A former finance minister of Mozambique who was accused of helping facilitate a multibillion-dollar fraud that nearly pushed his country’s economy into catastrophe has been ordered to spend eight and a half years in prison and pay $7 million in forfeiture, prosecutors said.
The sentencing was handed down after a four-week trial that ended in August in which Judge Nicholas G. Garaufis of the U.S. District Court in Brooklyn determined that the former minister, Manuel Chang, 69, had conspired to commit wire fraud and money laundering through an international scheme that bilked a number of international investors out of about $2 billion, according to a news release from the U.S. attorney’s office in the Eastern District of New York.
Prosecutors said he had taken $7 million in bribes as he signed guarantees on behalf of the Republic of Mozambique, without proper permission from the country’s Parliament, to get three loans for maritime projects aimed at erecting shipyards and developing tuna fishing.
“Chang’s brazen misconduct betrayed his duty to the people of Mozambique and defrauded investors, including those in the United States, of substantial amounts,” said Brent S. Wible, head of the Justice Department’s Criminal Division.
“With today’s sentence, Chang has been held accountable for his violations of U.S. law,” he added.
Mr. Chang’s lawyer, Adam C. Ford, did not immediately respond to a request for comment.
In addition to his time behind bars, Mr. Chang will have to pay restitution to his victims, the release said. How much he has to pay will be determined at a later date.
The scheme came to the authorities’ attention when about half a billion dollars went missing, and investigators said that it had been spent on bribes and kickbacks to former bankers and foreign officials. But the full scope of the fraud did not become clear until 2016, when Mozambique defaulted on its sovereign debt and its economy fell into disrepair.
It had become known as the “tuna bond” affair and “the hidden debt scandal.”
Mr. Chang and his co-conspirators ensured that a subsidiary of Credit Suisse and another, unidentified investment bank arranged for roughly $2 billion in loans to go to companies owned and controlled by the Mozambican government between 2013 and 2016, the news release said.
Credit Suisse and a Russian bank called VTB Capital greased the wheels for borrowing by the Mozambican government from 2013 to 2015 that amounted to about 12 percent of the country’s gross domestic product.
Mr. Chang and the others helped Privinvest Group, a shipbuilding company based in the United Arab Emirates, divert more than $200 million into kickbacks and bribes, kept it out of the public eye and lied to investors and banks about it, the release added.
Ultimately, Mr. Chang and the others misrepresented what the loans would be used for and sold them in part, or in whole, to investors worldwide, according to the release. Those investors experienced “substantial losses” when the government companies that had borrowed the money defaulted on more than $700 million in repayments, it added.
Mr. Chang was arrested in South Africa in December 2018 as he was trying to make his way to the United Arab Emirates. He was extradited to the Eastern District of New York in July 2023.
Credit Suisse and its subsidiary, based in Britain, admitted to defrauding a number of U.S. and international investors in the financing of an $850 million loan in October 2021. The subsidiary also pleaded guilty to conspiring to commit wire fraud while Credit Suisse worked out a deferred prosecution agreement, according to the release.
The pair has had to pay $475 million in penalties and fines to the U.S. and British governments, prosecutors said.
“Today’s sentence shows that foreign officials who abuse their power to commit crimes targeting the U.S. financial system will meet U.S. justice,” said Carolyn Pokorny, the acting U.S. attorney for the Eastern District, in the release.
