Russia's VTB sues Mozambique over loan in $2bn debt scandal

VTB had been in talks with Mozambique over restructuring the loan, which the deputy head of VTB Capital's legal department said in October represented a "significant exposure" for the bank.

VTB had been in talks with Mozambique over restructuring the loan, which the deputy head of VTB Capital's legal department said in October represented a "significant exposure" for the bank.

AFP/Alexander Nemenov

JOHANNESBURG - Russian bank VTB is suing a Mozambique state-owned company over $535-million it extended as part a series of loans now at the centre of a $2-billion debt scandal.

An online court filing dated 23 December shows VTB has lodged a lawsuit in Britain's High court against the Mozambique state and Mozambique Asset Management, which borrowed the money from VTB as part of a costly project that US authorities say was an elaborate front for a bribery and kickback scheme.

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VTB had been in talks with the southeast African country over restructuring the loan, which the deputy head of VTB Capital's legal department said in October represented a "significant exposure" for the bank.

"An agreed restructuring remains our preferred outcome but after 3 years of discussions with no tangible progress VTB must now consider all options available to it for a resolution," VTB said in an emailed statement.

Mozambique's Attorney General's Office said it was waiting for formal notification of the lawsuit.

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The court filing said the case relates to "general commercial contracts and arrangements" but no further information was available, other than that VTB Capital, the investment banking arm of VTB, is being represented by law firm Freshfields Bruckhaus Deringer.

The debt scandal has already sparked a series of court cases spanning London, New York and South Africa, ensnaring global investment bank Credit Suisse, three of its former bankers, Mozambique's former finance minister and a past president's son.

Source
Reuters