The biggest corruption trial in Mozambique’s history is under way at a maximum security prison, at the same time as the credibility of the country’s judicial system is on trial in neighbouring South Africa.
More than $2.7 billion (£2 billion) in undisclosed state debts – money borrowed by the government to establish a sophisticated tuna industry – were used to purchase trawlers and military patrol boats, but much of it was allegedly diverted to corrupt officials.
Manuel Chang, the former finance minister who approved the loans approximately eight years ago, has been detained in South Africa since December 2018.
The 66-year-old politician and economist, who denies accepting bribes worth $7 million, was arrested at the request of the United States, where investors were harmed by the scandal.
But he’s been stuck in South Africa for years because Mozambique filed a counter-request for his extradition.
In August, South Africa’s justice minister decided that Mr Chang should be extradited to Mozambique to face justice.
However, civil society groups in Mozambique and South Africa reacted angrily to the decision, questioning whether Mozambique possessed the political will or capacity to conduct a proper prosecution.
The Fórum de Monitoria do Orçamento (FMO), a non-governmental organisation (NGO) that monitors government finances in Mozambique, is attempting to stop the extradition, and the High Court in Johannesburg is expected to rule on its application soon.
FMO lawyers argued in court that there was no guarantee Mr Chang could be tried in Mozambique because the government had given contradictory information about whether his previous parliamentary immunity still protected him.
“Mr Chang may no longer be immune from prosecution for future conduct, but he may still be immune from prosecution for past conduct committed during his tenancy as MP,” said lawyer Max du Plessis.
“Mozambique safeguards its citizens against extradition. So, if Mr Chang flees to Mozambique, there is no way the US will ever prosecute him “He continued.
According to FMO chair Adriano Nuvunga, the scandal reveals “much about how Mozambique’s wealth is being diverted from improving people’s livelihoods to enrich… the elites.”
‘Cash in suitcase’
Back in Mozambique, 19 people, including the son of former President Armando Guebuza, are on trial, which began in August on the grounds of a jail on the outskirts of the capital, Maputo.
Bribery, embezzlement, and money laundering are among the charges, which they all deny.
Despite the long list of defendants in the case, Mr Nuvunga and others are concerned that the most powerful politicians are not being held accountable.
“If you look at the people being tried right now, they’re small fish – they’re high profile, but they’re still small fish compared to what happened,” he says.
He claims that those on trial are only accused of receiving a total of $50 million, compared to a total of $2.7 billion.
He echoes numerous calls for further investigation into the actions of Mr Guebuza, who was president at the time of the loan guarantees and the central bank’s then-governor at the time.
The former president told a parliamentary inquiry that he thought the project was in the best interests of the country, and when the scandal broke, his central bank governor claimed he was unaware of the hidden debts.
Nonetheless, the revelations of the last five years have been shocking.
Ndambi Guebuza, Mr Guebuza’s son, who denies any wrongdoing, is accused of receiving $33 million in kickbacks.
According to allegations made in a related case by Credit Suisse employee Andrew Pearce in a US court, he introduced the shipbuilder at the centre of the scandal to his father and other ministers.
The shipbuilder, Privinvest, a Lebanese-Emirati group, is said to have done business with the Guebuza family. Privinvest denies all allegations of wrongdoing.
According to Pearce, who pleaded guilty to wire fraud, Ndambi spent about a year at Privinvest owner Iskandar Safa’s home in the south of France before returning home with $100,000 in cash in his suitcase.
“When he was transiting through Dubai, he was stopped by the authorities for having too much money,” he told the court, adding that Privinvest assisted in getting the money released – something the shipbuilder denies.
Privinvest has stated that any payments made to Ndambi were all legal business investments, and that they did not pay him $33 million in bribes.
The fact that Filipe Nyusi, Mozambique’s president since 2015, is also accused of receiving campaign funds from Privinvest may raise concerns that the government will not be able to mount a successful prosecution.
Details of these allegations were revealed when Mr Nyusi’s government filed an application with the UK High Court in 2019 to reclaim money from Privinvest and avoid loan repayments.
In its defence, Privinvest admitted making payments – among others, it alleged, $10m to Mozambique’s ruling party Frelimo, and $1m to Mr Nyusi.
The shipbuilder, on the other hand, claimed that these were legal contributions to an election campaign in 2014, not bribes.
According to its defence statement, a Privinvest group company paid $1 million to a bank account in the name of Sunflower International Corp FZE in April 2014: “Privinvest understands that this payment was, in whole or in part, for the benefit of President Nyusi.”
The shipbuilder also stated that the group purchased a Toyota Land Cruiser with Mr Nyusi’s image and campaign insignia in South Africa, and that during a visit to Paris in August 2014, Mr Nyusi asked a Privinvest official for “further campaign contributions.”
Sunflower International appears to be a trading company registered in the emirate of Ras al-Khaimah in the United Arab Emirates, a tax haven and corporate secrecy jurisdiction.
The office of Mr Nyusi did not respond to a request for comment on these allegations.
The president has previously stated that he wants to combat corruption and was unaware of the secret loans.
‘Bona fide request’
The owner of Privinvest also stated in court that his companies paid Mr Chang a total of $7 million in 2013.
However, he stated that this was for private ventures that Privinvest and Mr Chang would have undertaken after his term as finance minister ended in 2014.
In papers filed with the Johannesburg court, a lawyer representing the Mozambican government stated that Mozambique’s judicial system was independent of political control.
“Mozambique’s request is genuine and bona fide, with the full intention of prosecuting Mr Chang for the criminal offences of corruption, money laundering, and other related offences.”
“The indictment issued against Mr. Chang speaks for itself.”
Mr Nuvungo, on the other hand, is not convinced and wants South Africa to extradite Mr Chang to the United States for trial.
He believes that if Mr Chang returns home, he will have achieved “the success of impunity… because the Mozambique judicial system will not allow a proper process.”