The Tuna Bond Scandal: The Continued Lack of Transparency in Bank-to-State Credit Facilities Agreements

Abstract

The United Nations Conference on Trade and Development Principles on Promoting Responsible Sovereign Lending and Borrowing provide inter alia that creditors should ensure debt contracts are duly authorized; yet, the Mozambique Tuna Bond Scandal suggests that in the market for private bank-to-state credit facilities agreements, there is still work to do. This article presents empirical evidence suggesting growth in the amount of private bank-to-state loans and argues that this growth, combined with a lack of transparency, will lead to increasing numbers of legal disputes over want and abuse of official authority. The English law doctrines of ultra vires contracting in private international law and abuse of agent authority, usually applied in the context of corruption, are considered, and various reforms are proposed, including a transparency register and a legislative reversal of presumption of agent authority.