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Viewing cable 10MAPUTO86, XXXXXXXXXXXX TALKS OF CORRUPTION AT THE

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Reference ID Created Released Classification Origin
10MAPUTO86 2010-01-28 06:06 2010-12-08 21:09 SECRET//NOFORN Embassy Maputo
VZCZCXRO0006
RR RUEHBZ RUEHDU RUEHMR RUEHRN
DE RUEHTO #0086/01 0280621
ZNY SSSSS ZZH
R 280621Z JAN 10
FM AMEMBASSY MAPUTO
TO RUEHC/SECSTATE WASHDC 1221
INFO RUCNSAD/SOUTHERN AFRICAN DEVELOPMENT COMMUNITY
RUEHLO/AMEMBASSY LONDON 0605
RUEHLMC/MILLENNIUM CHALLENGE CORP WASHINGTON DC
RHEFDIA/DIA WASHDC
RHEHNSC/NSC WASHDC
RUEAIIA/CIA WASHDC
S E C R E T SECTION 01 OF 03 MAPUTO 000086 

NOFORN 
SIPDIS 

E.O. 12958: DECL: 01/28/2020 
TAGS: PREL PGOV KDEM KMCA MCC SNAR EINV MZ
SUBJECT: XXXXXXXXXXXX TALKS OF CORRUPTION AT THE 
HIGHEST LEVELS OF GOVERNMENT 

REF: A. MAPUTO 80 
B. 07 MAPUTO 1395 

MAPUTO 00000086 001.2 OF 003 


Classified By: Charge d'Affaires Todd Chapman for reasons 1.4 (b+d) 

1. (S/NF) SUMMARY: The Charge recently met with XXXXXXXXXXXX
--("the source") who described his frustrations with FRELIMO, President
Guebuza, and Mohamed Bashir Suleiman (MBS). He complained that
they exercise  complete control over the licit and illicit economy of 
Mozambique. The source, who has excellent connections within 
the Government of Mozambique (GRM), including the private  number
of the President, as well as a personal relationship  with MBS,
said "I do not want to do business anymore in Mozambique
“ because of this triumverate of control. He is liquidating his
assets and leaving Mozambique, and says that he now sees
the "malaise" in Mozambique as if "he had cataracts
 but now see it all." 
2. (S/NF) The source describes President Guebuza, who he 
has known and befriended for the past twenty years as a 
"vicious scorpion who will sting you," and has an even more 
grav assessment of MBS. He cautions that FRELIMO is not 
interested in bettering the life of Mozambique's citizens, 
but rather its self-enrichment. In the licit economy, the 
ruling party, FRELIMO, and MBS work in tandem to control the 
legal and illegal economies and restrict the space for 
private sector growth by demanding a cut of all significant 
business transactions. In the illicit economy, MBS dominates 
money laundering and drug transshipment, providing kickbacks 
to FRELIMO. Other key players involved in pressuring the 
business community for bribes or percentage stakes, according 
to the source, are Domingos Tivane, head of Customs, and 
former Prime Minister Luisa Diogo. END SUMMARY. 
----------------------------------- 
MOHAMED BASHIR SULEIMAN AND GUEBUZA 
----------------------------------- 

3. (S/NF) The source XXXXXXXXXXXX. He speculated that 
over the next  term Guebuza would use his business proxies
to amass a still larger personal fortune. Guebuza manages his 
business interests through several front companies, including 
Celso Ismael Correia's Insitec and Salimo Abdullah's Intelec 
Holdings. The source said that MBS meets directly with 
President Guebuza, who has direct knowledge of MBS' funding 
to both the FRELIMO party (underwriting the recent election 
campaign) and Guebuza's front companies. The source, who 
described Correia as a "30 year-old pipsqueak," stated that 
Correia has no business experience or university degree, but 
shows great loyalty to Guebuza. 

4. (C) Guebuza's business interests in Mozambique are 
legion. They include stakes in Mocambique Gestores (MG), 
Maputo Port Development Company (MPDC) which runs Maputo 
Port, Focus 21, Navique, Vodacom, and SASOL. Guebuza also 
has a share in Maputo Corridor Logistics Initiative (MCLI) 
which controls the toll road from Maputo to South Africa, 
according to the source. Guebuza has shares in a significant 
number of banks, including BCI Fomento (where Correia is 
Chairman), Mocambique Capitais, Moza Banco, and Geocapital. 
Through family members, Guebuza also controls Intelec 
Business Advisory and Consulting, Beira Grain Terminal, MBT 
Construction Ltd, Englob Consultants Ltd, Mozambique Power 
Industries, Macequece Ltd, and Mozambique Natural Resources 
Corp. 

5. (S/NF) One new area that Guebuza appears to be 
interested in is the gaming industry. The source says that 
Guebuza forced the Constitutional Council (CC) to review and 
declare a recent law liberalizing the gaming industry as 
"constitutional" even though it calls for all casino assets 
to revert to the state after a defined period of time, in 
direct contravention of private property laws enshrined in 
the Constitution. The judges of the CC, who also ruled in 
favor of decisions during the elections to invalidate large 
numbers of opposition candidates in the legislative and 
presidential races, complained of the unconstitutionality of 
the new law, but were told to give it a favorable ruling, 
which they did. 

