U.S. indicts Mozambique's former finance minister over $2 billion loan schemeStaff Writer |
America Alleged roles in a $2 billion fraud and money laundering scheme
The U.S. Justice Department indicted Mozambique’s former finance minister, along with eight executives, officials and investment bankers, over their alleged roles in a $2 billion fraud and money laundering scheme, the department said.
Jean Boustani, 40, a citizen of Lebanon who worked for the Privinvest Group, a United Arab Emirates-based shipbuilding company, was arrested at John F. Kennedy Airport in New York on Jan. 2, 2019 and arraigned later that day in the Eastern District of New York on charges that he conspired with others to commit one count of wire fraud, one count of securities fraud, and one count of money laundering in connection with $200 million in bribe and kickback payments he helped organize relating to three loans totaling more than $2 billion that were marketed and sold to U.S. victim investors.
Boustani has pleaded not guilty to the charges; a trial date has not yet been set.
Alongside Boustani, Privinvest’s chief financial officer Najib Allam, 58, a citizen of Lebanon, was charged with the same counts.
Allam is alleged to have worked with Boustani to make the bribe and kickback payments.
Allam is not currently in U.S. custody.
Manuel Chang, 63, the former Mozambican minister of finance who is a citizen and resident of Mozambique, was charged with the same counts as Boustani, namely one count of conspiracy to commit wire fraud, one count of conspiracy to commit securities fraud, and one count of conspiracy to commit money laundering.
Chang was arrested at the request of the United States by South African authorities on Dec. 29, 2018.
The United States is seeking Chang’s extradition.
Antonio do Rosario, 44, a citizen and resident of Mozambique, was an official with Mozambique’s State Information and Security Service and a director and officer of each of the three Mozambican entities that obtained the maritime loans.
Do Rosario was charged with one count of conspiracy to commit wire fraud, one count of conspiracy to commit securities fraud, and one count of conspiracy to commit money laundering in connection with his receipt of bribe payments relating to the loans.
Do Rosario is not currently in U.S. custody.
Teofilo Nhangumele, 50, a citizen and resident of Mozambique, acted on behalf of the Office of the President of Mozambique.
Nhangumele was charged with one count of conspiracy to commit wire fraud and one count of conspiracy to commit money laundering in connection with his negotiation and receipt of bribe payments relating to the loans.
Nhangumele is not currently in U.S. custody.
The three investment bankers, Andrew Pearse, 49; Surjan Singh, 44; and Detelina Subeva, 37, each of whom is a resident of the United Kingdom, were also charged with one count of conspiracy to commit wire fraud, one count of conspiracy to commit securities fraud, and one count of conspiracy to commit money laundering.
In addition, each banker was charged with one count of conspiracy to violate the anti-bribery and internal controls provisions of the Foreign Corrupt Practices Act (FCPA) in connection with their roles in facilitating bribe payments to government officials in Mozambique and for circumventing the internal accounting controls of a foreign investment bank that arranged two of the loans.
At the time, Pearse and Singh were managing directors of the investment bank, and Subeva was a vice president.
Pearse, Singh and Subeva were arrested on Jan. 3, in the United Kingdom, all pursuant to provisional arrest warrants issued at the request of the United States.
The United States is seeking their extradition.
The indictment alleges that between approximately 2013 and 2016, the co-conspirators organized for more than $2 billion in three loans to be arranged by Investment Bank and another foreign bank.
The loans were made to companies owned and controlled by the Mozambican government: Proindicus S.A., Empresa Moçambicana de Atum, S.A. (EMATUM) and Mozambique Asset Management (MAM).
The money was purportedly to be used to fund three maritime projects for which the shipbuilder, Privinvest, would provide the equipment and services.
Proindicus was to perform coastal surveillance, EMATUM was to engage in tuna fishing, and MAM was to build and maintain shipyards.
Chang, in his capacity as minister of finance, signed guarantees on behalf of Mozambique for all three fraudulent loans.
Singh signed the agreements on behalf of the investment bank for the two loans on which the bank acted as primary arranger.
The investment bank subsequently paid the loans directly to Privinvest.
As further alleged in the indictment, the co-conspirators facilitated Privinvest’s criminal diversion of more than $200 million in loan proceeds, including more than $150 million in bribe payments to Chang and other Mozambican government officials that Privinvest paid to ensure that Mozambique would enter into the loan arrangements.
In addition to the bribe payments, the alleged fraud also included approximately $50 million in kickback payments to Pearse, Singh, and Subeva, who assisted the conspirators to obtain financing for the loans through their investment bank and a second foreign investment bank.
Pearse, Singh, and Subeva, along with the other members of the conspiracy, allegedly subsequently sold the loans to investors worldwide, including in the United States.
Moreover, the participants in the scheme allegedly conspired to defraud these investors by misrepresenting how the loan proceeds would be used, the amount and maturity dates of other loans and debt Mozambique was obligated to pay, and the ability of Mozambique or its state-owned entities to repay the loans.
Mozambique and its state-owned entities have thus far allegedly failed to make more than $700 million of repayments that have become due on the loans.
The charges in the indictment are merely allegations, and the defendants are presumed innocent until proven guilty beyond a reasonable doubt in a court of law. ■
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