US embassy cable - 05MAPUTO559

C O N F I D E N T I A L SECTION 01 OF 04 MAPUTO 000559 
 
SIPDIS 
AF/S FOR HTREGER 
E.O. 12958: DECL: 04/07/2010 
TAGS: PGOV, KCOR, KCRM, EAID, MZ 
SUBJECT: MOZAMBIQUE - CORRUPTION UPDATE 
 
REF: 04 MAPUTO 83 
Classified By: Ambassador Helen La Lime, for reasons 1.4 (b/d) 
 
1. (C) Summary: Mozambique has a serious corruption problem. 
The former Chissano government did little to confront the 
problem despite repeated promises. In the past three months 
newly-elected President Guebuza has vowed to take action. 
There are signs that his government is serious about 
grappling with the rot, though it is too early to conclude 
that its efforts will have a fundamental, far-reaching 
effect. End summary. 
 
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Mozambique is Perceived as Corrupt 
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2. (U) Corruption remains a serious problem in Mozambique. 
In its 2004 Corruption Perceptions Index (CPI) report, 
Transparency International gave Mozambique a CPI score of 2.8 
(on a 0 - 10 scale, from most to least corrupt). 
Transparency International placed Mozambique in the same 
grouping as Russia, The Gambia, Malawi, India, Nepal and 
Tanzania. Its CPI score was 2.7 the year before. 
 
3. (C) Regionally, both Zimbabwe and Zambia were rated worse 
than Mozambique by Transparency International, but South 
Africa, Botswana, and Namibia (and another SADC member, 
Mauritius) received much higher scores. We hear regularly 
from visiting businessmen of the challenges they face working 
with Mozambican officials, compared to doing deals in 
Johannesburg or Gaborone. 
 
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Some Systemic Reasons for Corruption 
------------------------------------ 
3. (SBU) One impetus for corrupt behavior lies with 
government salaries, which are not very high. A government 
minister, at the top rung of the government pay scale, can 
expect a salary of approximately $1,500 - $2,000 a month. He 
also gets free housing (in which case he can rent out his own 
home), free use of several cars, and some other perquisites. 
Nonetheless, this income is insufficient to support the 
lifestyle expected of those holding this office, particularly 
by their friends and family who hope to profit from their 
position. And so ministers regularly engage in "esquemas" or 
deals to supplement their salaries. The wealth identified by 
Minister of Finance, Manuel Chang, who published a list of 
his assets shortly after beginning work as minister in 
February, demonstrates this. Minister Chang may have 
declared his assets thinking that they were relatively modest 
in comparison with those of his peers -- no other minister 
was as forthcoming, and indeed the law only requires that 
assets be disclosed to a government body and not the public. 
All told Chang's net worth totaled close to $500,000 -- far 
more than one could reasonably expect a middle-aged civil 
servant just reaching the ministry level to have saved on his 
government income unless he had family money or made 
extremely lucrative investments. 
 
4. (SBU) Another factor in corruption is the outdated and 
cumbersome legal system which Mozambicans inherited from the 
Portuguese. Colonial-era laws are often inappropriate now 
and so need to be rewritten, but doing so takes expertise, 
which is hard to come by locally, and time. Meanwhile, to 
get things done, deals are made informally -- with monetary 
bribes or favors. Added to the awkward regulatory 
environment, officials make liberal use of fines in 
Mozambique. By law they are given considerable latitude in 
what fines they levy and are rewarded, in many instances, 
with a portion of the fines, too. This, of course, 
encourages corrupt behavior. 
 
5. (C) More insidiously, corruption flourishes because 
powerful senior leaders are insulated from public scrutiny 
and discipline due to the "politburo" system of government in 
Mozambique. FRELIMO, the ruling party, dominates all 
branches of government and runs the country. In turn, 
FRELIMO is run by a small coterie of men and women who form 
the 15 member Political Commission. These individuals are 
not directly elected by the people, and so not directly 
accountable to them, but instead obtain their positions 
through political arrangements between the Political 
Commission and the broader FRELIMO body, the 172-member 
Central Committee. All important decisions, from the 
selection of government ministers to decisions on major 
investments, depend on support from the Political Commission. 
Therefore, Mozambique has a system where its leadership is 
only indirectly responsible to the broad electorate, and 
these 15 individuals have enormous power. This setup, 
clearly, discourages accountability and transparency. 
 
