More Than $200 Million in Alleged Bribes and Kickbacks Paid
to Mozambican Government Officials and Investment Bankers
BROOKLYN, NY – An indictment was unsealed on March 4, 2019,
charging Najib Allam, an executive of the Privinvest family of maritime
services companies, and Teofilo Nhangumele and Antonio do Rosario, former
Mozambican government officials, for their roles in a $2 billion fraud and
money laundering scheme that victimized investors in the United States and
around the world. The indictment was
previously unsealed on January 3, 2019 as to co-defendants Jean Boustani, a
Privinvest executive, Manuel Chang, the former Finance Minister of Mozambique,
and Andrew Pearse, Surjan Singh and Detelina Subeva, former high-ranking
investment bankers at an international investment bank (the Investment
Bank). Each defendant is charged with
wire fraud conspiracy and money laundering conspiracy. In addition, Boustani, Allam, Chang, do
Rosario, Pearse, Singh and Subeva are charged with securities fraud
conspiracy. Pearse, Singh and Subeva are
also charged with conspiracy to violate the anti-bribery and internal controls
provisions of the Foreign Corrupt Practices Act (FCPA).
Richard P. Donoghue, United States Attorney for the Eastern
District of New York, Brian A. Benczkowski, Assistant Attorney General of the
Justice Department’s Criminal Division, and William F. Sweeney, Jr., Assistant
Director-in-Charge, Federal Bureau of Investigation, New York Field Office
(FBI), announced the charges.
“As charged in the indictment, the defendants orchestrated
an immense fraud and bribery scheme that took advantage of the United States
financial system, defrauded its investors and adversely impacted the economy of
Mozambique, in order to line their own pockets with hundreds of millions of
dollars,” said United States Attorney Donoghue.
“This indictment underscores the Department of Justice’s continuing
efforts to end such fraudulent and corrupt practices and to hold those
responsible to account for their crimes.”
“The indictment unsealed today alleges a brazen
international criminal scheme in which corrupt Mozambique government officials,
corporate executives, and investment bankers stole approximately $200 million
in loan proceeds that were meant to benefit the people of Mozambique,” said
Assistant Attorney General Benczkowski.
“The Department of Justice and our law enforcement partners are
dedicated to using all tools at our disposal to prosecute those who engage in
money laundering, financial fraud and corruption at the expense of U.S.
investors, wherever those individuals may be located.”
“Today’s indictment proves that no matter who you are, or
what position of power you’re in, you’re not immune from prosecution,” stated
FBI Assistant Director-in-Charge Sweeney.
"The FBI will continue to use all resources at our disposal to
uncover crimes of this nature and expose them for what they really are.”
The Fraudulent Scheme
The indictment alleges that between approximately 2013 and
2016, Boustani, Allam, Nhangumele, do Rosario, Chang, Pearse, Singh, Subeva and
their co-conspirators ensured that the Investment Bank, and another foreign
investment bank, would arrange for more than $2 billion to be extended, in
three loans, to companies owned and controlled by the Mozambican
government: Proindicus S.A.
(Proindicus), Empresa Moçambicana de Atum, S.A. (EMATUM) and Mozambique Asset
Management (MAM). The proceeds of the
loans were intended to fund three maritime projects for which Privinvest was to
provide the equipment and services.
Specifically, Proindicus was to perform coastal surveillance, EMATUM was
to engage in tuna fishing and MAM was to build and maintain shipyards.
Instead, the defendants and their co-conspirators illegally
facilitated Privinvest’s criminal diversion of more than $200 million of the
proceeds of the loans. These stolen
funds included more than $150 million that Privinvest — at the direction of
Boustani, Allam and others — used to bribe Chang, Nhangumele, do Rosario and
other Mozambican government officials to ensure that companies owned and
controlled by the Mozambican government would enter into the loan arrangements,
and that the government of Mozambique would guarantee those loans. In addition, Privinvest diverted
approximately $50 million in kickback payments to Pearse, Singh and Subeva, who
assisted the co-conspirators to obtain financing for the loans through the
Investment Bank and the other foreign investment bank. The loans were subsequently sold in whole or
in part to investors worldwide, including in the United States. In doing so, the participants in the scheme
conspired to defraud these investors by misrepresenting how the loan proceeds
would be used, the amount and maturity dates of other financial obligations
held by Mozambique and the ability of the government of Mozambique to repay the
loans.
To date, the companies controlled by the government of
Mozambique have failed to make more than $700 million of loan repayments that
have become due.
