Unsealed Indictment of Charges Against Mozambique Finance Minister on Money Laundering and Fraud Charges in U.S District Court of New York

The charges in the indictment are allegations, and the defendants are presumed innocent until proven guilty.

BROOKLYN, NY – Globe Afrique’s Research Desk has gained access to the unsealed indictment of the former Finance Minister of Mozambique in an alleged multi-billion dollar money laundering and fraud scheme. Mozambique, where about half the population lives in poverty, is the latest African country to be thrust in the spotlight by U.S. prosecutors at the U.S. Department of Justice.

Judge William F. Kuntz, II, at the U.S. Federal Courthouse located in Brooklyn, NY ruled to unsealed the four-count indictments against Mozambique’s Minister of Finance (who is awaiting extradition in a South African prison) and 7 other individuals on charges of money laundering, conspiracy to violate the U.S. Foreign Corrupt Practices Act, conspiracy to commit securities fraud, and conspiracy to commit wire fraud.

Mozambique’s former finance minister, Manuel Change was arrested on December 29 at O.R. Tambo International Airport while travelling to Dubai at the request of the United States. His alleged co-conspirators, Lebanese businessman Jean Boustani was arrested at New York’s JFK airport, and three Credit Suisse bankers, Andrew Pearse, Surjan Singh, and Detelina Subeva were also arrested in London.

Manuel Chang, Former Finance Minister of Mozambique (photo: courtesy of Reuters)

A few years ago, Mozambique’s fragile economy received a boost when it was determined that the country was sitting on one of the world’s largest natural gas deposit. A few months later, the IMF discovered that the country’s finance minister was hiding hundreds of millions of debt. This revelation led to an immediate suspension of critical aid from the IMF and investors fled the country. A forensic investigation revealed that the finance minister was hiding close to $2 billion in debt.

The Indictment

The unsealed indictment shows how the bankers and the former finance minister harmed Mozambique’s recovering economy. In a series of emails collected by U.S. law enforcement agents, the alleged criminals, including a senior official in the finance ministry, used maritime projects to enrich themselves and bribe other government officials.

Manuel Chang, former finance minister of Mozambique, at court to fight extradition to the US in Kempton Park, South Africa on January 8, 2019. Photo: AFP

In one of the redacted email, a government official stated, “In democratic governments like ours people come and go, and everyone involved will want to have his share of the deal while in office because once out of the office it will be difficult…”

According to the U.S. Department of Justice, “The indictment unsealed alleges a brazen international criminal scheme in which corrupt Mozambique government officials, corporate executives, and investment bankers stole approximately $200 million in loan proceeds that were meant to benefit the people of Mozambique,” said Assistant Attorney General Benczkowski. 

“The Department of Justice and our law enforcement partners are dedicated to using all tools at our disposal to prosecute those who engage in money laundering, financial fraud, and corruption … wherever those individuals may be located.”

The indictment alleges that between approximately 2013 and 2016, Boustani, Allam, Nhangumele, do Rosario, Chang, Pearse, Singh, Subeva and their co-conspirators ensured that the Investment Bank, and another foreign investment bank, would arrange for more than $2 billion to be extended, in three loans, to companies owned and controlled by the Mozambican government:  Proindicus S.A. (Proindicus), Empresa Moçambicana de Atum, S.A. (EMATUM) and Mozambique Asset Management (MAM). 

Maputo, Mozambique. Photographer: Waldo Swiegers/Bloomberg

The proceeds of the loans were intended to fund three maritime projects for which Privinvest was to provide the equipment and services.  Specifically, Proindicus was to perform coastal surveillance, EMATUM was to engage in tuna fishing and MAM was to build and maintain shipyards.  According to the International Monetary Fund, the loans Credit Suisse and others arranged effectively doubled the cost of servicing the country’s debt.

To date, the companies controlled by the government of Mozambique have failed to make more than $700 million of loan repayments that have become due.

Nhangumele, a citizen and resident of Mozambique, acted in an official capacity on behalf of the President of Mozambique during the charged scheme, and is charged for his role in facilitating the payment by Privinvest of over $150 million to Mozambican government officials to gain approval for the maritime projects, and to cause Mozambique to borrow more than $2 billion from the two investment banks in government-guaranteed loans to finance the projects.  Nhangumele has not yet been arrested on the charges in this indictment and Nhangumele is not currently in U.S. custody.

Chang, a citizen, and resident of Mozambique was the former Finance Minister of Mozambique and is charged for signing guarantees on behalf of Mozambique for the three corrupt loans.  He is alleged to have personally received at least $5 million from the scheme.  Chang was arrested on December 29, 2018, in South Africa, pursuant to a provisional arrest warrant issued at the request of the United States.  The United States is seeking his extradition.

The charges in the indictment are allegations, and the defendants are presumed innocent until proven guilty.

Globe Afrique’s Research Desk is following this case and will provide updates as they happen.

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