Nacala the quantities available are enough for the same period”.He also denied the social media rumour that there are tankers anchored in the ports which are not unloading their cargoes because the Mozambican state fuel company, Petromoc, is unable to give guarantees of payment.Paulino pointed out that the fuel distribution network in Mozambique is owned by several companies and not just Petromoc. He insisted that there is no interruption in supply.Paulino put total imports of liquid fuels at 1.2 million cubic metres a year, an amount which has been increasing as the number of vehicles on Mozambican roads increases.

Kool & The Gang in Maputo


The Mozambican branch of the Coca-Cola company has just put up its prices for the second time in just over a year.There was no public announcement, but the Coca-Cola director of public relations and communication, Francisco Ferrao, confirmed to the independent newssheet “Mediafax”, that the prices of some of his company’s products rose as of 1 November. 
Resultado de imagem para coca colaThus a pack of six two litre plastic bottles of Coke and of the other soft drinks produced by the company has risen in price by 7.8 per cent, from 320 to 345 meticais (4.2 to 4.5 US dollars). The retail price for a two litre bottle is now 75 rather than 65 meticais, a 15 per cent rise. (However, many retailers chose to ignore the recommended retails price, and were already selling the two litre bottles for 70 meticais).The price of the packs of 24 330 millilitre cans of coke rose from 520 to 600 meticais (15.4 per cent). The retail price for an individual can goes up from 25 to 30 meticais (a 20 per cent rise).The price for glass bottles of coke remains unchanged. Thus the price of a 300 millitre bottle stays at 15 meticais, while the slightly larger, 350 millilitre bottle, still costs 20 meticais.In the last price increase, in October 2015, it was the glass bottles of soft drink that rose in price, while the cans and the two litre plastic bottles remained untouched. The new price rise contradicts a promise given by Coca-Cola two months ago that no further price increases were being planned. Ferrao justified the rise by the depreciation of the metical against the US dollar and the South African rand, which is driving up the price of the imported materials the company uses. He claimed that, even with the increases, the prices of the drinks are below what the company would regard as ideal.Asked why there had been no change in the price of the drinks sold in glass bottles, Ferrao said that, because the glass bottles are returnable, they are cheaper than cans or plastic.

