Former Mozambique finance minister pleads not guilty in US federal court over $2 billion scandal

By Reuters

NEW YORK: Mozambique’s former finance minister pleaded not guilty in a U.S. federal court in New York on Thursday in connection with a $2 billion corruption and money laundering scandal that prosecutors said defrauded American investors and threatened to further destabilize the economy of one of the world’s poorest countries.

Manuel Chang served as finance minister from 2005 to 2015 for Mozambique, a country of 31 million on Africa’s southern coast on the Indian Ocean. He was ordered detained until at least October, when his attorneys argue for a dismissal of his case.

Chang is accused of receiving bribes of up to $18 million during a scheme that secured loans for Mozambican state-owned companies from foreign banks and financiers for maritime projects. The money was looted through kickbacks and other corrupt dealings, according to U.S. prosecutors.

Until his extradition to the United States Wednesday, Chang had been held in South Africa after being arrested in Johannesburg in 2018 on a U.S. warrant.

“He is relieved to be here,” his lawyer, Adam Ford, said after the arraignment in U.S. District Court in Brooklyn.

In a letter a month ago to U.S. District Judge Nicholas Garaufis, one of Chang’s attorneys sought to have the case dismissed, asserting that Chang’s right to a speedy trial had been violated.

Ford has called the charges “meritless” and asserted that Chang would be acquitted — like another key figure in the alleged scheme who was acquitted by a U.S. jury in 2019.

The judge raised that point in court Thursday, but was persuaded by the prosecution’s suggestion that another jury might see things differently.

In 2019, a federal jury acquitted co-defendant Jean Boustani, a Lebanese national who worked for a Middle Eastern shipbuilding company, who was accused by American authorities of fraud related to $200 million in bribes and kickbacks as part of the broader scheme.

Much of Thursday’s hearing focused on whether Chang should be released on bail. The judge, citing the amount of money involved and the gravity of the charges, agreed with prosecutors that he could be a flight risk.

During the hearing an attorney for the U.S. government, Hiral Mehta, provided a preview of the evidence that could be introduced during a trial, including emails, spreadsheets, bank records and other financial documents.

The scandal centers on loans totaling $2 billion that were supposed to go toward purchasing fishing vessels and naval patrol boats to bolster Mozambique’s fishing industry. But prosecutors say the investments never happened.

The scandal caused a financial crisis in Mozambique when the International Monetary Fund withdrew its support for the country after the so-called “hidden debts” were revealed in 2016.

In 2021, Swiss bank Credit Suisse agreed to pay at least $475 million to British and American authorities to settle bribery and kickback allegations stemming from their involvement with the corrupt loans.

At least 10 people have already been convicted and sentenced to prison by a Mozambican court over the scandal, including Ndambi Guebuza, the son of former Mozambican president Armando Guebuza. He was sentenced to 12 years in prison for receiving up to $33 million from the corrupt deal.