U.S. Markets

Lebanese salesman masterminded $2 billion Mozambique loan scheme, U.S. jury told

NEW YORK (Reuters) - Jean Boustani, a lead salesman for a Lebanese shipbuilding company, was the “mastermind” of a conspiracy to defraud U.S. investors involving $2 billion in loans for Mozambican government projects, a U.S. prosecutor told jurors at the opening of his trial on Wednesday.

Michael Schachter, a lawyer for Boustani, said his client never communicated with investors and had no U.S. ties, suggesting the case did not belong in the Brooklyn federal courtroom.

“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 debt default in 2016.

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

Assistant U.S. Attorney Margaret Moeser told jurors that Boustani paid hundreds of millions of dollars in bribes and kickbacks to Mozambican officials and Credit Suisse bankers to secure the contracts and loans.

Credit Suisse went on to sell parts of those loans to investors, including some in the United States, who were falsely told that all the money was being used for the legitimate government projects, Moeser said. While Privinvest did deliver 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 officials, which he called the “cost of doing business” in Mozambique. But he said that did not violate any U.S. laws.

In fact, Schachter said, Boustani had 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 previously pleaded guilty in the case. One of them, Andrew Pearse, is the prosecutors’ first witness in the trial.

Former Mozambique Finance Minister Manuel Chang was also charged in the case. Prosecutors said Chang, who is fighting extradition in South Africa, secretly had the country’s government guarantee the loans in exchange for bribes.

When the loan guarantees became public in 2016, foreign donors to cut off support and Mozambique defaulted on its sovereign debt. It remains among the world’s most indebted countries.

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