Friday, November 4, 2016


Resultado de imagem para embraer erj-190 cockpit
At least two Mozambican officials, including the then chief executive officer of Mozambique Airlines (LAM), were involved in taking a massive bribe from the Brazilian aircraft company, Embraer, according to documentation from the United States Securities and Exchange Commission (SEC). On 24 October, the US Department of Justice issued a very summary account of the charges Embraer faced in connection with bribes offered in four countries – India, Dominican Republic, Saudi Arabia and Mozambique. It said the Mozambican bribe was paid via what it described as “a false agency agreement with an intermediary designated by a high-level official” in Mozambique Airlines (LAM).
But Embraer was also taken to court by the SEC, and the SEC complaint against Embraer is much more detailed, although, like the Justice Department, it does not name the guilty parties. On Mozambique, it gives a blow by blow account of how, between May and September 2008, Embraer negotiated the sale of two of its aircraft to LAM. The sales price was 65 million US dollars, but Embraer also ended up paying a bribe of 800,000 dollars.SEC says that “on or around 13 August 2008, a Mozambique national (referred to as the “Mozambican Agent”) told at least one senior Embraer employee that Embraer should make ‘a gesture’ to unidentified officials in the government of Mozambique when delivering the first aircraft”. The Embraer staff involved in the negotiations believed that “the Mozambican Agent was well connected with officials in the government of Mozambique”.This unnamed agent, the SEC document continues, “did not have any legitimate role” in the negotiations between Embraer and LAM: “instead, he appeared to be acting as a middleman or agent for the government officials involved in the deal, and Embraer officials believed they needed to pay the Mozambican official in order to win the contract”.So senior Embraer officials “approved an offer to the Mozambican agent of between 50,000 and 80,000 dollars per aircraft sold, even though the Mozambican agent had not rendered any legitimate services to Embraer during the negotiations”.
But this bribe was too small, and so, on or around 25 August 2008, the then LAM chief executive officer “called an Embraer sales employee and suggested that a one million dollar ‘gesture’ to the Mozambican agent would be appropriate, but that Embraer could ‘get away’ with only paying 800,000”. Then came a menacing warning – this official threatened “to torpedo the ongoing negotiations with Embraer by giving a competing bid priority over Embraer’s bid”. In other words, without the bribe there would be no sale.The threat clearly worked, since on 15 September, Embraer signed the 65 million dollar purchase agreement for the two aircraft. The official who made the threat was one of three LAM executives who signed the agreement.To make the bribe look legitimate, the Mozambican agent set up a phoney company in Sao Tome and 
Principe through which the bribe was channeled. SEC found that “on or around 22 April 2009, Embraer’s US-based subsidiary, Embraer RL, executed a consulting agreement with a company based in Sao Tome and Principe which the Mozambican agent controlled and which had only been incorporated in or around November 2008”.The agreement authorized this company, referred to by SEC as “the Mozambican Consultant” to promote sales of the Embraer-190 aircraft to LAM “even though the sale of such aircraft had been completed seven months earlier”. The agreement stated that “the Mozambican Consultant” had begun promoting the Embraer aircraft to LAM in March, even though “the Mozambican Consultant” did not even exist at that date.
Resultado de imagem para linhas aereas de mocambique
Embraer RL then agreed to pay 400,000 dollars per aircraft – exactly the 800,000 dollar bribe mentioned in August 2008. This agreement was signed by two Embraer executives, while “the Mozambican Agent who had initially proposed the bribe payment as ‘a gesture’ signed the consulting agreement on behalf of the Mozambican Consultant”. The Mozambican Consultant, the SEC found, submitted two invoices to Embraer RL, each for 400,000 dollars, and dated 15 August and 25 September 2009. The invoices were both paid to the Mozambican Consultant’s bank account in Portugal. SEC notes “these payments bore no relation to any legitimate services rendered in Mozambique, and were bribes to foreign government officials”, although in Embraer’s accounts they were described as “Sales Commissions”. 
Resultado de imagem para linhas aereas de mocambiqueNone of this is in dispute. Just as in the cases of the illicit payments in India, Saudi Arabia and the Dominican Republic, Embraer made no attempt to deny that it had paid the bribe.Because it is quoted on the New York Stock Exchange, Embraer falls under US jurisdiction, and had to answer to the US Justice Department and to the SEC. The Justice Department says that Embraer entered into a three-year deferred prosecution agreement (DPA) to resolve the case. As part of the DPA, Embraer admitted to its involvement in a conspiracy to violate anti-bribery and books and records provisions and to its ”willful failure to implement an adequate system of internal accounting controls”. 
Resultado de imagem para cockpit embraer 190 LAmThe Justice Department fined Embraer 107 million dollars, and its settlement with the SEC cost it 98 million dollars. Embraer will pay the Brazilian authorities 20 million dollars.The Brazilian authorities have charged 11 individuals for their alleged involvement in Embraer’s bribery in the Dominican Republic, while the Saudi authorities have charged two individuals for their alleged involvement in similar offences in Saudi Arabia. Nobody has been charged in Mozambique, and none of the Mozambicans involved have so far not been named. Last week, Deputy Attorney General Taibo Mocubora told a Maputo press conference that Mozambican prosecutors will investigate. Doubtless if the Attorney-General’s office were to approach the US authorities, it could obtain more relevant information on the case, including the names of those involved.

