Mozambique: Priminvest trial – Feds rest, acquittal denied

15 November, 2019

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then Finance Minister, Manuel Chang

New York federal prosecutors on November 13 2019 rested their monthlong case against Privinvest Group executive Jean Boustani, who stands accused of conspiring to defraud investors in $2 billion worth of loans used to finance state-backed maritime projects in Mozambique.The judge, William F. Kuntz, threw out the defence team’s motion for acquittal, and declared “the government has established clearly and overwhelmingly the basis of this case going to the jury”.

[November 1 2019 Privinvest ’s CFO Najib Allam Spreadsheets shown at trial ]
Privinvest Group’s Chief Financial Officer Najib Allam emailed himself Excel Spreadsheets in November 2014 detailing the expenses he incurred in Mozambique, “meticulously detailing of bribes and kickbacks,” Mozambican figures who had taken bribes from Boustani, including the then Finance Minister, Manuel Chang, and Ndambi Guebuza, and Antonio do Rosario, the former senor security officer who became chairperson of the board of all three Mozambican companies.
One of Allam’s spreadsheets, headed “Ematum” detailed a string of corrupt payments. “ArGe” (Ndambi Guebuza) recived 21 millon dollars, “JB” (Boustani) got nine million, Rosario 8.7 million and Chang five million.

 

[October 21 2019   tuna scam: Said Freiha and Adel Afiouni   ]

 

andrew pearse

A combination photograph shows Detelina Subeva, left, a former vice president in the global financing unit at Credit Suisse Group AG, and Andrew Pearse, right, former managing director at Credit Suisse Group AG, in London.

Andrew Pearse, who pleaded guilty to conspiracy, told the court October 18 2019 that at least four former Credit Suisse bankers besides himself took millions of dollars in bribes from shipbuilder Privinvest Group, including two he hadn’t named before. Surjan Singh and Detelina Subeva, two former Credit Suisse bankers have pleaded guilty. Said Freiha and Adel Afiouni, a pair of former Credit Suisse colleagues introduced Privinvest to the bank.
Jean Boustani, a Privinvest salesman described by prosecutors as the “mastermind” of a plot to defraud U.S. investors.
Four Mozambican officials got kickbacks from Privinvest, and the son of the country’s then-president, Armando Guebuza, illegal payments.
Boustani helped Pearse set up a bank account in the United Arab Emirates to hide the US$45 million he’d paid him, even providing him with the necessary work permit. Asked what job was cited, the former banker said the permit falsely described him as a “tube welder” at a construction site.
Ndambi Guebuza, the former president’s son introduced the defendant to his father and to the ministers in the Mozambique government who were necessary for the project to proceed. Ndambi Guebuza was arrested by Mozambican authorities in February and is fighting charges.
The case is U.S. v. Boustani, 18-cr-681, U.S District Court, Eastern District of New York (Brooklyn).
SEALED INDICTMENT as to Jean Boustani (1) count(s) 1, 2, 4, Najib Allam (2) count(s) 1, 2, 4, Manuel Chang (3) count(s) 1, 2, 4, Antonio Do Rosario (4) count(s) 1, 2, 4, Teofilo Nhangumele (5) count(s) 1, 4, Andrew Pearse (6) count(s) 1, 2, 3, 4, Surjan Singh (7) count(s) 1, 2, 3, 4, Detelina Subeva (8) count(s) 1, 2, 3,

[August 27 2019 Credit Suisse’s Andrew Pearse lied says Mozambique ]
BN-OP498_MOZSHI_P_20160622163938

Mozambique sued Lebanese-French billionaire Iskandar Safa on July 31 in the High Court of Justice’s commercial court in London. Represented by Peters & Peters Solicitors LLP, Mozambique last month sued Safa, following the guilty plea from Andrew Pearse to wire fraud in federal court in Brooklyn, New York.
The legal action is the latest in a saga that has seen arrests including the son of Mozambique’s ex-president, former Finance Minister Manuel Chang, and two other former Credit Suisse staff. The U.S. has accused Mozambique government officials, the banker and Privinvest of setting up the project as a front to pay themselves more than $200 million in bribes and kickbacks.

