Mozambique’s former Finance Minister Manuel Chang pleaded not guilty to US charges stemming from his role in a $2 billion bond fraud scandal that embroiled Credit Suisse Group AG and created a financial crisis in the African nation.
(Bloomberg) — Mozambique’s former Finance Minister Manuel Chang pleaded not guilty to US charges stemming from his role in a $2 billion bond fraud scandal that embroiled Credit Suisse Group AG and created a financial crisis in the African nation.
Chang arrived in New York late Wednesday night on a private government jet after being extradited from South Africa, where he’d been in custody since his arrest in 2018 at the request of US prosecutors. He entered his plea Thursday before US District Judge Nicholas Garaufis in Brooklyn, New York.
The judge on Thursday ruled Chang is a flight risk and denied the former minister’s request for release on bail. Prosecutors wanted him to remain in custody because Mozambique doesn’t have an extradition treaty with the US.
The US claims Chang was part of a group of corrupt officials who conspired with Credit Suisse bankers to take Mozambique deeper into debt for dubious maritime projects such as a fleet of ships to combat piracy. But Mozambique defaulted on a bond meant to guarantee the $2 billion in loans, and prosecutors say that at least a half a billion dollars were looted.
Chang personally pocketed $5 million in bribes and facilitated the laundering of $200 million in money funneled to Mozambican officials — a fraud that caused “a severe financial crisis” in the country, according to US officials.
‘Devastate Economy’
“The defendant was a senior government official in Mozambique and his actions helped devastate the economy of one of the world’s poorest nations,” prosecutors Hiral Mehta and Jonathan Siegel said in letter to the court.
Chang could face as long as 55 years in prison if convicted, according to the US.
In 2021, Credit Suisse paid almost $475 million to resolve multiple investigations of its role in the scandal, one of several major legal and financial setbacks the Swiss bank faced in the years leading up to its collapse in March.
Meanwhile, a Credit Suisse unit and three former bankers also pleaded guilty to charges in the same case brought against Chang.
According to the US, at the center of the scheme was Jean Boustani, a salesman at shipbuilder Privinvest Group, who allegedly paid $200 million in bribes to bankers and Mozambican officials — including Chang. Boustani was acquitted after a 2019 federal trial in Brooklyn.
The US argued Boustani funneled illicit payments to bankers and to Mozambican officials to win business for Privinvest for three dubious maritime projects.
Prosecutors alleged Boustani defrauded US investors by helping organize and conceal bribes for loans marketed and sold to American investors. But the jury said Brooklyn wasn’t the proper venue for the case and it should have been tried in Manhattan because some payments went through bank accounts there.
Privinvest CFO
Chang and Najib Allam, the former chief financial officer of Privinvest, face charges that include conspiracy to commit securities fraud and money laundering.
Allam is in Lebanon, which doesn’t have an extradition treaty with the US, Mehta said at a hearing last month. The US would seek Allam’s extradition if he leaves Lebanon and is arrested in another country, the prosecutors said.
Last month, Chang’s attorney, Adam Ford, told Garaufis that said he’d seek dismissal of the charges arguing the government took too long to bring him to trial. He also argued that the case should be dismissed because Chang has been held in “dire conditions” in solitary confinement in a South African prison.
Mozambique had also sought to prosecute Chang, but a South African court ordered him sent to the US for trial.
The case is US v. Chang, 18-cr-00681, US District Court, Eastern District of New York (Brooklyn).
–With assistance from Matthew Hill.
(Updates with judge’s ruling on bail.)
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