A former Finance minister of Mozambique, Manuel Chang, has been convicted by a US Court of bribery to secretly commit his country to huge loans that prosecutors say ended up being looted.
- •Chang accepted payoffs to secretly hook up Mozambique to big loans issued to government controlled entities for tuna fishing ships and other maritime projects.
- •Consequently, the loans were stained by bribes and kickbacks, according to prosecutors, with Mozambique facing a US$2 billion in hidden debt, spurring a financial crisis.
- •The US$2 billion fraud, bribery and money laundering sustained losses for investors in the United States and elsewhere.
“[The] verdict is an inspiring victory for justice and the people of Mozambique who were betrayed by the defendant, a corrupt, high-ranking government official whose greed and self interest sold out one of the poorest countries in the world,” Brooklyn based US Attorney Breon Peace said in a statement.
“Chang now stands convicted of pocketing millions in bribes to approve projects that ultimately failed, laundering the money, and leaving investors and Mozambique stuck with the bill,” he added.
Manuel Chang held the Finance Minister position for almost ten years – 2005 to 2015-with the government only finding out about the high-level corruption in 2016, prompting the financial crisis. The scandal is known colloquailly as “the tuna bonds scandal” or “the tuna bond affair.”
Chang had however pleaded not guilty, with his defense lawyer holding that there was no evidence that he agreed to take payoffs, or received a penny, in exchange for having Mozambique guarantee that the loans would be repaid.
The Case Against Chang
Between 2013 and 2016, three government controlled companies quietly borrowed US$2 billion from major overseas banks. The government, through Chang’s signature, guaranteed repayment.
- •The money was purported to go to tuna fishing ships, a shipyard, radar systems and coast guard vessels seeking to protect natural gas fields off the country’s Indian Ocean coast.
- •The companies later defaulted on the loans, leaving the country in a US$2 billion debt hole, about 12 percent of the nation’s GDP at the time.
- •However, the prosecutors said, most of the money went to bribes and kickbacks to government officials and bankers, with US$7 million wired to Chang through US banks to accounts in Europe that were under an associate’s name.
Chang was arrested in December 2018 in South Africa, pursuant to an arrest warrant issued at the request of the US, and extradited to the Eastern District of New York in July 2023.
The scandal plunged Mozambique into financial distress: the currency lost value, inflation surged, it defaulted on its sovereign debt, and growth stagnated significantly. Before the US$2 billion scandal, Mozambique was among the world’s 10 fastest growing economies for two decades – according to the World Bank. However, as of last year, Mozambique was among the 10 countries in the world with the lowest GDP per capita.
While the charges possibly carry up to 20 years in prison depending on the defendant’s history and diverse factors, Chang had no sentencing date set.
Mozambique has since reached an agreement on a US$220 million settlement with Russia’s VTB Bank and Portugal’s BCP Bank. Global lender Credit Suisse was fined $500mn for facilitating the scandal, and the lender also forgave $200mn of Mozambique’s debt after pleading guilty to wire fraud in 2021.
In 2019 and 2020, the southern African country’s constitutional court declared several loans, and the state guarantees, in the scandal void.