Privinvest and some of its units were the sole suppliers for the project that included a tuna fishing operation, shipyards, and a coastal security system. The deals were signed in 2013 and 2014. The company and Safa ,the chief executive officer and founder of the shipbuilding company, have denied any wrongdoing. “Pearse’s allegations against Privinvest and Safa are entirely unfounded” and were obtained after several months of pressure, which diminishes their value as credible evidence.

[July 31 2019 guilty Mozambique and tuna fishing fleet scam ]
Andrew Pearse, who head Credit Suisse’s Global Financing Group at the time, entered his plea to one count of wire fraud conspiracy before U.S. District Judge William Kuntz in Brooklyn, New York federal court, admitting that he took millions of dollars in kickbacks in connection with the loans.
https://www.reuters.com/article/us-mozambique-credit-suisse-gp-charges/second-ex-credit-suisse-banker-pleads-guilty-in-mozambique-loan-scheme-idUSKCN1UE2OJ

[January 13 2019 U.S. steps into London scam ]

https://assets.documentcloud.org/documents/5674459/Boustani-Et-Al-Tuna-Bonds-Indictment-EDNY-Redacted.pdf

A 47-page US indictment against banker Andrew Pearse reads like a script to a Hollywood movie. Pearse and the other defendants created maritime projects as fronts to raise money to enrich themselves and intentionally divert portions of the loans’ proceeds to pay at least US$200m in bribes and kickbacks to themselves, officials and others.

[January 7 2019]

Jean Boustany, the top salesman for Privinvest, was arrested on January 2 2019 at New York’s John F Kennedy airport. The scam used loans to Privinvest , which is registered in the UAE, for three maritime projects. According to the indictment, Privinvest representatives were also accused of “inflating the prices of equipment and services” provided to Mozambique, thereby freeing the money for the bribe system.

“It is scandalous that it has required action from the U.S. authorities for this investigation and arrests to be made in London,” said Tim Jones, a policy officer at the British-based Jubilee Debt Campaign.

“It was the London branches of Credit Suisse and VTB which lent the $2 billion, yet there has been a shocking lack of action taken by UK authorities in holding them to account.”

Britain’s finance industry watchdog, the Financial Conduct Authority (FCA), started looking at Credit Suisse’s involvement in Mozambique in 2016. The FCA declined to comment on the latest events.

Former Credit Suisse bankers Andrew Pearse, Surjan Singh, and Detelina Subeva, were arrested in London on January 4 2019. They were charged with conspiring to violate US anti-bribery law, money laundering and securities fraud in an indictment issued in Brooklyn, New York US District Court, according to the U.S. Attorney’s Office for the Eastern District of New York.

Prosecutors say that through a series of financial transactions between approximately 2013 and 2016, they created fraudulent maritime projects and used state-owned companies in Mozambique as fronts to raise $2bn. The men have been released on bail in London while the US seeks their extradition.

An inquiry into the loan scandal surrounding Mozambique’s default shows that the money procured via Credit Suisse and VTB Bank served many purposes – just not helping the African nation to develop its economy.

Credit Suisse (CS) so far has flatly denied being at fault for Mozambique’s failure to repay its debt, including in a recently-published inquiry by New York-based Kroll economic research agency. The report by the agency suggests that some questions remain to be answered.

Kroll says that CS and Russia’s VTB, which together organized credit worth more than $2 billion to three state-owned companies in Mozambique, had received $200 million in fees, a claim CS rejects. The loans were intended for a tuna fishing fleet, patrol boats, nautical equipment, maintenance and training.

Bonds Awarded, Fees Distributed

CS in a statement said that it had received $23 million, or roughly 2.3 percent of the loans, a sum in line with market prices. A further $140 million from the $200 million in fees had been so-called contractor fees, passed onto members of the syndicate and investors, intended to boost their return.

CS and VTB had emitted bonds with a coupon of 8.5 percent for parts of the loans granted to Mozambique. CS had not told investors that the bank had granted further loans to the country.

