Maputo, 3 Apr (AIM) – A second trial in the case of Mozambique’s largest ever financial scandal, known as the case of the “hidden debts”, is approaching, now that the adversarial phase of the investigation has concluded, according to judicial sources cited by the Maputo daily “Noticias”.
There are four accused in this case, including former Finance Minister Manuel Chang, the former governor of the Bank of Mozambique, Ernesto Gove, and two other members of the central bank’s board.
At the heart of the scandal are illicit loans, for over two billion dollars, from the banks Credit Suisse and VTB of Russia, to three fraudulent, security-linked companies – namely Proindicus, Ematum (Mozambique Tuna Company), and MAM (Mozambique Assets Management).
These loans, granted in 2013 and 2014, were only possible because the government of the day, under the then President Armando Guebuza, issued guarantees covering 100 per cent of the loans. The loan guarantees were entirely illegal since they smashed through the ceiling on loan guarantees laid down by the budget laws of 2013 and 2014.
Manuel Chang signed the guarantees while Gove and his fellow directors of the Bank of Mozambique authorized the contracting of the loans. If any of them had raised objections, the whole scheme would have fallen through.
Gove and the other central bank directors can be hauled before a Mozambican court without too much difficulty, since they are in the country.
Chang, however, has been in South African police custody since December 2018. He was arrested at Johannesburg airport, while on his way to Dubai, on the basis of an international warrant issued by the US prosecuting authorities.
The US prosecutors want Chang to face trial in New York on charges of conspiracy to commit securities fraud and money laundering. They claim jurisdiction because the fraud involved abuse of the US financial system, and some of those defrauded are US citizens.
For more than four years, the South African legal system has been faced with competing extradition claims from the US and from Mozambique, both of whom want to put Chang on trial.
The charges against Chang in Mozambique are violation of budgetary legality, corruption, abuse of office, embezzlement, money laundering and criminal conspiracy.
The first “hidden debts” trial ran from August 2021 to December 2022. This trial laid bare a gigantic corruption scheme, involving Mozambican officials, Credit Suisse bankers, and officials of the Abu Dhabi-based group, Privinvest, which became the sole contractor for Proindicus, Ematum and MAM. Privinvest sold fishing boats, radar stations and other assets to the three companies at vastly inflated prices.
Eleven defendants were found guilty of crimes including embezzlement and money laundering and were sentenced to 11 or 12 years imprisonment. They included Guebuza’s oldest son, Ndambi, the head of the State Security Service (SISE) under Guebuza, Gregorio Leao, the director of SISE Economic Intelligence, Antonio Carlos do Rosario, Guebuza’s political advisor, Renamo Matusse, and the former President’s personal secretary, Ines Moiane. They have all announced their intention to appeal.
The court also ordered all the accused to repay the bribes they had received from Privinvest.
But the main conspirators will have to pay much more. The court ordered Ndambi Guebuza, Gregório Leão and António Carlos do Rosário to pay 2.883 billion dollars.
As was entirely predictable, the three companies did virtually no business and soon went bankrupt. At this point, what had been hidden loans became hidden debts. The guarantees signed by Chang meant that the Mozambican state became liable for the loans – and the banks wanted their money back.
Now that all phases of the investigation are complete, a date for a trial can be fixed. The sources cited by “Noticias” believe the trial can happen later this year (although it is still not known whether Chang will be extradited to Maputo or to New York).
During the investigations into Chang and the central bank directors, the Public Prosecutor’s Office managed to recover, in cash, seven million dollars, and 62.1 million meticais (slightly less than a million dollars, at the current exchange rate), plus a building in Maputo acquired for 850,000 dollars.
(AIM)
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