Former Mozambique Finance Minister Pleads Not Guilty to Corruption Charges

A former Mozambique finance minister pleaded not guilty to corruption charges in a New York federal court Thursday for what prosecutors called a kickback scheme involving $2 billion in fraudulent loans that nearly led to the collapse of the African country’s economy. 

Manuel Chang was arraigned after arriving at John F. Kennedy International Airport late Wednesday night following his extradition from South Africa, where he has been in custody since his arrest in 2018. That year, the U.S. attorney’s office in Brooklyn charged Chang and seven other defendants with conspiring to commit fraud and to launder money, as well as other offenses. 

Prosecutors alleged that between 2013 and 2016 Chang worked with other Mozambique officials, former Credit Suisse bankers and a contractor to secure financing for maritime projects in the country, knowing that $200 million of the $2 billion in loans would go toward kickbacks and bribes. He is accused of pocketing at least $5 million in bribes. 

At Thursday’s arraignment, U.S. District Judge Nicholas Garaufis ordered Chang detained. Prosecutors had called him a flight risk, saying he has no ties to the U.S. and faces up to 55 years in prison if convicted of the charges. Lawyers for Chang have called the allegations meritless. They had sought a bail package that would allow him to be released on $1 million bond and restrict his travel to parts of New York. 

“He intends to stay here and fight these charges,” Adam Ford, a lawyer for Chang, said at the arraignment.

The Justice Department began investigating the $2 billion in loans in 2016 after The Wall Street Journal reported on irregularities in debt deals involving Mozambique, one of the poorest countries in the world. Some money lent to a state-controlled entity to buy a tuna-fishing fleet had been diverted to purchase Navy ships, the Journal reported at the time. The Justice Department probe was part of a push to crack down on corruption in emerging markets.  

Prosecutors said the loans were subsequently sold to international investors, including to some in the U.S., who ended up losing tens of millions of dollars. Mozambique eventually defaulted and suffered a catastrophic economic blow, prosecutors said, with the International Monetary Fund withholding support to the country in 2016. 

Chang was Mozambique’s finance minister from 2005 until 2015, when he was elected to the country’s parliament. He also faces charges in Mozambique. He spent more than four years incarcerated in South Africa while courts there adjudicated competing requests for extradition from Mozambique and the U.S. 

Three former Credit Suisse bankers who were among Chang’s co-defendants in the case each previously pleaded guilty to a single charge. Another co-defendant, a Lebanese shipbuilding executive, was acquitted by a Brooklyn, N.Y., federal jury in 2019. Three other defendants aren’t in U.S. custody. 

Last month one of Chang’s lawyers filed a letter to Garaufis, the judge, asking for permission to file a motion to dismiss the indictment, saying his client’s right to a speedy trial had been violated because of his lengthy stay in South Africa. The lawyer said the U.S. has shown a lack of interest in the case, accusing the government of not filing any legal documents in South Africa in support of Chang’s extradition since the 2019 acquittal of the shipbuilding executive.

Write to James Fanelli at [email protected]