According to Agência de Informação de Moçambique (AIM), the prosecution in the New York trial of former Finance Minister Manuel Chang argued on Wednesday (7) that the Abu Dhabi-based Privinvest group “from the outset agreed to bribe the defendant and other Mozambican officials to obtain these projects”.
According to the information, the projects in question are the fraudulent Mozambican companies ProIndicus, Ematum (the Mozambican Tuna company) and MAM (Mozambique Asset Management) which, in 2013-14, obtained loans totalling 126.5 billion meticals (2 billion dollars) from the Russian banks Credit Suisse and VTB. The loans were only possible because the Mozambican state provided sovereign guarantees that if the companies failed, it would pay back the money. The man who signed the guarantees was Manuel Chang.
The money did not go to Mozambique, but directly to Privinvest as the sole contractor for the three companies. Privinvest then sold the companies fishing boats, patrol boats, radar stations and other assets at hugely inflated prices. An independent audit of the three companies estimated the over-invoicing at around 44.2 million meticals.
Manuel Chang faces charges of conspiracy to commit money laundering and wire fraud, and the prosecution has presented documentary evidence (including bank statements and incriminating email correspondence between the fraudsters) indicating that Chang did in fact accept bribes totalling 443.2 million meticals from Privinvest.
Concluding her summing up on Wednesday, prosecutor Genny Ngai, according to the trial transcript, described the loans as “a massive scheme of international bribery, money laundering and fraud”.
They depended on Chang’s co-operation. Senior Privinvest official Jean Boustani, Ngai said, “bribed the defendant into approving these projects and signing the loan guarantees”. Once they were signed, Boustani went to Credit Suisse and VTB to ask for the necessary money.
At Credit Suisse, the defendant bribed the negotiating team, led by Andrew Pearse and Surjan Singh “so that they would help approve these loans internally”. Pearse and Singh confessed to receiving bribes from Privinvest and testified for the prosecution.
Without the loan guarantees signed by Chang “there would be no money for the projects,” said Ngai. “And if there’s no money for the projects, there are no projects.”
Manuel Chang was finance minister, said the prosecutor. “Even so, he accepted 443.2 million meticals in bribes to approve projects, to sign loan documents, for projects that ultimately failed. And when those projects failed, the loan documents that the defendant signed put Mozambique and its people under an obligation to pay 126.5 billion meticals.”
All the evidence, Ngai added, “proved that the defendant knew what he was doing was wrong. But he did it anyway. He accepted the bribes, laundered those bribes so that no one would find out, and all the bribe money passed through the United States.”
According to the information, Manuel Chang and his co-conspirators “also agreed to lie to investors about these bribes so that they could keep getting more and more money,” said Ngai. “The damage they caused was not just in Mozambique, because investors lost hundreds of millions of dollars, including investors from the United States.”
Some of these investors testified in favour of the prosecution, and all told the court “that they believed the lies in the contract and lost millions of dollars because they decided to invest on the basis of these lies”.
“Privinvest senior official Jean Boustani,” said Ngai, “bribed the defendant so that he would approve these projects and sign the loan guarantees.Once the loan guarantees were signed, Boustani went to Credit Suisse and VTB to ask for the necessary money”
Andrew Pearse was a key figure in the fraud, and he confessed in 2019 when he pleaded guilty to conspiracy to commit wire fraud. At Chang’s trial, Ngai recalled that this former Credit Suisse lead banker told the court “that he received 2.8 billion meticals from Privinvest, and he said ‘I received millions of dollars in commissions and illegal payments from Privinvest'”.
Pearse conspired with his fellow Credit Suisse banker, Surjan Singh, to approve the loans by the banks, notably the loan to MAM. Pearse did this “even though he knew there was no chance that MAM would succeed. In fact, he testified that the project was rubbish.”
The money for the fraudulent companies kept increasing through “extensions”. Thus, the amount lent to Proindicus started at 23.5 million meticals, but three “extensions” brought the final amount to 39.3 million meticals. At each stage, the government had to guarantee the money, and it was Chang who signed these guarantees.
“The defendant was paid to approve the extension for Proindicus,” said Ngai. “He’s the finance minister. Boustani is the contractor who is supposed to be carrying out these projects. Boustani is paying the defendant and they are flying to Paris several times because they are conspiring together.”
Manuel Chang signed an additional 17.5 million metical guarantee for Proindicus in December 2014 “even though he knew for sure that Proindicus was failing and could not pay the interest to the banks”.
As AIM describes, Proindicus was in serious trouble, and an interest payment of 5.6 million meticals was looming, which Proindicus could not afford. The fraudsters feared that if Proindicus failed, Ematum and MAM would also collapse.
The solution was to pour more money into Proindicus’ black hole. Hence the “extension” of 17.5 million meticals. The conspirators, said Ngai, told potential investors “that Proindicus just needed more money for projects – when, in fact, what they were doing was using this extension to cover old loans”.
Manuel Chang’s mandate was coming to an end, and he signed an agreement with Boustani and Rosario whereby, if Chang signed the guarantee for the 17.5 million metical extension, Privinvest would pay Proindicus’ interest, thus avoiding a default.
This agreement was completely secret. “Nobody informed the banks,” said Ngai. “Nobody informed the investors.”
Chang involved his family in the scam. His daughter, Manuela, was taken to Lebanon for the sole purpose of opening an account at the First Bank of Lebanon. She sent Boustani an email with the Lebanese bank account numbers.
Within days, Chang signed the final Proindicus agreement, whereby, said Ngai, “he promised that Mozambique would pay up to 56.9 million meticals if Proindicus failed”.
“Manuel Chang signed an additional 17.5 million metical guarantee for Proindicus in December 2014 “even though he knew for sure that Proindicus was failing and could not pay the interest to the banks”
The former finance minister laundered the 443.2 million metical bribe through accounts in the name of his friend Luis Rocha Brito in the companies Genoa Asset and Thyse International, who later tried to cover up the arrangement by giving his bank (Barclays) “a fake property transaction” to disguise the Privinvest payments.
Chang, Ngai charged, “laundered his criminal proceeds to try to hide where they were coming from, who they were coming from and where they were going. That’s a criminal offence. That’s called money laundering.
The conspirators, the prosecution argued, “sent money through accounts in other people’s names. Privinvest divided the payments into instalments, and Privinvest created false documents to hide these bribes. For example, fake invoices for consultancy fees, fake invoices for real estate projects, even fake residence permits for government officials and bankers so they could open secret accounts in Abu Dhabi.”
“We proved beyond reasonable doubt,” said Ngai, “that the defendant agreed to lie and agreed to commit wire fraud. Because every time he signed a government guarantee, the defendant agreed to lie to investors,” the source said.
