The Russian bank VTB was represented again yesterday in the Mozambican hidden debts case at the Commercial Court in London, after being absent for six months due to the impact of British sanctions on Russian companies following the invasion of Ukraine.

The law firm Rosenblatt has replaced Freshfields, which since March has stopped intervening in the procedural management hearings that have been taking place on an ad hoc basis and has stopped working with VTB.

At a hearing held yesterday, attorney Timothy Howe, on behalf of Rosenblatt, said that, once the paperwork that has so far prevented involvement in the case has been resolved, VTB expects to participate in the trial scheduled to begin in October 2023.

VTB, Russia's second largest bank, was targeted for financial sanctions by the UK and the United States of America (US) as early as February 24, on the first day of Russia's invasion of Ukraine, along with other companies and individuals associated with President Vladimir Putin's regime.

According to a document presented yesterday and quoted by Lusa, VTB obtained in March a "basic needs" license from the Office of Financial Sanctions Implementation (OFSI) to be able to pay fees and expenses associated with providing legal services.

However, it encountered "practical difficulties in making such payments" and chose to appoint tax administrator Teneo to unblock the process, which was approved by the British authorities.

The Russian bank said it had "permission from the OFSI, the Bank of England and the UK financial regulators to access its funds to make certain payments to third parties to enable it to directly pay its legal and professional fees for the purposes of the ongoing conduct of these proceedings."

A permit from the U.S. Treasury Department is "pending," but VTB "has no reason to believe that this permit will not be granted," it indicated in the document submitted to the court.

The Republic of Mozambique began legal action in 2019 in the Commercial Court in London, part of the High Court [Tribunal Superior Tribunal], to cancel debts incurred of $622 million to the bank Credit Suisse, claiming they were the result of bribes to senior public officials.

For its part, VTB filed its own complaint against Mozambique for breach of contract, demanding payment of $670 million plus interest.

At issue are loans taken out between 2013 and 2014 in excess of $2 billion to finance tuna fishing and maritime protection projects of the public companies Ematum, ProIndicus and MAM, provided by the shipping group Privinvest.

The loans were guaranteed by the government of the Mozambique Liberation Front (Frelimo), led by Armando Guebuza, without the knowledge of the parliament or the Administrative Court.

As a result, the country has seen international aid suspended and relations with the International Monetary Fund, for example, have resumed this year in terms of financial aid programs, and other donors, such as Portugal, continue to not provide direct budget support, as they did until then, and have opted to fund specific programs outside of the government's control.

The hidden debts case is also being tried in the Mozambican courts, in Maputo, with sentencing scheduled for November 30.

The case involves 19 defendants, including Ndambi Guebuza, eldest son of Armando Guebuza, who was President of the Republic at the time of the hidden debts, Gregório Leão, former Director-General of the Information and State Security Services (SISE), António Carlos do Rosário, former Director of Economic Intelligence at SISE, Cipriano Mutota, former Director of the Studies and Projects Office at SISE, and Renamo Matusse and Emilia Moiane, former adviser and personal secretary to Armando Guebuza, respectively.