Mozambique arrests 5 in government debt scandal

Those detained include businessmen and intelligence officials

Mozambique Thursday detained five people, including businessmen and intelligence officials — the first arrests of suspects linked to a government debt which plunged the country into its worst financial crisis.

Among those arrested are Gregorio Leao, ex-director of the intelligence services, and Ines Moiane, a former assistant of ex-president Armando Guebuza, a prosecutor said in Maputo.

“There are five persons arrested so far,” the public prosecutor told AFP.

A senior police officer confirmed to AFP one of them was businessman Teofilo Nhangumele, accused of introducing secret service officials to a company which went on to sell surveillance ships and a tuna-fishing fleet to the government.

“He was arrested as a precautionary measure, to prevent him from obstructing the ongoing investigation,” said the officer, who asked not be named.

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The debt scandal came to light in 2016 when it emerged the government had taken out loans amounting to $2-billion to buy the equipment, hiding the transaction from parliament and international donors. 

An independent audit found that a quarter of the loan amount was diverted, and unaccounted for.

When the debt was revealed, Mozambique — which is one of the world’s poorest countries and relies on donor aid — was plunged into the worst financial crisis in its history as donors froze contributions.

The United States alleges at least $200 million was spent on bribes and kickbacks, including $12 million for former finance minister Manuel Chang, who allegedly signed off on debt guarantees.

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Chang was arrested in South Africa in December on a US extradition request.

A Johannesburg court will on Friday decide on Chang’s application for bail. 

Seven suspects including Mozambicans and ex-Credit Suisse bankers are accused by the US of fraud, conspiracy to financial security fraud, conspiracy to launder money.

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