Hidden Debts: Chang ordered by NY court to pay over $42 million to defrauded Russian bank – AIM report

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Hidden Debts: Chang ordered by NY court to pay over $42 million to defrauded Russian bank – AIM report

4:35 CAT | 21 May 2025

FILE - VTB offices in London. [File photo: Reuters]

A court in New York on Friday ordered former Mozambican Finance Minister Manuel Chang to pay 42.2 million US dollars to the Russian bank VTB Capital for losses incurred in the fraud generally known as the case of the “hidden debts”.

In 2013 and 2014, three fraudulent state-owned Mozambican companies, Proindicus, Ematum (Mozambican Tuna Company) and MAM (Mozambique Asset Management), obtained loans of over two billion dollars from the banks Credit Suisse and VTB.

The banks only agreed to pay out such huge sums because the Mozambican government of the day gave sovereign guarantees, signed by Chang as Finance Minister. There was never the slightest chance that the companies could repay: all three of them were set up by the Intelligence and Security Service (SISE) working closely with the Abu Dhabi-based group Privinvest.

The guarantees were flagrant violations of the Mozambican budget laws of 2013 and 2014. They meant that, when the companies defaulted, the Mozambican state became liable to repay the entire amount. What were initially hidden loans became hidden debts.

The loans never went to Mozambique but were sent directly to Privinvest, as the sole contractor for the three companies. Privinvest provided assets such as fishing boats, patrol vessels and radar stations to the companies, which were grossly overvalued. An independent audit of the companies showed that the over-invoicing amounted to over 700 million dollars.

This gave Privinvest the funds required to offer large bribes to Chang and other Mozambican officials, and to the Credit Suisse bankers who negotiated the loans.

But among those swindled in this scheme were American investors, which led US prosecutors to investigate, and to press charges against Chang. He was detained in South Africa in December 2018, while on his way to Dubai.

Legal battles in South African courts ensued, since both the US and Mozambique had sought his extradition. Eventually the US prosecutors won, and Chang was sent to New York, where he was found guilty of wire fraud and sentenced to eight and a half years in prison.

The court found it proven that Chang had taken bribes of seven million dollars from Privinvest. But the court award to VTB (which was the main bank financing the fake shipyard company, MAM) is for six times that amount.

The New York court also ordered the three Credit Suisse bankers who had confessed to taking Provinvest bribes to pay VTB tens of millions of dollars. The most senior of the three, Andrew Pearse, should pay 264.1 million dollars, Detelina Subeva was ordered to pay 10.5 million, and Surjan Singh 35.2 million. It is rather unlikely that the three can pay such sums.

There are three other defendants who have not yet appeared before the New York judge. One of them, Najib Allam, is the former Chief Financial Officer of Privinvest. He is a citizen of Lebanon, and if he has returned there, he may be beyond the reach of the New York court.

The other two, Teofilo Nhangumele and Carlos Antonio do Rosario, are currently serving 12 year sentences in a Mozambican prison.

They were found guilty in a trial that concluded in December 2022. Rosario, who was the SISE head of economic intelligence, was a key figure in the fraud, and became chairperson of all three fraudulent companies. Nhangumele and Rosario have now served about half their sentences and are expected to be granted parole.

READ: VTB Capital: Settlement of U.S. probe into Mozambique transactions – press release and comment

Russia’s VTB demands US$817.5 million from Mozambican state

VTB bank accuses Mozambican creditors of misinterpreting Kroll report

Source: AIM