Hidden Debts: New York jury finds Chang guilty

New York, 8 Aug (AIM) – A jury in a court in New York on Thursday found Mozambique’s former Finance Minister, Manuel Chang, guilty of conspiracy to commit money laundering and wire fraud.

The trial arose from the scandal of Mozambique’s “hidden debts” –a term that refers to the illicit loans for over two billion US dollars obtained in 2013 and 2014 from the banks Credit Suisse and VTB of Russia by three fraudulent companies, Proindicus, Ematum (Mozambique Tuna Company) and MAM (Mozambique Asset Management), which were all run by the Security and Intelligence Service, SISE.

The Abu Dhabi-based group, Privinvest, was the sole contractor for the three companies, and sold them fishing boats, radar stations and other assets at grossly inflated prices. To win the contracts, Privinvest bribed bankers and Mozambican officials, including Chang.

Chang received seven million dollars from Privinvest, and the prosecution argued this was determinant in securing his support for the fraudulent companies.

Since they had only just been set up, the companies had no business record, and so no reputable bank would have lent them money without firm guarantees. The Mozambican government of the day, under the then president Armando Guebuza, provided those guarantees.

The loan guarantees were all signed by Manuel Chang, even though he must have known they were illegal. The 2013 and 2014 Mozambican budget laws set a ceiling on the amount of loan guarantees that the Mozambican state could provide. The loans to Proindicus, Ematum and MAM smashed through this ceiling. Chang must have been well aware of this, since he had steered the budget laws through the Mozambican parliament.

Chang’s defence team insisted that he had taken no bribes from Privinvest. In his summing up on Wednesday, defence lawyer Adam Ford had the forlorn task of arguing that the three companies and their contracts were not corrupt, and were the responsibility, not of Chang, but of Guebuza.

Ford claimed there was no evidence that Chang had used the scheme to enrich himself. He said there is no document showing that Chang signed the guarantees “because he was promised money, because he received money, or because he was given money”.

But in fact there is a mountain of documentary evidence against Chang. The prosecution had obtained voluminous bank documents, and the email correspondence between Chang, and his co-conspirators, including Privinvest and Credit Suisse officials.

Particularly damning was the evidence given by Andrew Pearse and Surjan Singh, who led the Credit Suisse team negotiating the loans. They had earlier confessed to receiving Privinvest bribes, and now they testified against Chang.

Ford claimed that Chang had no “criminal intent” when he signed the loan guarantees. He ignored, or did not know, that the guarantees broke the Mozambican budget law, which Chang himself had presented to parliament a few months earlier.

Clearly the jury found the prosecution attorneys much more believable. One of them, Hiral Mehta, is his rebuttal to the defence arguments, declared “what’s at stake here is finding the defendant accountable for participating in an international fraud and conspiracy to obtain two billion dollars. Two billion in loans over the course of 15 months by agreeing to lie to investment banks and other investors to obtain that money in exchange for getting seven million dollars in bribes that he laundered with his criminal partners to line his own pockets”.

Whether the projects were any use to Mozambique, whether they made any sense was irrelevant. “That’s not what the case is about”, said Mehta. “The case is about lying and laundering money”.

Nonetheless, the truth was that the projects did fail. They made no money and went bankrupt. “Mozambique, a country with limited resources, was stuck with the bill”, said Mehta, “and banks and other investors lost hundreds of millions of dollars”.

One defence argument was that Chang repaid the seven million dollar bribe to the Mozambican authorities via his friend Luis Brito. The defence, Mehta said, believed that, since the money had been repaid, “shouldn’t we all just go home?”

“But that’s not how it works”, he said. “You don’t get to rob a bank and then, six years later you give the money back and say no harm done. That’s not how crime works”.

With Chang found guilty, the next stage is for the judge to determine an appropriate sentence. According to the US Justice Department, that could be a maximum prison sentence of 20 years for each of the two crimes.

Any sentence will be reduced by the more than five years Chang has already spent behind bars, ever since he was detained in Johannesburg airport in December 2018.

It looks as if Chang will not be returning to Mozambique any time soon. And when he does set foot on Mozambican soil, he will be re-arrested, since the Attorney-General’s Office has already drawn up a lengthy charge sheet against him.

The US Principal Deputy Assistant Attorney-General Nicole M. Argentieri, head of the Justice Department’s Criminal Division, declared “Not only did Chang’s abuse of authority betray the trust of the Mozambican people, but his corrupt bargain also caused investors—including U.S. investors—to suffer substantial losses on those loans. Chang’s conviction today demonstrates that the Criminal Division is committed to combatting foreign corruption in violation of U.S. law, no matter where these schemes occur or whom they involve.”

The Attorney for the Eastern District of New York, Breon Peace, issued a statement that “Today’s verdict is an inspiring victory for justice and the people of Mozambique who were betrayed by the defendant, a corrupt, high-ranking government official whose greed and self-interest sold out one of the poorest countries in the world. 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.”

(AIM)

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