- A New York court ordered ex-Mozambique finance minister Manuel Chang to pay US$42.2 million to VTB Capital over losses tied to Mozambique’s “hidden debts” scandal.
- Chang was convicted in 2024 of wire-fraud and money-laundering conspiracy in a US$2 billion loan scheme involving Credit Suisse and VTB, taking about US$7 million in bribes.
- He signed illegal sovereign guarantees for loans to Proindicus, EMATUM and MAM in 2013–2015, and their defaults turned the borrowing into undisclosed public debt.
- Audits found major diversion and overpricing, including more than US$700 million in Privinvest over-invoicing and over US$200 million in kickbacks, with recovery of losses still uncertain.
Read More
The New York court’s decision to order Manuel Chang to pay US$42.2 million to VTB Capital marks a further legal and financial blow in one of Africa’s largest corruption cases. While this compensation is substantial, it represents only a fraction of the estimated losses suffered by VTB and other creditors, raising questions about the enforceability of cross-border judgments and asset recovery.
Chang’s conviction in August 2024 solidified earlier investigative findings: that between 2013 and 2015, he signed sovereign guarantees that enabled over US$2 billion in loans to be issued to companies with no viable capacity, in breach of domestic budget laws. These guarantees were central to converting what were hidden, illegal loans into public debt after defaults.
The flow of funds shows a pattern: loans disbursed were routed to Privinvest, a shipbuilding contractor, at grossly inflated prices; audits suggest over-invoicing exceeded US$700 million. Similarly, over US$200 million of proceeds were diverted for bribes and kickbacks, with Chang personally receiving US$7 million.
From a governance perspective, the case underscores the dangers of opaque sovereign guarantees and the role of high-level collusion. Despite budget law ceilings, these guarantees were issued, and contract execution was severely compromised. The involvement of international financial institutions (Credit Suisse, VTB), U.S. law (wire fraud, money laundering), and private sector contractors (Privinvest) emphasize how cross-boundary enforcement and accountability can play out—albeit slowly.
Strategic implications for Mozambique are profound. The scandal eroded international trust, caused suspension of aid and IMF support, and induced macroeconomic instability. Domestically, the legal consequences (long trials, extradition battles, prison terms) may deter future abuse, but much hinges on asset recovery, reparations to creditors, and internal reforms in procurement, oversight, and debt contracting practices.
Open questions remain: How much of the court-ordered compensation will actually be recovered? What is the full spectrum of liability across banks, contractors, and domestic officials? And will these legal precedents shift Mozambique’s political economy toward greater transparency in sovereign debt guarantees and budget oversight?
Supporting Notes
- US court ordered Chang to pay US$42.2 million to VTB Capital for losses in the hidden debts scandal.
- In 2024, Chang was convicted of conspiracy to commit wire fraud and money laundering related to over US$2 billion in loans to Proindicus, EMATUM, and MAM.
- Clandestine sovereign guarantees signed by Chang enabled the loans despite violating Mozambique’s 2013-2014 budget laws.
- Independent audits found over-invoicing by Privinvest totalling over US$700 million.
- Loan proceeds were diverted to bribes and kickbacks totaling over US$200 million; Chang personally received around US$7 million.
- The three state-owned companies defaulted, leaving Mozambique liable for nearly US$2 billion—about 12% of its GDP at the time.
- Chang was sentenced to 8½ years in prison, having already spent six years in detention; he may have to serve about 2½ more years in U.S. custody.