Mozambicans To Credit Suisse: Make Good on Crooked Debt

Credit Suisse’s complicity in the $2.4 billion corruptly lent to the Mozambican government dampened festivities at its April 26 annual shareholders’ meeting.  While shareholders celebrated receipt of a fat dividend, a representative from Mozambique reminded them that some of this money comes at the expense of the citizens of Mozambique – 28 million persons, most desperately poor, saddled with repaying loans foisted off on their government through corruption.  Three senior Credit Suisse employees have been indicted for their role in the scheme, one Credit Suisse management (rewarded with a hefty pay hike at the meeting) claims cleverly circumvented its controls preventing unlawful deals.

The statement to shareholders, delivered by a representative of the civil society organization Fórum de Monitoria do Orçamento (FMO, budget monitoring forum in English), asks Credit Suisse to support restorative justice to atone for its role in the Mozambican debt crisis.  To this end, Credit Suisse is asked to: i) accept accountability for its actions in the debt issue;  ii) commit to return to Mozambique all proceeds from the Mozambican Illegal debt scandal; iii) collaborate with authorities to ensure that all responsible parties are held accountable for their roles in the scandal; iv) write off outstanding debt arising out of debt crisis; and v) help ensure the people of Mozambique do not have to make good on debts they had no part in incurring and which did nothing to benefit them.

Full text below; video here (at 2:18:50 –  2:28).

Continue reading

Mozambicans Ask: Will the United Arab Emirates Enforce UNCAC?

The United Arab Emirates faces the first serious test of its commitment the United Nations Convention Against Corruption.  Will it open a case against long-time resident Jean Boustani, who the U.S. Justice Department says masterminded the bribery scheme that robbed the people of Mozambique of some $2 billion.  The “Mozambican hidden debt” scandal pitched the nation into a deep recession, depriving thousands of basic necessities and leaving government without the resources to respond to Cyclone Idai

In its latest submission in its case against Boustani, the Justice Department reveals that much of the bribery scheme was carried out in the UAE. Boustani helped one co-conspirator open an account in a UAE bank to stash bribes, facilitated the travel of others to the UAE to further the bribery scheme, and secured UAE employment permits for three under false pretenses.  Each permit, says the Justice Department, “falsely stated that the [accomplices] professions were ‘petrol engine mechanic,’ ‘diesel engine mechanic,’ and ‘hydraulic mechanic.’”  In fact, the Justice Department told the court in its filing, “all three were members of the conspiracy who would receive millions of dollars of bribes and kickbacks for their roles in the scheme.”

The Justice Department’s charges against Boustani and accomplices are here. To view the Justice Department filing describing Boustani’s alleged violations of UAE law, click on DoJ Boustani filing .  To view the e-mails and other documents that support the Department’s narrative, click on evidence of UAE offenses.

Mozambican citizens have suffered a terrible wrong, one which UNCAC is meant to right.  Will UAE authorities do their part to help right that wrong?  Will the UAE live up to its obligations under the UNODC to prosecute those who pay bribes? Those who flagrantly violate other of its laws as part of a bribery scheme?

Who Will Get to Prosecute Mozambique’s Former Finance Minister for Corruption?

Manuel Chang must surely feel special these days. He is the first former Minister of Finance in history (or at least that history recorded on the internet) whose is being sought for corruption by two countries. As explained here, Chang was arrested in South Africa December 30 after the United States had filed a preliminary request for extradition. Two weeks later, Mozambique filed its own extradition request.  Both countries want to bring him to trial for offenses arising from his alleged corrupt approval of government guarantees for bonds issued by private firms while minster.  Soon after their issue, the bonds went into default, costing the impoverished nation (GNI per capita $1200) as much as $2 billion and throwing the economy into recession.

Which country will get to prosecute Chang will turn on how South African authorities construe recondite provisions in South Africa’s extradition treaties with the United States and Mozambique.  As obscure as the provisions in the two treaties are, how South African authorities choose to interpret them will remain anything but.  For their interpretation will have significant consequences for the global fight against corruption. Continue reading

The Promise – and Risk – of Internationalizing the Corruption Fight: Prosecuting the Mozambique Loan Fraud

Manuel Chang, Mozambique’s longest serving Finance Minister, has just lost the first round in his attempt to duck U.S. charges he defrauded the Mozambique people out of some $2 billion.  A South African Magistrate ruled January 9 that Chang’s December 30 arrest in South Africa, requested by the U.S. Justice Department, was valid.  Assuming South Africa stands firm in the face of legal maneuvering by Chang and political pressure by the Mozambique government, Chang will join accomplices in a Brooklyn jail to await trial for corruption.

That the corruption trial of a former official of the one of the world’s poorest nations will be held in the courts of one of the world’s wealthiest and that the trial turns on the strength of a third country ’s legal system and the political resolve of its government shows both the promise – and the risk – of the internationalization of the fight against corruption. Continue reading

Innovative or Ineffective?: Performance-Based Lending as an Anticorruption Tool

The Sustainable Development Goals’ (SDGs) new focus on fighting corruption and building institutions has generated quite a stir (including on this blog – see here, here, here, and here). But the Millennium Challenge Corporation (MCC) – a U.S. agency responsible for disbursement of assistance geared toward international development targets – has long been acting against corruption through its effort to achieve the SDG precursors, the Millennium Development Goals (MDGs). Institution-building does not appear among the substantive aims of the eight MDGs. Rather, the MCC made anticorruption central to its work by introducing corruption indices into its process for competitive selection of aid recipients. In brief, the MCC Board of Directors chooses aid-eligible countries by evaluating and scoring candidates countries’ “policy performance” on a number of measures. Crucially, in order to qualify for aid, countries must score above average for their income group on the Worldwide Governance Indicators (WGI) “Control of Corruption” score. The indicator is therefore known as the “hard hurdle.” The Board also assesses corruption trends in its analysis of a country’s ability to reduce poverty and generate economic growth, which, with policy performance, comprises the overall evaluation.

This strategy is known as performance-based lending, and the MCC has employed it to award over $10 billion in grants to nearly 40 countries over the past 12 years. Is the MCC approach a good one? Many critics say no. I say yes. Although it is a strategy that is still evolving, performance-based lending—including the corruption control “hard hurdle”—is not only innovative and effective, but important.

Continue reading