Page 8 - DMEA Week 29

DMEA Commentary DMEA
Mozambique trial
set for October
The US is reeling in targets for its Mozambique probe
afriCa
What:
The US has secured another plea in its efforts to crack down on the hidden debts of Mozambique.
Why:
Pearse’s plea puts more pressure on his alleged conspirators, including Manuel Chang, who may also be on his way to the US soon.
What next:
Privinvest’s boustani has taken a tougher line on the US accusations.
THe Us has chalked up a win – and another potential win – in its battle to hold the organ- isers of questionable loans to Mozambique to account. While most states have been slow to chase allegations of overseas corruption, the Us has continued to make notable progress in this area. e loans were secured from VTB and Credit suisse, from Proindicus, eMATUM and Mozambique Asset Management (MAM). ree loans were arranged in order to fund maritime projects but no progress was made on their exe- cution. Mozambique is said to have missed more than $700mn in payments on the loans.
e former head of Credit suisse’s nancing group, Andrew Pearse, pleaded guilty in a New york court last week to a single charge of wire fraud conspiracy.
e executive was accused by the Us indict- ment – with various others – of having created maritime projects “as fronts to raise money to enrich themselves and intentionally diverted portions of the loan proceeds to pay at least $200mn in bribes and kickbacks to themselves, Mozambican o cials and others”.
Pearse said that he had accepted cash from the scheme despite “knowing they were the proceeds of illegal activities”. Another former employee at Credit suisse, Detelina subeva, pleaded guilty in May to a similar charge.
e Credit suisse employees were charged with four counts: conspiracy to commit wire fraud, securities fraud, violating anti-corruption measures and committing money laundering.
Chang it up
Mozambique’s former nance minister, Manuel Chang, is another of those accused. He was arrested at the end of 2018 in south Africa, with the Us attempting to extradite him to face related charges.
At this point, Maputo too decided to pur- sue some of those implicated and led with the south African authorities to have him returned to Mozambique. Initially it seemed things were going Mozambique’s way, but – following the replacement of south Africa’s justice minister in May – things have changed.
A ling from south African Justice Minis- ter Ronald Lamola, on July 12, set out grounds to cancel this move, describing sending Chang back to Mozambique as inconsistent with south Africa’s constitution and various legal treaties.
One of the issues raised by the ministry’s
filing is that Chang would have immunity against prosecution, unless this was speci cally waived by the National Assembly.
e Us has set a date for Chang’s – and the others’ – trial of October 7 of this year.
According to the indictment led by the Us, the former minister received at least $5mn from Privinvest, the Lebanese shipbuilder that played a crucial role in originating the loan scheme. Pearse is said to have received $45mn, while subeva received $2.2mn.
eyes up
Both subeva and Pearse were freed on condi- tional bail. According to Bloomberg, Pearse said in court that Jean Boustani, an employee of Priv- invest – a Lebanese maritime contractor at the heart of the loan scheme – had said the company had paid at least $50mn to the son of Mozam- bique’s then president.
While the two Credit suisse figures have taken a conciliatory tack, not all the accused have adopted similar stances.
Boustani, represented by Wilkie Farr & Gal- lagher, has taken a de ant stance, saying the Us has no grounds for its investigations – in part because very little of the alleged actions took place in the country.
e Us case relies on the selling of debt to funds in the Us, on the basis that the information in the documentation was false or misleading.
e legal ling from Boustani’s lawyers states that the Privinvest employee “remains uncer- tain about what the actual misrepresentation or omission” in the documents is supposed to be.
The case involves UK and Russian-based banks, with Lebanon-based Privinvest and the loans going to east Africa.
None of those targeted in the Us probe are Us citizens. e Us case rests on the use of Us nan- cial infrastructure for the transmission of cash involved in the deal and the possibility that some of the debt ended up being held by Us investors.
The Us’ claims to jurisdictional oversight appear somewhat tenuous but they also demon- strate the importance and complexity of pur- suing alleged crimes in a global system. “Us law does not govern the world”, a ling from Boustani’s lawyers states.
When it comes to anti-corruption prosecu- tions, though, this does not seem to be practi- cally true. ese competing theses may well be tested in October in court.™
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w w w . N E W S B A S E . c o m Week 29 24•July•2019