Mozambique did not adequately show where at least $500 million out of $2 billion in loans meant for state companies was allocated, according to an audit by risk-management firm Kroll released on Saturday.

The audit of the loans to EMATUM, Proindicus and Mozambique Asset Management (MAM) was a condition for the International Monetary Fund (IMF) to resume aid talks with one of the world’s poorest countries.

“Until the inconsistencies are resolved, and satisfactory documentation is provided, at least USD 500 million of expenditure of a potentially sensitive nature remains unaudited and unexplained,” Kroll said in a 57-page audit summary.

Credit Suisse and Russia’s VTB Capital were paid a total of $199.7 million in fees to arrange the loans, the audit showed.

The audit also found that there were limitations in the process of issuing government guarantees, with no evidence provided that any assessment took place before the signing of three government guarantees with a combined value of $1 billion.

The companies also lacked some of the basic infrastructure to operate, the audit showed.

“Proindicus does not have an operational satellite package, EMATUM does not currently have permits for the fishing vessels, and MAM has only recently obtained access to a shipyard in Maputo that is undergoing an upgrade to enable the maintenance of vessels,” the audit said.

The discovery of the unapproved loans last year prompted the IMF and Western donors to end budgetary support for Mozambique, leading to a collapse of the southern African country’s currency and defaults on its debt.

The IMF said it would visit Mozambique from July 10-19 to discuss the debt audit concerns.

– By REUTERS