(Bloomberg) -- Privinvest Group salesman Jean Boustani was cleared of defrauding investors in a global scheme that prosecutors said involved more than $200 million in bribes to bankers and Mozambican government officials and resulted in a $2 billion loan scandal, a setback for U.S. efforts to police foreign bribery and corruption.
Boustani, a salesman for the global shipbuilding company 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 hearing the verdict in federal court in Brooklyn, N.Y.
“We are all winners in the American system when there is a just verdict,” U.S. District Judge William Kuntz told the jurors, who deliberated for about four hours on the Wednesday before Thanksgiving and 40 minutes on Monday.
The government had argued that Boustani was a central player in a scheme to funnel the illicit payments to bankers who arranged almost $2 billion in loans, and to Mozambique government officials, to win business for Privinvest for three dubious maritime projects in the country. Boustani, a Lebanese national, had been in jail in the U.S. since his arrest in early January at John F. Kennedy International Airport in New York.
Read More: Bribes, Lies and Money-Laundering Case Ready for U.S. Jury
Jurors seemed confused about prosecutors’ authority to bring the charges in New York, sending out a note on Nov. 22 asking, “Can you offer the jury a definition of acquit in relation to venue, is that different than not guilty?”
Prosecutors had argued during the six-week trial that Boustani defrauded U.S. investors by helping organize and conceal the bribes and kickbacks for the loans that were marketed and sold to Americans in New York and Los Angeles. They said the U.S. had the legal authority to bring the case because the loans and bribes passed through the American financial system, through correspondent banks such as JPMorgan Chase & Co. and Bank of New York Mellon.
Boustani’s lawyer Michael Schachter argued in his opening statement that the U.S. “was not the world’s policeman.”
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. Each side seized on its interpretation of the evidence to buttress its case.
The scandal stemmed from heavily financed maritime projects in Mozambique. Three Mozambican-owned companies 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.
Read More: Privinvest Spreadsheets Give U.S. Jury a Roadmap to Bribes
The projects were financed by loans from Credit Suisse Group AG and Russian bank VTB and paid directly to Privinvest. Prosecutors argued Privinvest secured the business after it made more than $150 million in payoffs to Mozambican government officials. Boustani and Privinvest paid an additional $50 million in kickbacks to three 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 Credit 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 three 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 Manual Chang, the former minister of finance, who prosecutors said gave a guarantee for the loan after he was paid $5 million.
(Updates with details of bribery scheme in second and third sections)
--With assistance from Matthew Hill.
To contact the reporter on this story: Patricia Hurtado in Federal Court in Manhattan at pathurtado@bloomberg.net
To contact the editors responsible for this story: David Glovin at dglovin@bloomberg.net, Joe Schneider, Peter Jeffrey
©2019 Bloomberg L.P.
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