Financial Crime World

Two Executives, Mozambican Officials, and Investment Bankers Indicted for $2 Billion Financial Fraud Scheme in Mozambique

Indictment Announced by Justice Department, Eastern District of New York, and FBI

On Dec. 19, 2018, a grand jury in the Eastern District of New York returned a four-count indictment charging:

  • Two executives of a shipbuilding company,
  • Three former senior Mozambican government officials, and
  • Three former London-based investment bankers

for their roles in a $2 billion financial fraud and money laundering scheme.

Statements from Justice Department, U.S. Attorney, and FBI

Assistant Attorney General Brian A. Benczkowski of the Justice Department’s Criminal Division stated:

“The Department of Justice, alongside our law enforcement partners, is committed to prosecuting those who engage in fraud, money laundering, and corruption that adversely impacts countries like Mozambique and harms U.S. investors.”

U.S. Attorney Richard P. Donoghue of the Eastern District of New York noted:

“The defendants are accused of orchestrating a massive scheme that defrauded investors and adversely affected Mozambique’s economy, all while lining their own pockets with hundreds of millions of dollars.”

FBI Assistant Director in Charge William F. Sweeney Jr. of the FBI’s New York Field Office stated:

“Today’s indictment serves as a reminder that no one is immune from the reach of the law, no matter how powerful or influential they may be.”

Individuals Charged and Current Status

Four executives and officials involved in the scheme were charged:

  1. Jean Boustani (40-year-old Lebanese national) - arrested at JFK Airport in New York
  2. Najib Allam (CFO of the Privinvest Group) - at large
  3. Manuel Chang (63-year-old Mozambican citizen and resident) - arrested in South Africa
  4. Antonio Do Rosario (44-year-old Mozambican citizen and resident) - not in US custody

Three former London-based investment bankers were also charged:

  1. Andrew Pearse - arrested in the UK
  2. Surjan Singh - arrested in the UK
  3. Detelina Subeva - still at large

Events surrounding the Scheme

The co-conspirators allegedly arranged for over $2 billion in loans to be made to companies owned and controlled by the Mozambican government. Approximately $200 million of the loan proceeds were criminally diverted:

  • $150 million in bribe payments
  • $50 million in kickbacks to investment bankers

The fraudulent loans were then sold to investors worldwide, including in the United States.

Current Status of Loan Repayments

Mozambique and its state-owned entities have failed to make over $700 million of repayments on the loans.

Allegations and Charges

The defendants are charged with:

  1. Wire Fraud
  2. Securities Fraud
  3. Money Laundering
  4. Conspiracy to commit wire fraud, securities fraud and money laundering
  5. Violation of the anti-bribery and internal controls provisions of the Foreign Corrupt Practices Act (FCPA)

Background

While the investigation is being conducted by the FBI’s New York Field Office, the prosecution is being handled by the Criminal Division’s Money Laundering and Asset Recovery Section (MLARS) and Fraud Section, along with the Business and Securities Fraud Section of the U.S. Attorney’s Office for the Eastern District of New York. MLARS has a dedicated unit focusing on banks and financial institutions, while the Fraud Section is responsible for investigating and prosecuting all Foreign Corrupt Practices Act (FCPA) matters.

Note

The charges in the indictment are merely allegations, and all defendants are presumed innocent until proven guilty in a court of law.