Chang to go on trial in tuna bond fraud case

Mozambique’s former Finance Minister Manuel Chang faces a criminal trial on Monday in New York over his role in a $2bn bond fraud scandal that embroiled Credit Suisse Group AG and created a financial crisis in the east African nation, reports Moneyweb. Federal prosecutors allege Chang was among the corrupt officials who conspired with Credit Suisse bankers to take Mozambique deeper into debt with loans starting in 2013 for dubious maritime projects, including ships to combat piracy and a tuna fishing fleet. Mozambique later defaulted on the bond meant to guarantee the loans, and prosecutors claim at least half a billion dollars was looted. The so-called tuna bond scandal spawned bribery and corruption cases on three continents and also led to the imprisonment of the son of a former Mozambique President. Chang allegedly pocketed $5m in bribes and facilitated the laundering of $200m in money funnelled to Mozambican officials. The fraud also caused ‘a severe financial crisis’ in the country, according to prosecutors in the office of Brooklyn US Attorney Breon Peace.

The former Minister, who has pleaded not guilty, has been in US custody since he was extradited a year ago from SA, where he was arrested in 2018 at the request of federal prosecutors. According to Moneyweb, US District Judge Nicholas Garaufis determined there was a risk he would flee because the US doesn’t have an extradition treaty with Mozambique. Chang, who is charged with wire-fraud conspiracy and engaging in a money laundering scheme, faces as long as 30 years in prison if convicted of the wire fraud scheme. The former Minister’s lawyers called the indictment ‘fatally flawed in numerous respects,’ including that ‘there is simply no conduct that Mr Chang is alleged to have engaged in that had any connection whatsoever to the United States,’ according to a court filing. Chang’s trial is expected to include testimony from former Credit Suisse banker Andrew Pearse, who admitted he got at least $45m for his role in arranging the loans and was the government’s star witness in the earlier case. Mozambique earlier this month agreed to pay creditors including VTB Capital Plc and Banco Comercial Português SA $220m in a settlement tied to the tuna bond scandal.