The jury in the federal criminal trial in Brooklyn of Jean Boustani acquitted him December 2 of charges arising from a scheme to pay Mozambican officials tens of millions of dollars in bribes in return for the government borrowing hundreds of millions of dollars to pay for ships it could not afford. No sooner was the verdict announced than Privinvest — Boustani’s employer, the supplier of the ships, and a major beneficiary of the scheme — crowed it had been completely vindicated. Despite evidence produced at the trial, charges pending in Mozambique, and allegations in a civil action in the United Kingdom, Privinvest lawyers are telling the press the acquittal proves the company had no part of the scheme. That it did not pay bribes to win the business.
If it were true the company paid no bribes, three Credit Suisse executives would not have pled guilty to accepting bribes from it in the same court where Boustani was acquitted. Nor would they have named its CEO Iskander Safa, CFO Najib Allam, and Boustani as bribe payers (here). Nor would a trial witness have explained that Government Exhibit 2758, an April 2014 e-mail from Boustani to Allam, is a list of bribes the company paid Mozambican officials. A list that includes President Filipe Jacinto Nyusi (“Nuy” in the e-mail), former Finance Minister Manuel Chang (“Chopstick”), and former intelligence chief António Carlos do Rosário (“Ros”). (Complete decoded list here.)
No, the verdict of acquittal does not exonerate Privinvest. Nor anyone else for that matter. What it shows is two things.
One, how hard for it for American prosecutors to pursue bribe payers clever enough to keep the United States at a distance, and two, not all federal prosecutors are afraid to prosecute a case they are not 110 percent certain they can win.
Because Boustani is not an American citizen, prosecutors could not charge him with violating the Foreign Corrupt Practices Act by bribing Mozambican officials. The best they could do was charge him with secondary or collateral crimes, offenses that arose in the course of paying the bribes. They had evidence of three: defrauding American investors, because some U.S. investors had bought into the loans Credit Suisse had made to Mozambique without knowing the loans were procured through bribery; wire fraud, because some of the communications about the bribery scheme passed through American telecommunications lines; and money laundering, because some of the monies used to pay the bribes passed through the American financial system.
Prosecutors had no evidence that Boustani had committed any of these offenses. As his lawyers repeatedly reminded the jury, he never sold a Credit Suisse loan to an investor, used an American phone-line or tapped into the American financial system. What prosecutors did charge him with was working together (“conspiring”) with those who did carry out these acts. Although the trial record shows evidence of conspiracy on each offense, presenting it to 12 people who do not live and breath business and finance can be an enormous challenge. To convict Boustani, prosecutors had to first prove that each crime had been committed, which required presentation of loan participation agreements, investors spread sheets, and other complex financial documents. They then had to show that for each crime Boustani had agreed to part of the scheme to carry them out. For each they had to paint a picture of an intricate spider’s web and then show how Boustani was connected to each. And on top of all this, they had to show “venue,” that at least one of the acts constituting each crime took place in in the Eastern District of New York, a small area encompassing parts of New York City and a couple of suburban countries.
Even with the best of judges and an attentive jury, proving a defendant conspired to commit a complex financial crime is hard. Not only was the judge of no help, his actions in explaining the case to the jury raised the bar. For fear of being reversed on appeal, he did not explain the securities and wire fraud and money laundering laws in plain English. Rather, he read the statutes aloud to the jurors. No experienced lawyer could understand what these laws meant after hearing them read aloud; it is doubtful the jury could do any better. Shortly after the jurors began their deliberations, they asked the judge to clarify the term “venue,” a sign his reliance on statutory verbiage rather than plain English left them confused.
The jury was also a disappointment. After listening to almost six weeks of detailed testimony, it spent less than a day before rendering a verdict, four hours on the day before Thanksgiving, and a part of the morning the following Monday. The jurors had already spent an enormous time hearing the case but to come to a conclusion on all three charges so quickly suggests an impatience to be finished with the matter.