Thursday, November 3, 2016

Gemfields and the ruby revolution in Mozambique

In the Maninge Nice pit, the ground is literally littered with rubies. They sit in among the dirt, throwing up glints of red and pink. We play a somewhat novel game – who can collect the most stones in the space of a few minutes – but it’s too easy. I get to a handful before becoming steadily distracted by the magnitude of it all.
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I am with a group of journalists in Mozambique’s northeastern Cabo Delgado Province, at the Montepuez Ruby Mine. Lauded as the most significant ruby-deposit discovery of recent times, about 50 per cent of the world’s ruby supply now comes from this mine. "Montepuez Ruby Mine covers over 33,000 hectares, making it the world’s largest ruby deposit," explains Rupak Sen, director of marketing and sales, Asia and Middle East, for Gemfields, which owns a 75 per cent stake in the mine. "Although the deposit was only discovered in 2009, the rubies at the Gemfields Montepuez deposit have been established as approximately 500 million years old."
To boot, some of the rubies found here are of a quality previously only thought possible in gemstones from Myanmar. "They are comparable with the legendary ‘pigeon blood’ rubies of Myanmar, which frequently command the highest price per carat of any coloured gemstone," says Sen.
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Getting to the mine is no easy task, of course. There are flights from Dubai to Tanzania and then onto Pemba, on Mozambique’s northern coast – where a tiny airport and convoluted entry process highlight the area’s limited number of tourist arrivals – and then a lengthy drive that takes us through acres of untamed land, past abandoned colonial-era buildings and villages made of mud huts.
The following morning brings expansive horizons and clear, uninterrupted blue skies – the kind that seem specific to Africa – along with a tour of the Montepuez Ruby Mine. It’s a revelation. The mining industry has a notoriously bad reputation, but here we are greeted with signs such as: "Stop, think, act" and "Safety awareness saves lives", highlighting Gemfields’ aim of operating a zero-accident mine.
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Every employee we see is appropriately dressed and equipped; and there is only minimal visible damage to the landscape, courtesy of Gemfields’ practice of filling in old pits as mining teams move along, replanting local plant species to bring verdant cover back to the land. We contribute to this process during our stay, with each member of the group planting a tree as a marker of our time spent here.
Rubies were first discovered in Montepuez in 2009. As the story goes, a man working the land, which was formerly a hunting concession, happened across one of the red stones. Given the volume of rubies that we see during our trip, it seems incredible not that they were discovered, but that they managed to remain hidden for so long. The local owners of the land contacted Gemfields; they had heard about the success of the company’s ethically operated emerald mine in Zambia and wanted to replicate the model in Mozambique. Gemfields acquired a 75 per cent stake in the mine and arrived on-site in 2012.
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The team remembers trying to decide where to place their camp. They picked a spot, started digging a hole for the latrine and promptly unearthed handfuls of rubies. The jokingly dubbed "million-dollar toilet" stayed, and is now flanked by the Sort House, but the camp was moved farther away.
The sheer number of rubies here makes the mining process relatively straightforward. This is open-pit mining – in simple terms, mountains of rich red earth are scooped up in enormous diggers, transported to the wash plant and processed. The rubies are then picked out from the resultant gravel by hand.
Mining may be a controversial business, but there’s magic in it, too. There is something indescribable about picking up a ruby and knowing that it has sat under the Earth’s surface for hundreds of millions of years – that you are the first person to ever touch it.
While diamonds have dominated the market for the best part of the past century, rubies have been coveted by certain cultures throughout the ages. "Rubies were treasured by early cultures as they represented the redness of the blood that flowed through their veins, and many believed that rubies held the power of life and so were often carried into battle for protection," says Sen. "In fact, the ruby has always been highly esteemed in Oriental countries, being regarded as endowed with extraordinary powers. As western empires rose to power, rubies became the favoured gemstones of European royalty and aristocracy.
Resultado de imagem para rubis pemba"However, the advent of feisty diamond marketing, backed by consistent supply, in the past three or four decades, took coloured gemstones to the background, while diamonds took centre stage. This is now changing, with leading jewellery brands like Chopard, Bvlgari, Cartier et al launching exclusive coloured-gemstone collections, and with increasing incidence of ruby and emerald jewellery being sported by celebrities around the world."
If the tide is turning, Gemfields must be given its dues. It can now offer a consistent supply of rubies to manufacturers and polishers, with the promise that they have been ethically sourced and are of a guaranteed quality. Much as it did with emeralds in Zambia, the company has also created the first official classification system for rubies, which in addition to the standard four Cs (colour, clarity, cut and carat) that will be familiar to any diamond buyer, includes two other Cs: certification and character.
