Lebanese vendor staged $ 2 billion mozambique loan scheme, US jury said

NEW YORK (Reuters) – Jean Boustani, a top seller of a Lebanese shipbuilding company, was the “mastermind” of a conspiracy to defraud American investors involving $ 2 billion in loans for projects in the Mozambican government, a US prosecutor told jurors at the start of his trial on Wednesday.

Michael Schachter, an attorney for Boustani, said his client had never communicated with investors and had no connection with the United States, suggesting the case did not belong to the federal courtroom of Brooklyn.

“The United States is not the world’s policeman,” he said.

The statements kicked off what is expected to be a five-week trial that could shed light on a corruption scandal that contributed to Mozambique’s default in 2016.

The case revolves around three contracts awarded by Mozambique to Boustani’s employer, Privinvest, for the construction of a coastal defense system, a tuna fishing fleet and a shipyard. The projects were funded with nearly $ 2 billion in loans from Credit Suisse Group AG CSGN.S and the Russian lender VTB VTBR.MM.

Deputy U.S. attorney Margaret Moeser told jurors Boustani paid hundreds of millions of dollars in bribes to Mozambican officials and Credit Suisse bankers to secure contracts and loans.

Credit Suisse then sold some of those loans to investors, including some in the United States, who were falsely told that all the money was being used for legitimate government projects, Moeser said. While Privinvest delivered ships and equipment to Mozambique, she said, their value was grossly inflated.

Eventually, she said, the loans defaulted and investors lost their money.

Schachter did not dispute that Boustani, a Lebanese citizen, paid civil servants, what he called the “cost of doing business” in Mozambique. But he said it didn’t violate any US law.

In fact, Schachter said, Boustani played no role in selling the loans to investors and never communicated with anyone in the United States.

“He’s not a banker,” Schachter said. “He’s a boat salesman.

Three Credit Suisse bankers had already pleaded guilty in this case. One of them, Andrew Pearse, is prosecutors’ first witness at the trial.

Mozambique’s former finance minister Manuel Chang has also been charged in the case. Prosecutors said Chang, who is fighting extradition in South Africa, secretly asked the country’s government to guarantee the loans in exchange for bribes.

When loan guarantees went public in 2016, foreign donors halted support and Mozambique defaulted on its sovereign debt. It remains among the most indebted countries in the world.

Reporting by Brendan Pierson in New York; Editing by Richard Chang

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