6. (C) To illustrate how such a monopoly on power by this 
group leads to corruption, consider the case of retired 
general Joaquim Chipande, hero of Mozambique's liberation 
struggle for allegedly firing the first shot at a Portuguese 
district administrator in 1964. He is a member of the 
Political Commission, and has been for many years, even 
though he eschews politics. Nothing gets done, the saying 
goes, in his home province of Cabo Delgado without his 
approval. For example a local Cabo Delgado businessman, 
according to one of our staff who knows him, gave up trying 
to negotiate a fair price for the land on which to build a 
five-star hotel after being confronted by Chipande. One 
evening Chipande called him to his private yacht at midnight 
for a 'friendly' meeting to talk over the deal, but set a 
handgun on the table. In the end the businessman got a 
second hand delivery truck in exchange for the land. It is 
unclear what Chipande received. 
 
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Chissano Government Anti-Corruption Efforts 
------------------------------------------- 
7. (SBU) The outgoing Chissano government took some action 
against corruption in its last several months. The Director 
of the National Social Welfare Institute (INAS) was suspended 
in August 2004 after being accused of siphoning money out of 
INAS, which is now widely believed to be close to bankruptcy. 
An inquiry was ordered earlier in the year into another INAS 
sub-delegate accused of corruption by an anonymous 
whistle-blower. In August 2004, the National Assembly passed 
a long-awaited Anti-Corruption Law. The legislation aims to 
fight corruption in government offices, hospitals, schools, 
and the police by making bribe-taking punishable by 
imprisonment. The law also provides more protection for 
whistle-blowers, modifies a key provision on requests for 
permits, and imposes new obligations on state auditors by 
requiring them to report in writing to the Attorney General's 
Anti-Corruption Unit (ACU) any audit that reveals corrupt 
practices. The ACU indicted two dozen individuals on 
corruption charges in 2004, doubling the number indicted in 
2003. With USG support, the ACU has expanded its coverage 
outside the capital city by opening new offices in the two 
main provincial capitals of Beira and Nampula. The GRM has 
stated that it plans to increase budget levels for the ACU in 
2005 and 2006. 
 
8. (C) But there were setbacks as well. According to a 
January 2005 press report, then-Minister of Planning and 
Finance and current Prime Minister Luisa Diogo dismissed 
three ministry officials, allegedly because they attempted to 
undermine a scheme directing state resources to FRELIMO. In 
January 2005 outgoing Minister of Health Francisco Songane 
distributed 36 cars to national directors and heads of 
department in his ministry. Though regulations exist that 
allow senior public servants the benefit of a car through 
long-term lease arrangements, the timing (he delivered the 
cars in the last week of his term) and value of the vehicles 
(approximately USD 36K each) provoked considerable criticism 
in the media. 
 
9. (C) Virtually no one, at the senior levels anyhow, has yet 
been held accountable. All of the 24 ACU indictments from 
2004 were turned down or otherwise rejected by judges. Thus 
there were no convictions, nor apparently even trials. As 
for the head of INAS, although he appears to have lost his 
job, the inquiry into his actions is not yet over and up 
until now he has not gone to prison. Investigations into the 
two high-profile killings of the last several years - 
investigative journalist Carlos Cardoso in 2000 and senior 
Banco Austral (a large local bank) official Siba Siba in 2001 
- remain incomplete. In the case of Cardoso, prosecutors 
have followed the trail of responsibility only up to several 
wealthy Indo-Mozambicans, even though there is strong 
evidence implicating former President Chissano's son Nympine. 
As for the Siba Siba killing, no one has gone to trial at 
all. Attorney General Madeira in March presented his annual 
review in the National Assembly, and was openly ridiculed 
because his report left blank any sign of progress toward 
catching the guilty in these and several other high-profile 
scandals. Legislators, mainly from the opposition RENAMO 
party but, unusually, also from FRELIMO, scoffed when Madeira 
responded that he could not reveal details of ongoing 
investigations. 
 
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What More Can Be Done? 
---------------------- 
10. (SBU) The Media and Civil Society: Within Mozambican 
civil society, the media continues to be one of the main 
anti-corruption forces, reporting and investigating numerous 
corruption cases. With USG support, in 2004 the NGO Etica 
Mozambique established eight corruption reporting centers in 
Maputo and Beira. The centers provide citizens with free 
legal advice, justice sector ombudsman services, and a 
mechanism for confidentially reporting corruption-related 
crimes to the Attorney General's office. This effort by 
Etica was developed in close coordination with the ACU. 
Further USG support to the media or civil society to expose 
corruption would be worthwhile, and we included in our 
Mission Performance Plan a request for FY07 ESF for this 
purpose. 
 
