Unlock the Editor’s Digest for free
Roula Khalaf, Editor of the FT, selects her favourite stories in this weekly newsletter.
Dead men tell no tales, in Lebanon as much as anywhere else. But in that country in particular, they are also not even legal persons with estates.
Almost a year since Mozambique won a landmark claim for nearly $2bn in damages from Privinvest, the Gulf shipbuilder, over the tuna bond fraud — a scandal over a decade old — this finer point of Lebanese inheritance law became a surprisingly critical obstacle to whether it might see the money.
So we thought it was worth an update to note that this obstacle has just been cleared by the High Court — in a case that has again shown just how hard sovereign asset enforcement is, even when it is sovereigns doing the enforcing for once.
Iskandar Safa, Privinvest’s French-Lebanese owner, died last year between trial and judgment in a case that found he “was the individual ultimately behind each promise and payment” in a scheme for Mozambique’s then finance minister to arrange loans from 2013.
Privinvest launched an appeal, which will be heard around this time next year. In the meantime, with an eye on Safa’s business empire, Mozambique pushed to add his widow — Clara Martinez Thedy de Safa — and his sons Akram and Alejandro as defendants.
Given the oddities of Lebanese law on this matter, they argued Mozambique didn’t have the jurisdiction and it should sue in Beirut if it wanted to get anywhere.
The Hon Mr Justice Robin Knowles rejected those points in a ruling this week:
Again, I see the present effort by Mozambique as enabling the English Court in the circumstances described to complete its work in light of the sad development of Mr Safa’s death. As things stand, I regard it as unsuitable and unjust that the English Court should leave matters open and unfinished. I am not left with any clarity or certainty over what would happen with the Judgment if I do not allow the specific matters involved to proceed here, and to proceed now . . .
Further, as Mozambique points out, the risk of the English Court determining that Mr Safa was liable, only for the heirs to resist enforcement in Lebanon or elsewhere on the basis that he was not, entails a risk of inconsistent judgments and the same issues having to be litigated twice in two jurisdictions.
Honestly, he sounds as exasperated as the rest of us that this case is still going.
As a result, Mozambique’s lawyers, Peters & Peters, will now be able to serve claims on Safa’s widow and sons in a range of jurisdictions.
A spokesperson for the Safa family called the judgment “disappointing,” and said that they intend to appeal. They added:
Mr Safa’s widow and two sons had no involvement in the matters that gave rise to the finding of liability now under appeal. At the relevant time, Mr. Safa’s sons were just 13 and 10 years old, and in any event, are not heirs of the late Mr. Safa . . . Today, each member of the family leads an independent life and is pursuing their own professional path, with no connection to the events underpinning the Republic of Mozambique’s original case.
Which if nothing else is a reminder how long this saga, now well into its second decade, has endured. It is, however, very much still with us.
The other heirs to the tuna bond saga, Mozambique’s long-suffering population, could have really used the best part of $2bn around about now.
The ruling Frelimo party’s handling of disputed elections last year spooked exporters and savers so much that the country is desperately short of foreign currency months later. Mozambique is currently between IMF bailouts, worsening the problem.
The shortage is so bad that Mozambique currently tops the IATA’s list of countries blocking airline repatriation of revenues, a classic sign of dollar scarcity.
Despite signs of a restart in offshore natural gas investment projects, serious export revenues are a long way off. Ironic, given they were the original pretext for why the country ordered the ‘maritime security’ projects around the tuna bonds over a decade ago.
This might be all quite challenging for Mozambique’s 2031 dollar bond, which houses the remnants of the original tuna debt after restructuring down the years. It carries a coupon of 9 per cent. It currently trades at around 80 cents on the dollar.
On the other hand, this is partly why Mozambique is still pursuing the tuna bond case so many years on. Payments on the 2031 bond would be covered by an indemnity in the damages it won from Privinvest last year.
Mozambique hasn’t seen the money yet. But for now at least, Lebanese inheritance law may be one less hurdle.