🔒 Mozambique’s action on ‘tuna bond’ scandal could stall investment – The Wall Street Journal

LONDON — It took a long time for the long running tuna bond case in Mozambique to lead to arrests. And you would think that the crime fighters in South Africa’s neighbour would be keen to prosecute those responsible for crippling the country and effectively blocking loans to them from the IMF.  It was however only once the long arm of the American legal system decided to charge the three former bankers of Credit Suisse and the country’s former finance minister Manuel Chang, plus executives from Privinvest Group that Mozambique sprang into action and started arresting former government officials. The action by the Frelimo Government however effectively blocks the extradition of Mozambicans to the US. They also want Mr Chang to be extradited from South Africa to Mozambique, and not the US, a move which is supported by the South African government. It seems that Mozambique does not want extensive details of the case to surface before the country’s October elections. If they wait for the international community to go after corrupt officials and frustrate those efforts they may however put the foreign investment that one of the poorest countries in Africa so desperately needs, at risk. – Linda van Tilburg

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US Case in Mozambique Debt Runs Into Trouble

A U.S. grand jury in December charged former Credit Suisse bankers—Surjan Singh, Andrew Pearse and Detelina Subeva—with securities fraud and money laundering.
A US grand jury in December charged former Credit Suisse bankers – Surjan Singh, Andrew Pearse and Detelina Subeva – with securities fraud and money laundering. PHOTO: CHRIS RATCLIFFE/BLOOMBERG

By Margot Patrick and Matina Stevis-Gridneff

(The Wall Street Journal) – Three former Credit Suisse Group AG CS 1.53% bankers will fight extradition to the US to face fraud charges over $2bn in debt deals for government-owned companies in Mozambique, a lawyer representing the US government said Friday.

The legal challenge is the latest in a string of obstacles arising in the Justice Department’s indictment of the bankers and five other foreign nationals it alleges arranged the debt deals, along with bribes and kickbacks to enrich themselves and others.

Mozambique has in recent weeks arrested former government officials and associates mentioned in the indictment, a move that effectively blocks their extradition to the U.S. and potentially damaging testimonies there ahead of October national elections. It has also requested that its former finance minister, who was charged in the indictment and is currently under arrest in South Africa, be extradited to Mozambique rather than to the US.

A US grand jury in December charged the former Credit Suisse bankers – Andrew Pearse, Surjan Singh and Detelina Subeva – with securities fraud and money laundering. Mark Summers, a lawyer representing the US government, said all three defendants, who have been released on bail since their Jan. 3 arrest, were fighting the extradition request.

In court Friday, a lawyer for the 49-year-old Mr. Pearse said his client would contest the case on the “forum bar,” and possibly other grounds. The forum bar is a measure in UK law that allows British courts to stop extraditions if they find a substantial part of the alleged criminal activity took place in the UK. Lawyers for Mr. Singh, 44, and Ms. Subeva, 37, didn’t indicate what form their challenges might take and declined to comment after the hearing.

Credit Suisse declined to comment Friday. The three former bankers haven’t commented on the charges.

A prominent UK extradition lawyer, Mr. Summers has represented the US in other extradition cases, including in bringing Navinder Sarao, a British trader who later pleaded guilty to contributing to the 2010 “flash crash” on US stock markets, to face charges in Chicago.

The US charged the three former bankers along with Mozambique’s former finance minister, Manuel Chang, and executives of Abu Dhabi naval contractor Privinvest Group. They are accused of creating government maritime projects as fronts to borrow money, which was used to pay at least $200m in bribes and kickbacks.

The case is part of a new US strategy to curb global corruption by targeting individuals rather than companies. Yet these efforts often depend on the cooperation of foreign governments, whose interests don’t always align with the US.

South Africa’s foreign minister last month told local media that Mr. Chang should be extradited to Mozambique, whose ruling Frelimo party has close relations with South Africa’s African National Congress. A Johannesburg court is set to hear both extradition requests on Monday.

The parallel case in Mozambique, meanwhile, will ensure none of those arrested at home is questioned in the US. Two people familiar with the government’s thinking said this was convenient for Frelimo, as it prevents the airing of embarrassing or even criminal details abroad and helps protect its supremacy ahead of October elections.

Even in countries with close ties to the US extradition cases can take years. In the case of Mr. Sarao, 17 months lapsed between charging and his 2016 extradition from the UK to the US.

This week, the Justice Department revealed the names of three other defendants whose identities had been redacted in December’s grand-jury indictment filed by the US District Attorney for the Eastern District of New York. They are Privinvest Chief Financial Officer Najib Allam, Antonio do Rosario,  the chief executive of the three Mozambican companies that borrowed the $2bn and a former senior official at the national intelligence service, and Mozambican businessman Teofilo Nhangumele.

“The unsealed indictment includes allegations against Privinvest staff members which are unproven and rejected,” a Privinvest spokesman said Friday. “Whilst Privinvest takes these matters seriously, and is conducting its own investigation, it will continue to support its staff. Privinvest is not a defendant and will make no further comment at this time.”

A spokesman for the US attorney’s office declined to comment.

Messrs. Nhangumele and do Rosario have been arrested in Mozambique as part of the separate prosecution by the country’s government. Mr. Allam remains at large, while another Privinvest executive, Jean Boustani, is awaiting trial in a Brooklyn, NY, detention facility.

The Mozambican attorney general also ordered the arrest of Ndambi Guebuza, the son of the country’s former president, Armando Guebuza, who was in power when the lending took place, Armando Guebuza’s private secretary and the former head of national intelligence service.

They are all detained on suspicion of money laundering, abuse of office and embezzlement, but deny the charges. Mr. Chang, who has also denied wrongdoing, would join these suspects in the Mozambican prosecution of the case, if he is extradited back to his home country.

Write to Margot Patrick at [email protected] and Matina Stevis-Gridneff at [email protected]

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