The Defendants
Boustani, a citizen and resident of Lebanon and Antigua and
Barbuda, was the lead salesperson and negotiator for Privinvest, and is charged
for his role in coordinating the payment by Privinvest of more than $200
million in bribe and kickback payments to Mozambican government officials and
investment bankers in order to facilitate the three loans. He is alleged to have personally received at
least $15 million from the scheme.
Boustani was arrested in Queens, New York on January 2, 2019 and
arraigned later that day in federal court in Brooklyn. Boustani has pleaded not guilty to the
charges, and a trial date has not yet been set.
Allam, a citizen of Lebanon, was the Chief Financial Officer
of Privinvest, and is charged for his role in helping Boustani and others
coordinate the payment by Privinvest of more than $200 million in bribe and
kickback payments. Allam remains at
large.
Nhangumele, a citizen and resident of Mozambique, acted in
an official capacity on behalf of the President of Mozambique during the
charged scheme, and is charged for his role in facilitating the payment by
Privinvest of over $150 million to Mozambican government officials to gain
approval for the maritime projects, and to cause Mozambique to borrow more than
$2 billion from the two investment banks in government-guaranteed loans to
finance the projects. Nhangumele has not
yet been arrested on the charges in this indictment and Nhangumele is not
currently in U.S. custody.
Do Rosario, a citizen and resident of Mozambique, held
positions within the Mozambican government, including with the Mozambican state
intelligence service, known as “SISE,” and managerial roles for each of the
three state-owned entities formed to undertake the maritime projects that are
the subject of the indictment. He is
charged for his role in ensuring that Mozambique would undertake the maritime
projects and award the contracts for those projects to Privinvest, and that
Finance Minister Chang would issue government guarantees binding Mozambique to
repay $2 billion in loans to undertake the projects. He is alleged to have personally received more
than $12 million from the scheme. Do
Rosario has not yet been arrested on the charges in this indictment and is not
currently in U.S. custody.
Chang, a citizen and resident of Mozambique, was the former
Finance Minister of Mozambique, and is charged for signing guarantees on behalf
of Mozambique for the three corrupt loans.
He is alleged to have personally received at least $5 million from the
scheme. Chang was arrested on December
29, 2018, in South Africa, pursuant to a provisional arrest warrant issued at
the request of the United States. The
United States is seeking his extradition.
Pearse, a citizen of New Zealand, Singh, a citizen of the
United Kingdom and Subeva, a citizen of Bulgaria, reside in the United
Kingdom. At the time of the charged
scheme, Pearse and Singh were managing directors, and Subeva was a vice
president, of the Investment Bank. Each
has been charged for facilitating bribe payments to government officials in
Mozambique and for circumventing the internal accounting controls of the
Investment Bank, which arranged two of the three loans. Pearse, Singh and Subeva were arrested on
January 3, 2019, in the United Kingdom, pursuant to provisional arrest warrants
issued at the request of the United States.
The United States is seeking their extradition.
* * * * *
The charges in the indictment are allegations, and the
defendants are presumed innocent until proven guilty.
The investigation is being conducted by the FBI’s New York
Field Office. The government’s case is
being handled by the Business and Securities Fraud Section of the United States
Attorney’s Office for the Eastern District of New York (EDNY), the Criminal
Division’s Money Laundering and Asset Recovery Section (MLARS) and the Fraud
Section. Assistant United States
Attorneys Matthew S. Amatruda and Mark E. Bini of the EDNY, Trial Attorneys
Margaret Moeser and Sean W. O’Donnell of MLARS and Trial Attorney David M. Fuhr
of the Fraud Section are prosecuting the case.
The Criminal Division’s Office of International Affairs
provided critical assistance in this case.
The Department appreciates the significant cooperation and assistance
provided by the United States Securities and Exchange Commission. The Department also appreciates the
assistance provided by law enforcement authorities in the United Kingdom and in
South Africa.
The Defendants:
JEAN BOUSTANI
Age: 40
Lebanon, Antigua and Barbuda
NAJIB ALLAM
Age: 58
Lebanon
MANUEL CHANG
Age: 63
Mozambique
ANTONIO DO ROSARIO
Age: 44
Mozambique
TEOFILO NHANGUMELE
Age: 50
Mozambique
ANDREW PEARSE
Age: 49
United Kingdom
SURJAN SINGH
Age: 44
United Kingdom
DETELINA SUBEVA
Age: 37
United Kingdom
E.D.N.Y. Docket No. 18-CR-681 (WFK)
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