Chang to pay $42.2m to Russian bank for tuna fraud

A court in New York has ordered former Mozambican Finance Minister Manuel Chang to pay $42.2m to the Russian bank VTB Capital for losses incurred in the fraud generally known as the case of the ‘hidden debts’. According to the Club of Mozambique, in 2013 and 2014, three fraudulent state-owned Mozambican companies, Proindicus, Ematum (Mozambican Tuna Company) and Mozambique Asset Management, obtained loans of over $2bn from the banks Credit Suisse and VTB. The banks only agreed to pay out such huge sums because the Mozambican Government of the day gave sovereign guarantees, signed by Chang as Finance Minister. The guarantees were flagrant violations of the Mozambican budget laws of 2013 and 2014. They meant that, when the companies defaulted, the Mozambican state became liable to repay the entire amount. What were initially hidden loans became hidden debts. The loans never went to Mozambique but were sent directly to Privinvest, as the sole contractor for the three companies. But among those swindled in this scheme were American investors, which led US prosecutors to press charges against Chang. Chang was found guilty of wire fraud in New York and sentenced to eight and a half years in prison.

The court found that Chang had taken bribes of $7m from Privinvest. But the court award to VTB is for six times that amount. The New York court also ordered the three Credit Suisse bankers who had confessed to taking Provinvest bribes to pay VTB tens of millions of dollars. The most senior of the three, Andrew Pearse, should pay $264.1m, Detelina Subeva was ordered to pay $10.5m, and Surjan Singh $35.2m. It is rather unlikely that the three can pay such sums, reports the Club of Mozambique. There are three other defendants who have not yet appeared before the New York judge. One of them, Najib Allam, is the former CFO of Privinvest. He is a citizen of Lebanon, and if he has returned there, he may be beyond the reach of the New York court. The other two, Teofilo Nhangumele and Carlos Antonio do Rosario, are serving 12-year sentences in a Mozambican prison. They were found guilty in a trial that concluded in December 2022. Rosario was a key figure in the fraud, and became chairperson of all three fraudulent companies. Nhangumele and Rosario have now served about half their sentences and are expected to be granted parole.

Full report on the Club of Mozambique site