Mozambican officials have launched an investigation after an audit raised questions over $500 million of secret government loans, the country's prosecutor's office said Saturday. The audit, by forensic accountants Kroll, revealed the $500-million (447-million-euro) gap from a total of $2 billion in loans, said a statement from the prosecutor's office.
Prosecutors said they had opened a preliminary investigation into possible criminal activity as they released a summary of Kroll's findings Saturday. Kroll was called in after news emerged in April last year that the government had secretly borrowed $2 billion between 2012 and 2014 to fund a coastal protection project.
In December a parliamentary commission of inquiry found that the government had broken the law when it failed to seek parliamentary clearance for the loans..
The audit found that three firms linked to Mozambique's defence and intelligence services had borrowed $2 billion to buy maritime surveillance equipment and vessels, in 2013 and 2014. Kroll's investigation revealed significant discrepancies in the prices listed as paid for equipment and how much an independent expert said they should actually cost.
While there might be documents to explain the spending, Kroll had not received them at the time they concluded their investigation, said the prosecutor's office. "Until the inconsistencies are resolved, and satisfactory documentation is provided, at least USD 500 million of expenditure of a potentially sensitive nature remains unaudited and unexplained," it concluded.
When news broke in April last year of the secret loans, the ensuing scandal seriously damaged Mozambique's economy, already hit by a collapse in commodity prices. That triggered the country's worst financial crisis since a civil war ended in 1992. As a result of the revelations, several major donors to the state budget - including the International Monetary Fund and World Bank - suspended aid to the southern African nation.
The IMF on Saturday welcomed the decision by prosecutors to release the information. "The report summary provides useful information on how the loans were contracted and on assets purchased by the companies," it said. The loans were taken out in anticipation of a windfall from recently discovered natural gas deposits - but that has so far failed to materialise and the government is unable to pay them back. Mozambique's opposition has called for the loans to be cancelled.