By MOZTIMES
Maputo (MOZTIMES) – Mozambique’s former Finance Minister, Manuel Chang, has petitioned a federal court in the United States for early release.
Chang is serving an eight and a half year sentence in the state of Connecticut, after he was found guilty in a New York court on charges of fraud and money laundering arising from Mozambique’s largest financial scandal, known as the case of the “hidden debts”.
The request for early release is based on the 70 year old Chang’s state of health. He is allegedly suffering from kidney problems, high blood pressure and diabetes. His legal team also claims that his advanced age makes it unlikely that he will re-offend.
The court should give its decision on 30 January. If Chang’s request is granted, he will be released immediately. He was approaching the age for parole, and his good behaviour while in prison would have made him eligible for release on 26 March. Hence, his request for early release will gain him just an extra two months of freedom.
The term “hidden debts” refers to the scheme whereby three fraudulent Mozambican state companies, Proindicus, Ematum (Mozambique Tuna Company), and MAM (Mozambique Asset Management), all of them run by the security service, SISE, obtained loans of over two billion US dollars from the banks Credit Suisse and VTB of Russia.
No bank in its right mind would give such huge loans to companies with no track record and run by an intelligence service. But any qualms that Credit Suisse and VTB may have had were overcome when Chang, as Finance Minister, signed sovereign guarantees, which meant that, if the companies defaulted, the Mozambican state would repay the banks.
And, sure enough, all three companies soon went bankrupt, and so the hidden loans became hidden debts. The guarantees signed by Chang were illicit, since the loans smashed through the ceiling on lending established under the 2013 and 2014 budget laws.
The loans were a corrupt scheme designed by the Abu Dhabi-based group Privinvest, which spent hundreds of millions of dollars in bribing Mozambican officials (including Chang) and Credit Suisse bankers. Under these deals, Privinvest became the sole contractor for the three fake companies and sold them fishing boats, radar stations and other assets at vastly inflated prices.
Chang was arrested at Johannesburg international airport in December 2018, on an international arrest warrant issued by American prosecutors. Because American investors were among those swindled in the scandal, the US wanted Chang to stand trial in New York.
Belatedly, the Mozambican authorities said that Chang should be put on trial in Maputo. Chang’s lawyers worked for five years to avoid extradition to the US. Eventually, they failed and in 2023 Chang was deported from Johannesburg to New York.
He was found guilty of conspiracy to commit wire fraud and money laundering, and judge Nicholas Garaufis sentenced him to a jail term of eight and a half years.
“The defendant, a corrupt public official, placed his own country, one of limited means and resources, on the hook for two billion dollars in loans it ultimately could not pay, so that he and his criminal partners could pocket tens of millions of dollars for themselves,” prosecutors wrote in a 13 November 2024 filing.
The “hidden debts” plunged Mozambique into a huge financial crisis. When the International Monetary Fund (IMF) discovered the scale of the three loans, it accused the Mozambican government of concealing the true size of the country’s foreign debt.
The IMF suspended its programme with Mozambique and all 14 donors who provided aid in the form of direct budget support halted all further disbursements. The value of the Mozambican currency, the metical, crashed, and only vigorous intervention by the Bank of Mozambique prevented an economic meltdown.
The Attorney-General’s Office (PGR) insisted repeatedly that Mozambique was the only country with the legitimacy to bring Chang to trial. But the US prosecutors put in their requests for extradition first.
On his release, Chang should be deported to Mozambique, but it remains to be seen whether the PGR will insist that he stand trial. (MT)
