Business Maverick

Business Maverick

Salesman Cleared in $2 Billion Mozambican Scam in Blow to U.S.

A derelict boat stands on the beach as young men play football on Tofo beach in Vilankulo, Mozambique, 02 October 2018 (issued 05 October 2018). The beach is a popular destination for tourists and sees many locals working to support the industry. EPA-EFE/YESHIEL PANCHIA
By Bloomberg
02 Dec 2019 0

A Privinvest Group salesman was acquitted of defrauding investors in a $2 billion global loan scandal that prosecutors said involved more than $200 million in bribes to bankers and Mozambican officials, a blow to U.S. efforts to police corruption abroad.

Jean Boustani, who worked for the global shipbuilding company Privinvest based in the United Arab Emirates, was found not guilty Monday on all three conspiracy counts against him — to commit wire fraud, securities fraud and launder money. He smiled and crossed himself after the verdict was read out in federal court in Brooklyn, N.Y., and embraced each of his lawyers in a bear hug.“Your honor, first of all, I apologize for being emotional, a little bit. It wasn’t easy for me after 11 months in jail,” he told U.S. District Judge William Kuntz. Boustani, who’d been in jail in the U.S. since his arrest in early January at John F. Kennedy International Airport in New York, thanked the court “for all your time, dedication and for your fair judgment throughout this trial.” He raised his fist in the air on the way out.

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, in the Eastern District of New York, had the authority to prosecute crimes that hadn’t occurred in their jurisdiction.

The government said Boustani, a Lebanese national, was a central player in a scheme to funnel illicit payments to bankers who arranged almost $2 billion in loans, as well as to Mozambique government officials, to win business for Privinvest for three dubious maritime projects in the country. Prosecutors argued during the six-week trial that Boustani had defrauded U.S. investors by helping organize and conceal the bribes and kickbacks for loans marketed and sold to Americans in New York and Los Angeles.

Read More: Bribes, Lies and Money-Laundering Case Ready for U.S. Jury

Prosecutors told the jury that the bribes, even those paid via banks in Abu Dhabi, passed through the U.S. financial system through correspondent banks such as JPMorgan Chase & Co. and Bank of New York Mellon. They also argued that the Eastern District was an appropriate venue because some payments went through JPMorgan accounts in Brooklyn and because even transactions with Manhattan banks passed through the waterways around Manhattan, which the government claimed was within the jurisdiction of federal prosecutors in Brooklyn.

Defense lawyers argued that Boustani couldn’t have foreseen that money paid via a Middle Eastern bank could have passed through the U.S. While the government’s evidence included hundreds of emails in which Boustani sought or offered a payment, he told jurors during three days on the witness stand that these were merely fees to help complete legitimate deals for Privinvest.

Asked if she thought Boustani was bribing Mozambican officials, as prosecutors argued, one of the three jurors interviewed said she believed the payments started out as more or less genuine attempts to win business for the shipbuilder.

Boustani’s lawyer Michael Schachter argued in his opening statement that the U.S. “was not the world’s policeman.” On Monday he said “we are gratified and relieved and deeply appreciative of the jury’s verdict.”

“We are all winners in the American system when there is a just verdict,” Kuntz told the jurors as he excused them. They’d deliberated for about four hours on the Wednesday before Thanksgiving and 40 minutes on Monday.

Read More: Privinvest Spreadsheets Give U.S. Jury a Roadmap to Bribes

The sprawling case was a complex one for the jury, which was shown thousands of documents culled from the Middle East, Europe and the U.S., including emails, phone text messages, Privinvest files, contracts and financial records tied to the loans. Three Mozambican-owned companies had purchased a fleet of tuna fishing boats, built a shipyard and created a coastal defense system that included unmanned patrol vessels. After conducting little or no business, the ventures failed and caused one of the world’s poorest countries to default on its Euro-bonds in 2017.

The projects were heavily financed by loans from Credit Suisse Group AG and Russian bank VTB and paid directly to Privinvest. Prosecutors said Privinvest secured the business after it made more than $150 million in payoffs to Mozambican officials. Boustani and Privinvest paid an additional $50 million in kickbacks to Credit Suisse bankers critical to obtaining the loans, according to the U.S.

The U.S. said Boustani and his conspirators defrauded investors by making material misrepresentations in loan offering materials about how the loan proceeds would be spent, as well as Mozambique’s ability and intention to repay. Boustani, one of eight people charged in the case, was the only one to go to trial. Three former London-basedCredit Suisse bankers pleaded guilty and agreed to cooperate, while four others aren’t in U.S. custody.

Prosecutors said Privinvest inflated the costs of equipment, sometimes by as much as 50%, to bankroll the illicit payments. Jurors were shown Privinvest documents and spreadsheets the U.S. said were an accounting of bribes and the true cost of the projects.

Those who allegedly received payments included the son of the country’s president at the time, Armando Guebuza, who the U.S. said got at least $50 million for providing access to his father, and Manuel Chang, the former minister of finance, who prosecutors said gave a guarantee for the loan after he was paid $5 million.

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