Mozambique’s ex-finance minister sentenced in US in loan scandal
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In August, Manuel Chang was convicted of conspiring to commit wire fraud and money laundering. [Phill Magakoe/Associated Press]
Manuel Chang, the former finance minister of Mozambique, was sentenced on Friday to eight and a half years in prison by a New York court for his role in the infamous “hidden debt” scandal that triggered an economic crisis in Mozambique. Chang has already served six years in custody, in both the United States and South Africa, pending his trial.
Chang’s conviction stems from a scheme that involved the approval of about $2 billion in secret loans, which were arranged by major international banks for state-owned companies in Mozambique. The loans were intended to finance projects, including the purchase of a tuna fishing fleet and improvements to maritime security. However, rather than benefiting the country’s economy, the funds were siphoned off through bribes and kickbacks, leading to the collapse of the projects. The companies involved defaulted on the loans, leaving investors with significant losses.
As a result of the scandal, Mozambique was burdened with a $2 billion debt—equivalent to roughly 12 percent of its gross domestic product at the time. This financial disaster caused international donors, including the International Monetary Fund (IMF) and the World Bank, to temporarily suspend aid to the country. Consequently, Mozambique faced a currency collapse and widespread financial instability.
In the court proceedings on Friday, Chang expressed regret for his actions, acknowledging that he believed the projects would have been beneficial for Mozambique at the time. He admitted that he now recognized his involvement was wrong. During the sentencing, the judge took into account the six years Chang had already served in custody, meaning he will be eligible for release after serving an additional two and a half years in the United States. Once he completes his sentence, he will be deported back to Mozambique.
Chang’s lawyers have indicated that they plan to appeal the conviction, challenging the outcome of the trial. The sentencing marks a significant chapter in the aftermath of the “hidden debt” scandal, which has had far-reaching consequences for both the people of Mozambique and the international financial community.
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