Mozambique mega-fraudster Manuel Chang sentenced to more than 8 years in jail

A US judge has sentenced former Mozambican finance minister Manuel Chang to eight-and-a-half years of imprisonment for his role in the “tuna bond” fraud and bribery scam in Mozambique more than 10 years ago.

US District Judge Nicholas Garaufis, sitting in a Brooklyn, New York, federal court, also ordered Chang to pay $7-million in forfeiture, as well as restitution to victims of his crimes. Garaufis said the restitution amount would be determined later.

Garaufis said he would recommend that Chang be credited for the six years he had already spent in prison in South Africa and the US, Reuters reported. This would mean he would be eligible to be released from a US prison after 2½ years in prison and deported to Mozambique.

Prosecutors had sought a longer sentence of between 11¼ and 14 years, while Chang’s lawyers pleaded for no jail time because of the six years he had already served.

He was arrested at Johannesburg’s OR Tambo International Airport in December 2018.

After a long battle in the South African courts, Chang was extradited to the US in July 2023. In a four-week trial in Brooklyn in July and August 2024 he was convicted of conspiring to commit wire fraud and money laundering.

The court found that between 2013 and 2016 he had received $7-million in bribes in exchange for signing guarantees on behalf of the Mozambican government for three bank loans totalling more than $2-billion to three Mozambique government companies — Proindicus, Ematum and MAM — to buy fishing and patrol boats from Privinvest, a United Arab Emirates-based shipbuilding company.

“In fact, however, Chang and his co-conspirators facilitated the criminal diversion of more than $200-million of the loan proceeds that were used to pay bribes and kickbacks to Chang and others,” said the US Attorney’s Office in a press release on Friday, 17 January.

The US government became involved because it said the three loans were subsequently sold in whole or in part to investors worldwide, including in the US.

“Ultimately, Proindicus, Ematum and MAM each defaulted on their loans and proceeded to miss more than $700-million in loan payments, causing substantial losses to investors.”

South African authorities arrested Chang in December 2018 as he was passing through OR Tambo International Airport en route to a holiday in Dubai. He did not know that South Africa had just issued a provisional arrest warrant for him at the request of the US.

International consequences

Benilde Nhalivilo, the coordinator of the Mozambique Budget Monitoring Forum NGO, (Forum de Monitoria do Orcamento — FMO), said Chang’s sentence “serves as an example that corruption, although not punished at the national level, can have international consequences. This creates additional pressure to combat corruption in Mozambique.”

FMO started the process that culminated in Chang’s conviction and sentence in the US. In 2019, it persuaded the South Gauteng High Court to overturn orders by two South African justice ministers, Michael Masutha and his successor Ronald Lamola, that Chang should be extradited to  Mozambique rather than the US.

FMO argued that if he were extradited to Mozambique, justice would not be served. The high court agreed in two judgments, first overturning Masutha’s extradition order and sending the decision back to Lamola, and then overturning Lamola’s subsequent order extraditing Chang to Mozambique and ordering that he should be extradited to the US instead.

Nhalivilo told Daily Maverick on Sunday that the $7-million which the US court had ordered Chang to forfeit “must be used in favour of Mozambicans — either to alleviate the payment of Ematum debt securities, or allocation to social sectors, such as education, health and social protection”.

Nhalivilo added that this process “must be highly transparent to Mozambicans, who are the real victims.

“Although Chang’s conviction represents a victory, it is not the end of the fight against corruption. Many others involved in this scandal have not yet been held accountable and enjoy immunity on home soil.

“Therefore, investigations in Mozambique must continue to identify and punish all those responsible, ensuring that the population is compensated. It’s time to enforce justice in Mozambique.”

“Today’s sentence shows that foreign officials who abuse their power to commit crimes targeting the US financial system will meet US justice,”  said Carolyn Pokorny, acting United States attorney for the Eastern District of New York, in the press release.

Brazen misconduct

“Manuel Chang abused his position as finance minister of Mozambique by obtaining $7-million in bribe payments in exchange for helping secure more than $2-billion in loans,” said Principal Deputy Assistant Attorney-General Brent S Wible, the head of the Justice Department’s Criminal Division.

“Chang’s brazen misconduct betrayed his duty to the people of Mozambique and defrauded investors, including those in the United States, of substantial losses. With today’s sentence, Chang has been held accountable for his violations of US law.”

The prosecutors detailed how Chang, then finance minister, together with his co-conspirators — including executives of Privinvest — had ensured that Credit Suisse AG, through its subsidiary in the UK, Credit Suisse Securities (Europe) Limited (CSSEL), and another foreign investment bank had lent more than $2-billion to the three companies owned and controlled by the Mozambican government: Proindicus SA (Proindicus), Empresa Moçambicana de Atum, SA (Ematum), and Mozambique Asset Management (MAM).

The loans were supposed to be used to buy boats for Ematum to engage in tuna fishing; Proindicus to acquire patrol boats to perform coastal surveillance; and MAM to build and maintain shipyards.

Instead, Chang and his co-conspirators illegally facilitated Privinvest’s diversion of more than $200-million of the loan proceeds to bribes and kickbacks, including more than $150-million that Privinvest used to bribe Chang and other Mozambican government officials to ensure the government entered into and guaranteed the loans, said the press release.

It added that in October 2021, Credit Suisse AG and CSSEL had admitted to defrauding US and international investors in the financing of an $850-million loan for the Ematum project and had paid $475-million in penalties, fines and restitution.

The Mozambique government initially concealed its guarantee of the $2-billion in loans from the International Monetary Fund (IMF) and other creditors.

When the loans came to light in 2016, the IMF and other creditors suspended support to Mozambique, triggering a plunge in that country’s economy.

Last month, London’s High Court denied Privinvest permission to appeal against its ruling that Mozambique could collect more than $825-million from Privinvest’s late owner and his companies, Reuters reported. Privinvest intends to appeal, its lawyer has said. DM