In mid-February, Ndambi Guebuza, the son of a former president of Mozambique, was arrested for alleged links to a $2 billion government debt scandal. It followed the arrest in January in New York of Jean Boustani, a Lebanese national. Also arrested that same month in London were three Credit Suisse bankers, Andrew Pearse, Surjan Singh and Detelina Subeva, of New Zealand, British and Bulgarian nationality respectively. In late December, Mozambique’s former finance minister Manuel Chang was arrested in South Africa.
What links all these people is a US federal indictment. They are charged with conspiracy to defraud investors in America and elsewhere through more than S2 billion of “loans guaranteed by the Mozambican government”.
Mozambique can neither afford such extravagance nor such extravagant corruption. The former Portuguese colony is desperately poor and a recipient of foreign aid. With its officials allegedly blowing through more than $2 billion of borrowed money, donors suspended aid and the International Monetary Fund called a halt to financing. As a result, Mozambique has been left with near-empty coffers.
According to court filings in the Eastern District of New York, the accused conspired “to pay at least $200 million in bribes and kickbacks… to enrich themselves, Mozambican government officials and others.” All of the accused are charged with one count of conspiracy to commit wire fraud, one count of conspiracy to commit securities fraud and one count of conspiracy to commit money laundering. The three Credit Suisse bankers face an additional count of conspiracy to violate the Foreign Corrupt Practices Act’s anti-bribery and internal controls provision by knowingly and wilfully conspiring to commit offences against the US.
But all of the accused are linked through one particular company and one man, Privinvest and its CEO Iskandar Safa. Privinvest describes itself as “one of the leading privately-owned shipbuilding groups in Europe and the Middle East with major naval and civilian clients around the world”.
The US court filing takes a much less wholesome view of Privinvest. It is described as “the sole contractor for the projects”, which were supposedly meant “to benefit Mozambique and its people”. In reality, said the indictment, the company “charged inflated prices for the equipment and services provided, which were then used, at least in part, to pay bribes and kickbacks.”
Safa’s name does not appear in the redacted public version of the US indictment. However, there are all sorts of reasons to think Iskandar Safa must figure somewhere in the US investigation, possibly in some of the blacked-out sections of the 47-page charging document. After all, Safa and his brother Akram founded Privinvest more than 20 years ago and have driven its growth. And there are references in the indictment to Privinvest co-conspirators, one of whom (“Co-Conspirator 2”) is described as “a principal executive of Privinvest”.
Safa’s prominence as an international dealmaker goes back decades. In 1988, he helped negotiate the release of French hostages in Lebanon and there were rumours he pocketed some of the ransom. In the 1990s, his name popped up, albeit not as a principal, in the so-called “Angola-gate” scandal, which involved $790m worth of arms sales to José Eduardo dos Santos’ government. Safa is reported to maintain close ties with people in high places, holidaying in Dubai with Angola’s current President João Lourenço, who took over from dos Santos.
Safa is said to have enjoyed the same sort of intimate family relationship with Mozambique’s former president Armando Guebuza, who was in office when the controversial deal was signed. Safa is said to have tried to broker deals with Saudi Arabia and Gaddafi-ruled Libya. In 2015, Safa’s UAE company won a contract to build four warships for the Israeli Navy. In May 2018, Safa’s Kiel-based German Naval Yards company proudly reported it had, with another German firm, Thyssenkrupp Marine Systems (TKMS) “recently built two highly complex frigates for the Algerian Navy, which have already been delivered on time and within budget”. German Naval Yards also revealed that it was engaged in a joint venture with TKMS to build five corvettes or warships for the Bundeswehr (German armed forces).
Just as in France, where Safa’s Constructions mecaniques de Normandie (CMN) employs 400 people, his German operations (which comprise three companies) are considered important to the local economy.
German Naval Yards, in Germany’s northernmost state of Schleswig-Holstein, employs just under a thousand people. German Naval Yards and CMN are subsidiaries of Privinvest. There are others listed by the US indictment. These include Privinvest Shipbuilding S.A.L.; Abu Dhabi MAR; Logistics International and Palomar Capital Holdings and Palomar Holdings Ltd. The attention paid by the indictment to Privinvest is striking. The activities of Boustani, its “lead salesman and negotiator” in the words of the indicting document, are detailed, sometimes like a parody of the business of bribery.
For instance, Boustani allegedly emailed an unnamed Mozambican government official to discuss the timing of so-called “success fee” payments, which seems to be a code phrase for bribes. Privinvest, the email says, had “various negative experiences in Africa”. Accordingly, says Boustani, “we have a strict policy in the Group consisting of not disbursing any ‘success fee’ before the signature of the Project Contract.” The contract referred to was the task of building a “coastal monitoring system” to fight pirates. The Mozambican official allegedly responded to Boustani’s email by suggesting a two-stroke payment schedule of the “success fee” – one on project signing, the other on project implementation.
His rationale is frank: “there will be other players whose interest will have to be looked after e.g. ministry of defense, ministry of interior, air force, etc. … in democratic governments like ours people come and go, and everyone involved will want to have his/her share of the deal while in office, because once out of the office it will be difficult.”
The bribe-negotiation continues in other emails. Boustani, for instance, allegedly emailed the Mozambican official “requesting a bribe and kickback figure,” to which the official replied: “Fine brother. I have consulted and please put 50 million chickens. Whatever numbers you have on your poultry I will add 50 million of my breed.” Chickens seems to be another code word for bribes. And so it goes.
Of course, questions were being asked early on over the deal struck by the Mozambican government with Privinvest. Back in October 2013, when French president Francois Hollande and his Mozambican counterpart Armando Guebuza shook hands and smiled for the cameras as they formally launched a massive ship-building project at Cherbourg, on France’s Atlantic coast, Safa played a prominent role in events. At the time, Hollande’s office said Mozambique’s contract for 30 trawlers and patrol boats with CMN was just part of a larger global deal with Privinvest. It was a time when offshore gas fields had been discovered in Mozambique and the sub-Saharan country was being hailed as the next Qatar. But in 2013, Mozambique was 185 out of 187 on the UN’s Human Development Index (it’s now 181). Critics of then President Guebuza said that instead of buying ships, Mozambique should be tackling the lack of food, medicine, and roads.
As it turns out, the massive project was never what it pretended to be.
