VZCZCXYZ0009
RR RUEHWEB

DE RUEHTO #0675 1690543
ZNR UUUUU ZZH
R 180543Z JUN 07
FM AMEMBASSY MAPUTO
TO SECSTATE WASHDC 7464

UNCLAS MAPUTO 000675 
 
SIPDIS 
 
SIPDIS 
 
AF/S FOR HTREGER 
EB/IFD/OIA FOR HGEOTHERT 
L/CID FOR SMCDONALD 
 
E.O. 12958: N/A 
TAGS: ECON EAID EINV ETRD OPIC PGOV KIDE CASC MZ
SUBJECT: MOZAMBIQUE - 2007 Report on Investment Disputes and 
Expropriation Claims 
 
REF:  A. STATE 055422 
 
      ¶B. 05 Maputo 1062 
 
¶1.  Post is aware of one (1) claim that may be outstanding against 
the Government of the Republic of Mozambique (GRM). 
 
¶2.  Claimant A. 
 
¶3.  This potential claim arose on or around August 5, 2005. 
 
¶4.  In 2001 Claimant A received authorization for a foreign 
investment project from the GRM's Ministry of Planning and Finance. 
The GRM granted Claimant A a ten-year right to operate (the 
"concession") in the District of Chifunde, Province of Tete, with 
the option to renew for five years.  The concession was for the 
cultivation, fomentation and commercialization of loose-leaf 
tobacco.  Each year Claimant A's subsidiary was required to submit a 
proposed program of cultivation, fomentation and commercialization 
to the GRM, allowing the subsidiary to proceed with the program for 
the following season.  This concession was one of several held by 
Claimant A within the country of Mozambique. 
 
¶5.  On August 5, 2005, the Minister of Agriculture issued a decision 
interrupting/revoking Claimant A's concession rights in the District 
of Chifunde.  On August 15, 2005, Claimant A filed an appeal with 
the Minister of Agriculture requesting reconsideration and 
revocation of the August 5 decision.  The status quo was not 
maintained during consideration of this appeal, and on September 15, 
2005, the Governor of Tete issued a decision granting another 
American company the immediate right to operate the concession. 
Claimant A maintains that the grounds given for 
interruption/revocation of the concession were false, and that the 
GRM failed to follow procedures outlined in the concession agreement 
and Mozambican law regarding revocation of concession rights. 
 
¶6.  In response to private sector and Claimant A's complaints, on 
October 11, 2005, the Minister of Agriculture sent the issue to the 
Governor of Tete for further consideration.  Fact-finding 
investigations were supposed to occur but did not.  Claimant A 
stated to Embassy officers that it spent the following eight months 
trying to regain possession and use-rights to the concession. 
Efforts included meetings with the Governor of Tete, meetings with 
governors of other provinces in which Claimant A had concessions, 
meetings and correspondence with the Ministry of Agriculture and 
presidential advisors, and open letters by the private sector. 
Claimant A retained local legal representation to assist in these 
efforts. 
 
¶7.  As the result of the loss of its concession in Tete, Claimant A 
decided in March 2006 to cease all operations in Mozambique. 
Claimant A informed the Embassy at that time that it was in the 
process of filing an insurance claim against the GRM and was 
considering pursuing international arbitration under the Bilateral 
Investment Treaty.  According to Claimant A, it has suffered damages 
in an amount exceeding ten (10) million dollars ($10,000,000) as the 
result of the loss of this concession and its departure from 
Mozambique. 
 
¶8.  The Embassy last received information on this dispute in June 
¶2007.  Claimant A's Country Director confirmed that that all 
operations were shut down and that Claimant A would be completely 
out of Mozambique by August 2007.  Claimant A's Country Director 
also confirmed that to the best of his knowledge Claimant A would 
not be pursuing legal action or international arbitration regarding 
the concession dispute. 
 
¶9.  Claimant A:  Alliance One International (formerly 
DIMON Incorporated).  Post understands that Alliance One 
International formed on May 13, 2005, as the result of a merger of 
DIMON Incorporated ("DIMON") and Standard Commercial Corporation 
("Stancom").  The concession at issue was originally granted to 
DIMON; however, both DIMON and Stancom held concessions in 
Mozambique.  Post does not have any information indicating whether 
Alliance One or any of its subsidiaries or predecessors signed a 
Privacy Act waiver. 
 
Dudley