Investors only found out after agreeing to a refinancing in March 2016. The deal had become necessary because Mozambique hadn’t been able to finance the loans. Switzerland’s banking regulator Finma is looking into the transaction, as is the U.K.’s Financial Conduct Authority, or FCA.

The Role of Abu Dhabi Mar

The Kroll Report shows in detail who received how much of the money provided to the African country. Apart from the banks, it includes officials in the African nation and Abu Dhabi Mar, a company based in the Middle East. Abu Dhabi Mar delivered tuna fishing boats, other vessels and nautical equipment and infrastructure as well as an aircraft. The company received $1.8 billion for the goods and services, paid with money borrowed by Mozambique.

Kroll indicated that there had been a number of conflicts of interest in the provision of the loan, and that a large amount of information had been withheld by authorities and companies in Mozambique that would have helped shed light on the affair.

Where Are the Missing $500 Million?

This included the whereabouts of several hundred million dollars, information about which had not been forthcoming from sources in Mozambique. What is known is that Mozambique had changed the end purpose of some of the loans and attributed them to the budget of the country’s military.

Kroll said that it was unclear where some $500 million of the loan intended for the tuna fishing project went to.

Overpaid?

The agency says that Mozambique paid too much for the boats, further equipment and services. Kroll compared the money the country paid with estimated market prices of the equipment and services and came up with a delta of $713 million.

Abu Dhabi Mar is controlled by Privinvest, an investment company partly controlled by Iskandar Safa, a Lebanese billionaire. A spokesperson for Privinvest told finews.com that Kroll in its calculations had not taken into account a number of elements of the deliveries agreed in the contract.

A Lot of Additional Technology

Privinvest hadn’t delivered individual pieces of equipment, but an integrated system, whose individual elements had been adjusted to the needs and complemented with additional technology.

Privinvest also holds a stake in Palomar, an offshore firm. Andrew Pearse, a former CS banker, is a partner at Palomar.

Role of the Former CS Banker

During his time at Credit Suisse, Pearse is said to have contributed to the awarding of part of the Mozambique loans. He had told finews.com that there had been no conflict of interest between his work at CS and his stake at Palomar.

Kroll says that Palomar had received fees of $30.6 million. More than CS and VTB together. Kroll isn’t able to say why this was the case because of the information that had been withheld.

The report alludes to the conflict of interest of a person only named as «B» who had owned a stake in Palomar and had been a former member of a participating company. The report doesn’t specify whether person «B» is Andrew Pearse, and whether the company involved is Switzerland’s second-largest bank.

A spokesperson for Palomar told finews.com that the Kroll-report contained errors and was misleading. Kroll never had contacted Palomar. Still, Palomar was ready to provide the necessary information at any time.

Projects That Don’t Work Properly

The inquiry also found that Abu Dhabi Mar, Privinvest and Palomar had had leading roles in all the Mozambique projects. They structured the projects, introduced CS as a provider of financing, agreed payments of contractor fees and restructured the credits – which led to the payment of further fees.

The report also says that Privinvest had provided financial support. The projects hadn’t taken off as had been expected, partly because of a lack of infrastructure for fish processing, but also because personnel had been unsuitable.

Palomar Capital Advisors Liquidated

Zurich-based Palomar Capital Advisors was liquidated in November 2016. Pearse was chairman of the company, which had been a key actor in the Mozambique deal and received the fees mentioned. The fees still outstanding will now go to VR Global Partners, a company based in the Caribbean.

Kroll has kept the report neutral and refrained from making assumptions or pointing fingers. Still, the inquiry repeatedly showed that some of the payments and transactions could not be explained on the basis of the information available.

CS Agreed to the Deal Even as Conditions Weren’t Met

Credit Suisse is being cleared by the report’s findings. It says that CS had demanded a number of conditions to be met for it to agree to the deal. They included an agreement from the central bank of the country, an examination of local courts as well as a report to the International Monetary Fund.

The documents Kroll had at its disposal showed that the conditions set out by CS had not been met. Further information would need to be made available to explain why the bank had agreed to providing the finance despite its conditions hadn’t been met.

https://www.finews.com/news/english-news/27878-moza

https://zitamar.com/revealed-credit-suisse-banker-now-pay-ematum-ship-builder/

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