6. (S/NF) The source elaborated on the depth of Guebuza's 
business interests, which range across the economy. He said 

MAPUTO 00000086 002.2 OF 003 


that Guebuza is in on almost all of the "mega-project" 
multi-million dollar deals via contractual stipulations to 
work with the Mozambican private sector. One example is 
Guebuza's involvement in the 2007 purchase of Cahora Bassa 
Hydroelectric Dam (HCB) from the Portuguese Government for 
$950 million. $700 million of this was paid by a private 
consortium of banks, which was arranged by a Guebuza proxy, 
for which Guebuza received, while he was a sitting president, 
an estimated commission of between $35 and $50 million. The 
Portuguese bank which arranged the financing turned over its 
shares in BCI Fomento, one of the largest Mozambican 
commercial banks, to a Guebuza-controlled company. 

--------------- 
MBS AND FRELIMO 
--------------- 

7. (S/NF) The source, says that FRELIMO brazenly squeezes 
the business community for kickbacks. As an example, the 
source said that he has personally seen Manuel Tome, former 
FRELIMO Secretary General, senior member of the National 
Assembly, and relative of President Chissano, in MBS' office 
receiving pay-offs quite openly. Head of Customs Domingos 
Tivane openly demands and receives payoffs from importers, 
including MBS. The source stated that one business contact 
remarked to him that when visiting Tivane's expansive home to 
deliver a bribe he noticed that the bureaucrat had solid gold 
fixtures in his bathroom. The source also stated that former 
Prime Minister Luisa Diogo, until she was removed from the 
Cabinet (septel), was heavily involved in taking bribes for 
FRELIMO, of which she kept a percentage. Similar allegations 
were raised in the 21 January issue of Zambeze, regarding 
soft loans paid to Diogo's husband Albano Silva, purchases of 
houses and buildings for a fraction of their value, as well 
as Diogo's close ties to officials such as Diodino Cambaza, 
whose corruption trial is ongoing. 

8. (S/NF) At the ports, the source commented that FRELIMO 
has its own clearing agent that handles FRELIMO and MBS 
business. The clearing agent chronically under-invoices 
items, avoids the 17% VAT, and also has an arrangement with 
Tivane's Customs authorities to bypass the ports' mandatory 
scanning. The source has documentary proof of the 
under-invoicing by MBS, and poloff has seen MBS' trucks drive 
through the port without being scanned. Nonetheless, the 
source said that Government of Mozambique (GRM) officials 
routinely describe MBS as an "untouchable" due to his 
connections to Tivane and Guebuza, a situation which is 
reported to irk a cash-strapped Tax Authority (AT) President 
Rosario Fernandes. 

------------------------- 
MBS AND OTHER BUSINESSMEN 
------------------------- 

9. (S/NF) Regarding MBS' retail operation, the source 
states that MBS does not tolerate competition. The source's 
milk processing facility was threatened by MBS who used 
VAT-avoidance and under-invoicing to dump vast quantities of 
imported condensed milk on the market in order to put the 
source out of business. Only after the source made an 
agreement with MBS for exclusive distribution of his milk 
products, with a 10% kickback on all sales to MBS, did MBS 
stop his dumping practices. Other businessmen have 
complained about similar practices in other commodities to 
include edible oil. The source complained that "even those 
who bribe" MBS or FRELIMO cannot make a profit under such 
conditions. 

------------------------------ 
NARCOTICS AND MONEY LAUNDERING 
------------------------------ 

10. (S/NF) The source says he only has second hand 
knowledge of drug trafficking and money laundering in 
Mozambique. He said that "MBS and the 'Nacala dealers' all 
have offices in Dubai" to facilitate money laundering 
operations in Mozambique. It is through these operations 
that after 15 years in business in Mozambique, MBS was able 
to pay $30 million in cash to establish his shopping plaza 
downtown, Maputo Shopping, which opened in 2007. The source 
said that he asked prominent Ismaili/Aga Khan businessman 
Mustaque Ali how MBS became so rich so fast, and Ali's wry 
answer was "Johnson's baby powder," a euphemism for drugs. 
The source noted that the sometimes erratic changes in 

MAPUTO 00000086 003.2 OF 003 


Mozambique's foreign exchange position are due to sudden 
multi-million dollar transfers of cash overseas tied to money 
laundering. The source commented that in the past few years 
there have been several embarrassing situations in which 
shiploads of drugs, primarily hashish and heroin have washed 
ashore; however, the media is usually afraid to report on 
such incidents because no one wants to become another Carlos 
Cardoso, the courageous Mozambican journalist who was 
murdered in 2000 while investigating a massive bank fraud 
tied to then-President Chissano's family. 

--------------------------------------------- 
COMMENT: CANDID COMMENTS FROM A CONNECTED MAN 
--------------------------------------------- 

11. (S/NF) The source, XXXXXXXXXXXX While he has an axe to 
grind because he is frustrated with the scope and depth of 
corruption in Mozambique, his statements corroborate what we 
have learned from other sources (Ref A). Ties with MBS and 
other known money launders and narcotraffickers by senior GRM 
officials are disturbing and demonstrate a short-sighted 
focus on self-enrichment. The source cautions against 
building long term relationships with FRELIMO, and fears 
that, having allowed the illicit economy to prosper, and 
having advertised Mozambique as a money laundering 
destination and drug transshipment hotspot, the ruling party 
will no longer be able to control the nefarious activities 
within its borders. Rumors and stories of corruption abound 
in Mozambique, but rarely will a successful well-connected 
XXXXXXXXXXXX be willing to share specific practices based 
on first-hand knowledge and participation in these practices. 
CHAPMAN