On January 4, three ex-bankers from Credit Suisse Group were arrested in London over their involvement in a $2 billion loan package for faking maritime development projects in Mozambique. Additionally, a fourth ex banker, from Lebanese named Jean Boustani, who was involved, was arrested on January, in New York City. Moreover, a fifth former Mozambican minister of finance Manuel Chang, was detained in South Africa, connected to the case. All arrested, face the possibility of extradition to the United States.
Specifically, the US Department of Justice supports that between 2013-2016, all five arrested bribed Mozambican officials and defrauded investors. Their aim was to collect financing for projects in shipyards, tuna fisheries and maritime security in Mozambique.
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Also, the prosecutors are of the opinion that their prior goal was to create financial flows that the participants would benefit from.
Moreover, a federal indictment released on January 3, noted that Credit Suisse bankers Andrew Pearse, Surjan Singh and Detelina Subeva collected approximately $2 billion in funds from international investors by selling loans guaranteed by the Mozambican government.
As stated in the indictment, allegedly three men misled the investors concerning the nature of the loans’ use, the amount of Mozambique’s existent debt and its capability to repay. The three men arranged with the Finance Minister Manuel Chang to keep the loans secret from Mozambique’s other lenders and circumvented internal controls at Credit Suisse to complete the deals.
The majority of the money collected was paid to Boustani’s firm, Privinvest, the primary contractor for the project. Privinvest then paid out over $200 million in bribes and kickbacks to Pearse, Singh, Boustani and a range of Mozambican officials.
As quoted in the indictment
The defendants created the maritime project as fronts to enrich themselves
The amount addressed in the indictment might not include all elements. In other words, approximately $500 million worth of the projects’ spending remains unaccounted for. Out of the remaining expenses that were accounted for, the assets bought were overpriced by an estimated $700 million, as stated to a 2017 audit.
Yet, one of the ‘front’ projects which was a 24-vessel tuna fishing fleet, is now a symbol of Mozambique’s debt and the poor results of its government’s investments. During 2016, three years after being launched, the company was no longer in use and only gathered about $500,000 per year worth of tuna with two dozen new vessels. None of the other entities created with the funding are still operational.
Concluding, the minute the full extent of Mozambique’s debt burden was in the spotlight in 2016, a majority of its international lenders and donors stopped their help over being concerned that the government would use the money to pay off bad debt.
