MANUEL Chang, the former finance minister of Mozambique, pleaded not guilty on Thursday to criminal charges filed in the United States, accusing him of involvement in a fraud scheme related to $2bn in loans provided to three state-owned companies. Chang entered his plea before US District Judge Nicholas Garaufis in Brooklyn after being extradited from South Africa, where he was arrested in December 2018 on charges of wire fraud, securities fraud, and money laundering.
Judge Garaufis denied Chang’s request for bail, agreeing with prosecutors that he posed a flight risk and could potentially seek refuge in Mozambique’s UN mission in Manhattan to avoid the charges. ‘The evidence regarding his guilt on the face of it is strong,’ stated Garaufis. Chang had proposed a $1 million bond as an alternative.
The case, known as the ‘tuna bonds’ case, revolves around loans provided by Credit Suisse and Russian bank VTB to finance projects aimed at developing Mozambique’s fishing industry and enhancing maritime security between 2013 and 2016. Prosecutors allege that at least $200 million of the funds were diverted to various defendants and Mozambican government officials.
According to federal prosecutors, Chang allegedly obtained Mozambique’s government guarantee for the loans in exchange for bribes, and the three state-owned companies involved were used as fronts to enrich Chang and other defendants. This scheme allegedly misled US investors regarding Mozambique’s creditworthiness.
Chang’s attorney, Adam Ford, stated in court that his client had guaranteed the loans in his official capacity and did not accept bribes. ‘He intends to stay here and fight these charges,’ Ford said.
Among the other defendants in the case was Jean Boustani, a salesman for a Lebanese shipbuilding company accused of bribing officials and bankers to secure contracts with the state-owned companies. Boustani was acquitted in December 2019 after testifying that he played no role in packaging the loans for investors. Three former bankers from Credit Suisse pleaded guilty in 2019.
Credit Suisse, which was acquired by UBS earlier this year, agreed to pay $475 million to the United States and Britain in 2021 to settle bribery and fraud charges. Although Boustani’s company Privinvest did deliver ships and equipment to Mozambique, prosecutors argue that their value was significantly inflated. The loans eventually defaulted, resulting in financial losses for investors. Credit Suisse forgave $200 million of Mozambique’s debt.
Following the revelation of undisclosed state-backed borrowing in 2016, Mozambique experienced a currency collapse and sovereign debt default after international donors and the IMF suspended support. The country is currently pursuing legal action against Credit Suisse and Privinvest in London for compensation and restitution.
(with Reuters)
