Mozambique’s $2b loan fraud: 3 ex-bankers arrested

Five days after the arrest of Manuel Chang, Mozambique’s former finance minister, more arrests have been made over a fraud scheme involving $2 billion in loans to state-owned companies in the country, TOPNAIJA.NG can confirm.

The latest suspects arrested were three former Credit Suisse Group AG bankers. They were arrested in London on Thursday on U.S. charges that they took part in the fraud, a spokesman for U.S. prosecutors said.

Andrew Pearse, 49; Surjan Singh, 44; and Detelina Subeva, 37 were charged in an indictment in Brooklyn, New York federal court with conspiring to violate U.S. anti-bribery law and to commit money laundering and securities fraud, according to spokesman John Marzulli.

They have been released on bail in London while the United States seeks extradition.

Former Mozambique Finance Minister Manuel Chang was arrested in South Africa as part of the same criminal case.

A fifth man, Jean Boustani, was arrested on Wednesday at New York’s John F. Kennedy Airport, Marzulli said.

Boustani was a Lebanese citizen who worked for an Abu Dhabi-based contractor of the Mozambican companies, according to the indictment.

Lawyers for the defendants could not immediately be reached for comment after business hours in New York and London.

“The indictment alleges that the former employees worked to defeat the bank’s internal controls, acted out of a motive of personal profit, and sought to hide these activities from the bank,” Credit Suisse said in a statement. It added that the bank will continue to cooperate with authorities.

According to the indictment, the three state-owned companies were created to undertake maritime projects, but were really “fronts” for Chang, Boustani and the three bankers to enrich themselves.

According to the indictment, between 2013 and 2016 three Mozambican state-owned companies borrowed more than $2 billion through loans guaranteed by the government and arranged by Credit Suisse and another investment bank, which was not named.

Chang, 63, signed off on the guarantees as finance minister, but did not disclose them. When the guarantees were revealed in 2016, foreign donors including the International Monetary Fund (IMF) to cut off support for Mozambique, plunging the southern African country into a debt crisis that still plagues it two years later.

According to the indictment, the three state-owned companies were created to undertake maritime projects, but were really “fronts” for Chang, Boustani and the three bankers to enrich themselves.

Prosecutors said at least $200 million was diverted to the defendants and other Mozambican government officials. They said the defendants concealed the misuse of the funds and misled investors abroad including in the United States about Mozambique’s creditworthiness.

The companies missed more than $700 million in loan payments after defaulting in 2016 and 2017, the indictment said