MOZAMBICAN ATTORNEY GENERAL REFERS NYATI LODGE CASE

UNCLAS MAPUTO 001539

SIPDIS
STATE FOR AF/S, AF/EPS, EB/IFD/OIA, E
MCC FOR APPLEGARTH, HEWKO, BRIGGS, GAULL
STATE PASS OPIC FOR SHORE
SENSITIVE
E.O. 12958: N/A
TAGS: EINV MZ MCC
SUBJECT: MOZAMBICAN ATTORNEY GENERAL REFERS NYATI LODGE CASE
TO HIGH COURT

Ref: Maputo 01446

Sensitive but Unclassified - Business Confidential
Information. Not for Internet Distribution


1. (SBU) On November 25, Attorney General Joaquim Madeira
referred to the High Court of Mozambique a motion by
Vilanculos Coastal Wildlife Sanctuary to suspend an October
court order by Inhambane provincial judge Jose Sampaio that
authorized expropriation of the Nyati Beach Lodge. The
Lodge is co-owned by American investor David Herbert, who
has received OPIC support for his investment. The Attorney
General also recommended that the High Court suspend the
provincial judge's earlier decision, which had enabled the
Zimbabwean company Cabo do Mar to attempt several failed
expropriations of Mr. Herbert's property based on an earlier
land rights claim. Reftel provides details on the dispute.
On November 23, Ambassador La Lime had met with the Attorney
General to seek prompt action on the matter. The Attorney
General had indicated that he would refer the case to the
High Court with a recommendation to suspend the order.


2. (SBU) The Attorney General's move represents a positive
step for Mr. Herbert in his efforts to protect his
investment in the lodge. Over the past month, Mr. Herbert
and his legal teams had made several unsuccessful attempts
to obtain an order from Judge Sampaio suspending enforcement
of his October order. Based on his perceived vulnerability,
Mr. Herbert and his team had negotiated a $650,000
settlement with Cabo do Mar on October 28 in exchange for
Cabo do Mar's agreement never to evict them. This
settlement has been drafted but has not been signed, and
Cabo do Mar has responded by upping its cash demands. It
also attempted to take over Nyati Lodge on November 17 and
again on November 20, each time with a private security
force in tow. The Cabo do Mar security forces were fended
off without incident, but Mr. Herbert believed that, without
a favorable decision by the Attorney General, he probably
would have been forced to meet Cabo do Mar's demands in
order to keep his business.
. (SBU) A referral to the High Court does not end the legal
dispute between Cabo do Mar and Mr. Herbert. The High Court
often takes months to decide cases, and Cabo do Mar is
likely to attempt further evictions in the meantime. Mr.
Herbert and his legal advisors believe that the Attorney
General's decision to issue a recommendation along with the
referral should help them, but admit that this is not always
the case. Post believes that Mr. Herbert eventually will
probably end up paying some form of settlement to Cabo do
Mar in order to settle the issue of overlapping land claims.
In any case, the Attorney General's decision should
strengthen Mr. Herbert's position in his dealings with Cabo
do Mar.
LA LIME