By Luc Cohen
NEW YORK (Reuters) -A former Mozambique finance minister pleaded not guilty on Thursday to U.S. criminal charges over his alleged involvement in a fraud involving $2 billion in loans to three state-owned companies.
Manuel Chang entered his plea before U.S. District Judge Nicholas Garaufis in Brooklyn.
Chang had been extradited on Wednesday from South Africa, where he was arrested in December 2018 on U.S. charges of conspiring to commit wire fraud, securities fraud and money laundering.
Prosecutors said in a court filing on Thursday he should be detained pending trial, citing his alleged central role in the scheme and the possibility of a hefty sentence if convicted.
“If released on bail, the defendant only has to walk into the permanent mission of Mozambique in Manhattan to potentially avoid prosecution,” federal prosecutors in Brooklyn wrote.
Chang’s lawyers were expected to request that he be released on $1 million bond secured by a $100,000 cash deposit.
The so-called “tuna bonds” case stems from financing extended to the three state companies by Credit Suisse and Russian bank VTB for projects to develop Mozambique’s fishing industry and improve maritime security between 2013 and 2016.
Prosecutors said at least $200 million was diverted to various defendants and Mozambican government officials.
Federal prosecutors said Chang secretly had Mozambique’s government guarantee the loans in exchange for bribes, and that the three companies were really “fronts” for Chang and other defendants to enrich themselves. The scheme misled U.S. investors about Mozambique’s creditworthiness, prosecutors said.
Chang has denied wrongdoing.
The other defendants included Jean Boustani, a salesman for a Lebanese shipbuilding company accused of bribing officials and bankers to win contracts from the state-owned companies.
He was acquitted at trial in December 2019, after he testified that he had no role in packaging the loans for investors.
Three former bankers at Credit Suisse pleaded guilty in 2019.
Credit Suisse, which was acquired by former rival UBS in a rescue this year, agreed to pay $475 million to Britain and the United States in 2021 to resolve bribery and fraud charges.
While Boustani’s company Privinvest did deliver ships and equipment to Mozambique, prosecutors said their value was grossly inflated.
Eventually the loans defaulted and investors lost their money. Credit Suisse has forgiven $200 million that Mozambique owed.
In 2016, Mozambique unveiled previously-undisclosed state-backed borrowing, leading to a currency collapse and sovereign debt default after the International Monetary Fund and foreign donors cut off support.
The country is suing Credit Suisse and Privinvest in London for compensation and restitution.