Mozambique’s ex-Finance Minister convicted in the US

Mozambique’s former Finance Minister, Manuel Chang, has been convicted in the US for his involvement in a $2bn bond fraud case that caused a financial crisis in his country. Legalbrief reports that Chang was charged with accepting bribes to covertly bind his country to large loans focused on tuna fishing and various maritime projects. The scandal battered the nation’s finances and triggered one of Africa’s biggest graft scandals. The lawsuit relates to Mozambique's hidden debts scandal after Credit Suisse and VTB of Russia granted $2bn in loans to three shelf companies – Proindicus, Ematum (Mozambican Tuna Company) and MAM (Mozambique Assets Management). The loans were only possible because the banks carried out no due diligence on the three companies, which had no business record and were effectively run by the Mozambican security service. In addition, the government of the day, under President Armando Guebuza, issued illegal loan guarantees, in violation of the laws. Massive corruption was involved in the loans, as was admitted by the three Credit Suisse managers who negotiated them, Andrew Pearse, Detelvina Subeva and Surjan Singh. These three people were among those charged by American prosecutors, who took a close interest in the case because the US financial system had been abused, and US investors were swindled.

Chang, who was Finance Minister from 2005 to 2015, had pleaded not guilty to the conspiracy charges. A report on the africanews site notes that his attorneys argued that he was merely executing his government's wishes when he approved the loan repayment agreements for Mozambique, and they maintained that there was no evidence of any financial gain for him. Prosecutors alleged that Chang received $7m in bribes, which were transferred via US banks to European accounts owned by a colleague. A federal jury in New York reached a guilty verdict on Thursday for Chang on charges of conspiracy to commit wire fraud and money laundering, both of which could lead to a maximum of 20 years in prison. Between 2013 and 2016, three companies managed by the Mozambican Government quietly obtained $2bn in loans from major foreign banks. Chang signed off on guarantees that the government would repay these loans, which were vital for reassuring lenders who might have been reluctant to work with these newly formed companies.

A federal district court judge will determine his sentence. It is not yet clear if he intends to appeal. The jury reached its verdict after three weeks of trial and three days of deliberation. ‘Today’s verdict is an inspiring victory for justice and for the people of Mozambique, who were betrayed by a corrupt high-level public official whose greed and self-interest sold out one of the poorest countries in the world,’ said Breon Peace, US Attorney for the Eastern District of New York. ‘Chang now stands convicted of pocketing millions in bribes to approve projects that ultimately failed, laundering the money and leaving investors and Mozambique stuck with the bill.’ The Daily Maverick reports that Chang’s conviction has also been hailed as a victory for South African justice – but also an indictment of the executive – as it was the climax of a protracted legal process which began with his arrest at Johannesburg’s OR Tambo International Airport in December 2018 and wound through the South African courts for almost five years. The Gauteng High Court (Johannesburg) twice overturned orders by two different South African Justice Ministers that he should be extradited to Mozambique. But advocates representing the Mozambican NGO Fórum de Monitoria do Orçamento (FMO) – Forum for Monitoring the Budget – argued that he would very likely escape justice in Mozambique, and so in November 2021 the Johannesburg court ordered him to be extradited to the US. This decision was later confirmed by the Supreme Court of Appeal and the Constitutional Court, and Chang was finally extradited to the US in July 2023.

Nicole Fritz, former head of the Southern Africa Litigation Centre and of the Helen Suzman Foundation – which joined the litigation to have Chang extradited to the US – hailed his conviction. ‘The US verdict can’t stand as anything but an indictment of the SA justice system. It is true that SA ultimately extradited Mr Chang to the US, but this was only after much to-ing and fro-ing about whether to do so,’ she told DM. ‘At different points, the SA government indicated that they would choose instead to extradite him to Mozambique where he would almost certainly have been guaranteed immunity. It was only the intervention of Mozambican civil society, and the solidarity of SA civil society, through the courts that ensured he was transferred to the US. It is worth noting that the period between his arrest in Johannesburg in 2018 and his extradition to the US in 2023 far, far exceeds the time in which it took the US to mount a jury trial and secure a conviction. ‘Whatever else that tells us, it should shame our criminal justice system for the endless delays we suffer in securing any relatively high-profile convictions. ‘Mozambique NGO the Centre for Public Integrity also welcomed Chang’s conviction, noting: ‘Chang becomes the first former member of the Mozambican government to be convicted abroad for corrupt practices while a member of the government.’

Full africanews report

Full Daily Maverick report

Mozambique earlier this month won its $3.1bn lawsuit at London's High Court against Emirati-Lebanese shipbuilder Privinvest for allegedly paying bribes in relation to the same scandal. The court ruled ‘substantially in favour’ of a claim that the country was defrauded in loans used to fund tuna boats and other maritime projects. BusinessLIVE reports that the boats supplied by Privinvest rusted in harbour and the projects were looted of hundreds of millions of dollars after Mozambican state companies used sovereign guarantees to issue debt arranged by Credit Suisse and other banks from 2013. The borrowing spree collapsed after its full extent was revealed in 2016, unleashing a financial crisis and ultimately a government debt default as the IMF and key donors to Mozambique pulled direct budget funding.

Full BusinessLIVE report