Overview of the Case
On August 8, 2024, Manuel Chang, the former finance minister of Mozambique, was convicted on U.S. criminal charges related to a massive fraud case involving $2 billion in loans. The case, known as the “tuna bonds” scandal, revolved around fraudulent loans intended for developing Mozambique’s fishing industry. Chang was found guilty of conspiracy to commit wire fraud and money laundering.
The Fraudulent Scheme
Background of the Loans
The loans in question were provided by Credit Suisse and Russian bank VTB. They were intended for three state-owned companies in Mozambique to develop the fishing industry and enhance maritime security. However, these projects were plagued with issues from the start.
Role of Manuel Chang
Manuel Chang played a crucial role in this scandal. He was accused of accepting $7 million in bribes from Privinvest, a shipbuilding firm. In return, Chang approved a government guarantee for the loans. This guarantee was essential for securing the financing from Credit Suisse and VTB.
Execution of the Fraud
Prosecutors revealed that Chang received the bribes through a Swiss bank account controlled by a friend. Additionally, other Mozambican officials were involved in communicating with Privinvest about the payoffs, attempting to cover up their tracks.
Fallout from the Scandal
Collapse of the Projects
The projects funded by the fraudulent loans eventually collapsed. The state-backed companies defaulted on their loans, leading to significant financial losses for investors. This default also caused a severe currency collapse in Mozambique, further exacerbating the country’s financial turmoil.
Impact on Mozambique
The scandal had far-reaching effects on Mozambique. Donors, including the International Monetary Fund, suspended their support. This suspension triggered a currency crisis and widespread financial instability in the country.
Legal Proceedings
Trial and Conviction
The trial lasted three weeks and ended with Chang’s conviction. The jury found him guilty of conspiracy to commit wire fraud and money laundering. Chang’s defense argued that the $7 million bribe was not intended for him and that his actions were done under presidential directives.
Statements from Key Figures
Breon Peace, the top federal prosecutor in Brooklyn, described the verdict as a victory for justice and the people of Mozambique. He condemned Chang as a corrupt official whose actions severely harmed one of the world’s poorest nations.
On the other hand, Chang’s defense lawyer, Adam Ford, claimed that the money was not intended for Chang and that his client acted under presidential influence.
Related Developments
Plea Deals and Testimonies
In 2019, two Credit Suisse bankers pleaded guilty and testified against Chang. Their testimonies were crucial in securing the conviction. Another co-defendant, Privinvest salesman Jean Boustani, was acquitted in 2019 after testifying that he was not involved in structuring the loans.
Financial Penalties
Credit Suisse, which was acquired by UBS, agreed to pay $475 million in 2021 to settle related bribery and fraud charges. This settlement was part of the broader resolution of the scandal.
Lawsuits and Appeals
Mozambique recently won a substantial portion of a $3.1 billion lawsuit in London’s High Court against Privinvest. The lawsuit alleges that Privinvest paid bribes to Mozambican officials and Credit Suisse bankers. Privinvest has announced plans to appeal the court’s finding and contest the damages.
Conclusion
Manuel Chang’s conviction marks a significant moment in the fight against global financial corruption. The “tuna bonds” case highlights the severe impact of financial misconduct on developing nations. Mozambique’s ongoing legal battles reflect the broader challenges in addressing such large-scale corruption.