Resultado de imagem para rubis pembaBeyond logistics, Gemfields’ global marketing campaigns are contributing to creating an aura of covetability around coloured gemstones once again. Its latest marketing campaign, Ruby-Inspired Stories, offers a triptych of films that explore three properties that rubies have long been associated with: passion, prosperity and protection.
In fact, unbeknownst to many, rubies are much rarer than other precious stones. At present, the world ruby supply consists of about three million cut and polished carats per year, compared to about five to eight million for emeralds and 50 million for diamonds, according to Ian Harebottle, chief executive of Gemfields.
But the company’s aim is not for coloured gemstones to overtake or replace diamonds in the public consciousness, but to create more balance and choice in the market. "The decade starting 2015 was actually billed as the decade of the coloured gemstone," says Sen, when asked whether he envisages a time when coloured gemstones will surpass diamonds in popularity. "Every time a consumer buys a coloured gemstone, diamonds are sold alongside. Coloured gemstones and diamonds complement each other, and that’s the way it will always be," he says.
Resultado de imagem para rubis pembaGemfields held its first ruby auction in Singapore in June 2014, and generated US$33.5 million (Dh123m). At its latest ruby auction in June, the company generated record revenues of $44.3m (Dh162.7m), with an average realised price of $29.21 (Dh107) per carat.
There is much talk during our time in Mozambique about the "1 per cent". Not the 1 per cent, that top layer of society that holds a disproportionate share of global wealth (although that is an unfortunate parallel) – but the 1 per cent of Gemfields’ annual revenue that it donates to CSR initiatives. The number feels small to me – as small as it can be, almost.
I put this point to Harebottle. "Our commitment is a minimum of 1 per cent," he says. "We are working with a luxury good in unstable economies. We are very fortunate that through our efforts we are constantly growing, but there are no guarantees. When I make a commitment, I have, to the very best of my ability, barring any major catastrophes, to be sure that I am able to keep that commitment."
The point, of course, is that whether you are talking about 1 per cent or 100 per cent, sustainability needs to be sustainable, or else it is entirely counterproductive. "When people ask me about our investment in sustainability, I say: ‘The one thing I can tell you is it doesn’t mean we are perfect and it doesn’t mean we are doing enough.’ I’ve lived in Africa and I know there is not a company or individual in the world that can do enough, because the needs are so great.
"The one thing I do know, 100 per cent, is that the areas we are in are better for us being there. We’re doing the best we can, recognising it’s not enough and constantly trying to do better."
And I am reminded on numerous occasions how even one per cent can make a major difference in a place like Mozambique. We visit some of the projects that the company is investing in – they are very real grass-roots initiatives. "After collaboration with the local community, a farming association was recently formed producing beans, okra and various other vegetables. Currently, most of the produce is being bought back by the company, where it is purchased at market prices and used for the sustenance of its own employees," Sen explains. "A poultry-farming cooperative has been formed at a nearby village with a view to further empower women in the area. Going forward, initiatives based around education (including a new skills and development centre), health care and the provision of clean drinking water will also be put in place. Conservation is also a focus."
Resultado de imagem para rubis pembaBeyond this, by implementing a professional, transparent, legal mining process, Gemfields is taking the trade of Mozambican rubies out of the hands of illegal syndicates, which exploit poverty-stricken members of the community, by driving them to partake in hazardous and illegal mining work, and paying them a fraction of the gemstones’ true worth. Illegally mined rubies are then smuggled out of the country. Gemfields, on the other hand, will argue that it is able to achieve the best prices for the stones, and pays taxes and royalties to the Mozambique government (MRM is responsible for about 20 per cent of the corporate tax in the Cabo Delgado Province), while also creating employment and job security for members of the local community.
In a perfect world, Gemfields would not be an anomaly. Its ethical approach to mining would be the industry norm. But we do not live in a perfect world, so Gemfields must be lauded for its efforts. It is the only supplier of coloured gemstones that has built a holistic business model that places importance on people and the planet, as well as profit. It is introducing transparency in an industry where, traditionally, there has been none.For the first time, you can buy a ruby and know exactly where it has come from, and that it was mined in a way that is respectful of local populations. And in this imperfect world, that’s basically priceless.
*Read this and more stories in Luxury magazine, out with The National on Thursday, November 3.