(Bloomberg) -- Blackwater Security founder Erik Prince will partner with at least one of the state-owned Mozambican companies at the center of a hidden-loan scandal that resulted in the country defaulting on its debt this year.
Prince, chairman of Hong Kong-based Frontier Services Group, is forming a joint venture with tuna-fishing company Ematum, and may extend this to assisting the southeast African nation with maritime security, he told reporters Wednesday in the capital, Maputo. Ematum Chairman Antonio do Rosario said Tuesday Prince will also partner with maritime security company ProIndicus, and Mozambique Asset Management, or MAM.
“We are here to work on finalizing details with a joint venture with the government of Mozambique to develop and enhance their fishery in a sustainable, professional and ethical manner,” Prince said at a joint press briefing with Do Rosario. “We are looking at many other investment opportunities in Mozambique.”
Ematum, ProIndicus and MAM borrowed about $2 billion from Credit Suisse Group AG and Russia’s VTB Capital to build a fishing fleet, ship yards and a maritime security system from 2013 to 2014. The government didn’t notify the International Monetary Fund of the debt, and the Washington-based lender suspended balance of payments support to the country as a result. None of the companies are operational, according to an audit report published by Kroll LLC in June.
Asked whether he would invest in all three companies, Prince said “phase one” would focus on the fishing industry, while he may later get involved in protecting Mozambique’s oil and gas assets, which is ProIndicus’s main business.
Kroll’s report found that equipment purchased with the loans appeared to be overpriced, and that $500 million of the spending remained unexplained. The government-appointed audit was among conditions set by the IMF in order for it to resume lending.
It’s not clear when the three state-owned companies “will become fully operational, but it appears that this would require considerable financial investment,” Kroll said in June. “Even assuming that the Mozambique project could be operationalized, it is not known when profits might be realized.”
Prince, who has an agreement in principal with Ematum, said he plans to finalize a deal within 60 days and have 24 fishing boats that have been rusting in Maputo harbor since they were acquired put to sea by March. Ematum was supposed to generate fishing revenue of $224 million by December 2016, according to a feasibility study Kroll cited in its report. In reality, the company has been posting losses, and the vessels don’t have fishing licenses, it said.
A former U.S. Navy SEAL, Prince is best known for his role running Blackwater, which was hired to provide private security during the U.S. war with Iraq. Controversy erupted in 2007, when Blackwater guards stopping traffic for a State Department convoy shot and killed 14 unarmed Iraqi civilians during a chaotic scene in Baghdad’s Nisour Square.
Asked about concerns about the debt scandal Ematum was involved in, Prince said: “I wasn’t involved in any decisions six months ago or a year ago in Mozambique.”
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