The jurors might also have wondered why they never heard from the Mozambican government, the representative of the primary victim in the case, the people of Mozambique. Why hadn’t it produced Manuel Chang, who as Finance Minister had, in violation of Mozambique law, approved the loans without telling parliament? As readers of this blog know, rather than cooperating with U.S. prosecutors to see the wrongdoers were convicted, the Mozambican government has stood in their way by, among other things, blocking Chang from being tried with Boustani, a pairing that could have well changed the outcome even given the judge and jury in the case. (South African High Court August 1 decision that Chang should be extradited to the U.S. here)
In his 2017 book, award-winning American journalist Jesse Eisinger charges that all American federal prosecutors belong to a secret club, one that binds them not to bring a case against a business executive unless they are absolutely certain they would win. Dubbed the Chickenshit Club, the actions those who work in the office of the United States Attorney for the Eastern District of New York shows membership is not universal. Thanks to their efforts, there is now overwhelming evidence on the public record of fraud and bribery in the loans extended to Mozambique to buy Privinvest vessels.
The spotlight now shifts to other jurisdictions where one or more of the miscreants could, and should be, prosecuted.
*Mozambique, where a criminal complaint names some but not all of those who took bribes, and where Boustani and his Privinvest accomplices could be charged with paying the bribes.
*The United Kingdom, where the government of Mozambique is seeking damages from Privinvest and the banks which cooked up the scheme.
*The United Arab Emirates, where Privinvest is located and where evidence at Boustani’s trial revealed numerous violations of UAE law, but which to date has not only taken no action itself but refused to provide the U.S. and Mozambique government with evidence to advance their cases.
*To France, where Privinvest built the vessels sold to Mozambique with the corrupt loans and where civil society organizations could prompt both a criminal case and one to recover damages.
*And don’t forget the United States, where defrauded investors now have a roadmap and evidence in hand for a civil action against those who sold them the corrupt loans.
The Boustani case will not be the last action to arise from the scheme, and with the evidence prosecutors presented in the Brooklyn case now available to all, it is unlikely others will be as lucky as Mr. Boustani was.
Thanks for the insights on this interesting case. Is there any indication whether the jury acquitted Boustani based on the venue issue or because they did not find that the proof of conspiracy rose to beyond a reasonable doubt? If it is the former, this would serve as encouragement for prosecutors looking to bring tricky cases such as this one.
Actually yes: apparently it was the venue issue. “The verdict came down to the venue, three jurors, including the foreman, said in interviews afterward. All three, who declined to give their names, said the panel didn’t see how federal prosecutors in Brooklyn had the authority to prosecute crimes that hadn’t occurred in their jurisdiction. The jury deliberated for about four hours on Wednesday, before a Thanksgiving break, and 40 minutes on Monday.”
Although, I suppose there’s no indication that the jury agreed with the proof of conspiracy, either.
Extremely insightful piece, thank you Rick. Also a reminder that Lebanon should criminalize bribery of foreign officials in line with their international obligation (it wasn’t criminalized as of their last UNCAC review in 2016)! If criminalized in Lebanon that would’ve been another avenue for prosecution.
Brilliant post, Rick. We will see whether the Mozambican authorities are up to the task in case Manuel Chang et al. are eventually extradited to Mozambique. I am afraid that, despite all the criticism, we still need the US to play the role of global anticorruption police now and then.
Pingback: This Week in FCPA-Episode 182 – the Farewell to DC Fontana edition - Compliance ReportCompliance Report
This post makes me continue to think about the suitability of the jury system to complex corruption cases. When I see Brazilian courts, composed only by magistrates, rule corruption cases in favor of corrupts, often influenced by political and economic pressure, I tend to think that the jury system could be a good alternative. However, when I see situations like the one exposed in the post, I tend to question my previous thoughts.
I learnt something new through this post – so thank you for that. This leapt out at me – “For fear of being reversed on appeal, he did not explain the securities and wire fraud and money laundering laws in plain English. Rather, he read the statutes aloud to the jurors. No experienced lawyer could understand what these laws meant after hearing them read aloud; it is doubtful the jury could do any better.” I’m assuming this is not routine procedure? If so, is there a specified procedure for jury vis a viz concerned statutes? Curious to know what kind of resources the judiciary invests in jury orientation and facilitation..
Pingback: Mozambique and the “Tuna Bond” Scandal - Spotlight on Corruption