11. (SBU) The Judiciary: The judiciary continues to hamper 
efforts by the Attorney General's Office to fight corruption, 
as shown by its rejection of ACU indictments. Partly this is 
the result of under-staffing and poor training. There are 
fewer than 100 prosecutors and only 184 judges in Mozambique, 
and many lack specific technical skills. Isabel Rupia, head 
of the ACU, admitted to the press in late 2004 that the 
number of cases entering the court system from the ACU was 
far too low. She called for the creation of an independent 
body of auditors and specialized investigators to follow 
through on court cases. In 2004 the USG supported the 
training of 20 new-entry magistrates, as well as specialized 
training of 21 prosecutors, representing an important 
contribution to a judicial system plagued by huge case 
backlogs. 
 
12. (SBU) Public Sector Reform: Progress on the GRM's highly 
publicized public sector reform has been slow. The UK's 
Department for International Development (DFID) is the lead 
donor assisting the GRM in its public sector reform 
activities by providing functional analysis and support for 
various quick impact projects (e.g. salary reform). One 
reform goal, among others, is to coordinate all donor funding 
through a new donor-supported budget tracking system known as 
SISTAFE. A pilot project with SISTAFE should start within 
the GRM in 2005; the GRM hopes to have all of its ministries' 
funding tracked via SISTAFE by the end of 2006. 
 
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Guebuza Government Efforts 
-------------------------- 
13. (C) President Guebuza made fighting corruption a key 
message in his campaign, and since taking office has 
repeatedly emphasized combating corruption in his speeches. 
Queried by Assistant Secretary Newman in March whether he 
meant business with all his rhetoric, he answered that she 
should look to the staff he has appointed to gauge his 
commitment. Several cabinet ministers have promised real 
action on corruption, and indeed three of them -- Jose 
Pacheco, Minister of Interior; Felicio Zacarias, Minister of 
Public Works; and Aires Aly, Minister of Education -- were 
governors with strong records either for openness (Pacheco) 
or being tough on corruption (Zacarias and Aly). The Guebuza 
government has begun to act. Auditors have begun looking 
into the misappropriation of funds in the Interior Ministry, 
presumably at the invitation of Minister Pacheco. The new 
governor of Maputo province, Telmina Pereira, in March toured 
the Ponto do Ouro resort area, on the South African border, 
and upon her return the government announced that a number of 
illegally-built houses there would be torn down. The 
Agriculture Ministry has declared that those who have not 
developed land they have leased from the government will be 
forced to surrender their holdings back to the state. Most 
recently, employees at the headquarters of state ministries 
have been told to leave official vehicles in the parking lot 
after work, rather than driving them home, and use of cell 
phones has been severely restricted. There is growing 
grumbling among the Frelimo party elite over the crackdown, a 
sign that the fight against corruption is having a palpable 
effect. 
 
14. (C) Complicating matters is the fact that Guebuza, widely 
regarded as one of the wealthiest men in the country (he is a 
part-owner of more than a score of major enterprises), has 
grown rich as a powerful party insider with ties to the 
commercial sector. Perhaps more than anyone, he has profited 
from such activity, at least in areas that elsewhere would be 
considered conflict of interest schemes, insider trading, 
influence peddling and the like. Can his claims to want to 
fight corruption be taken seriously? Some speculate that 
with a stake in the economy, he will be sure to keep it 
growing. In this view, then, he would not let corruption 
stifle business deals. Others guess that he will move to 
crack down on petty corruption, which saps public support for 
the government, but will do little to rein in the powerful. 
 
15. (C) Comment: Mozambique remains seriously corrupt. 
President Guebuza is talking a tough line, at present, and 
appears serious in combating the evil, but he has been in 
office for just three months. The dilemma for donors (and it 
is worth remembering that fully half of the government budget 
is paid by donors) is that one lever they might wield to rein 
in corruption -- reducing assistance -- would certainly 
affect not only corrupt senior officials but the general 
population, too. As long as the government continues to 
manage the economy so that the well-being of all Mozambicans 
is improving, donors will be loath to cut aid. Anyway, by 
African standards Mozambique's is certainly not the worst 
instance of a corrupt government -- Nigeria, Angola, 
Cameroon, Niger, Zambia, Zimbabwe and Sierra Leone all place 
far lower down the Transparency International CPI index. 
Ultimately, hope lies in fostering a sense among all 
Mozambicans to hold their government and institutions more 
accountable for the country's wealth. As they demand better 
behavior, the powerful will find it increasingly difficult to 
steal. 
LALIME