Mozambique fraud case: 18 more indictments

File photo.

Mozambique has indicted 18 citizens in a $2 billion fraud case involving New Zealander Andrew Pearse, which threatens to bankrupt the country.

US prosecutors claim Mr Pearse and his associates skimmed at least US$200 million from secret $2 billion loans from the Mozambique government, purportedly made to fund maritime development projects in the impoverished African nation.

Mozambique's former finance minister Manuel Chang is also among those charged. He was arrested in South Africa last week.

Mozambique's attorney general's office (AGO) today announced it is indicting 18 citizens for their involvement in the case.

"Mozambique AGO is indicting 18 defendants, (ranging) from public workers and other citizens, on charges of abuse of power, abuse of trust, swindling and money laundering," it said in a statement.

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Tim Jones from the the Jubilee Debt Campaign, which advocates for debt relief in developing countries, said the scandal was the trigger for Mozambique's crippling debt crisis.

"When the scandal first erupted, it caused the value of the Mozambique currency to halve against the dollar.

"That meant that imports into the country doubled in price and Mozambique is dependent on imports for many basic necessities like medicines and some food stuffs."

Mr Pearse, who is based in London, is portrayed by US prosecutors as one of the central figures in the case. He's alleged to have siphoned some $45 million for himself while head of Credit Suisse's global financing group in the UK.

According to an indictment filed in New York's Eastern District Court last month, the loans were given by two London-based banks - Credit Suisse and VTB - to three state-owned companies in Mozambique.

The loans were guaranteed by the country's government but were never signed off by the Parliament, so campaigners say they were illegal.

The indictment says the money was never transferred to Mozambique but to a company, Privinvest, in Abu Dhabi.

From there, kickbacks and bribes were allegedly paid off to officials in Mozambique, executives from the Privinvest, and the London-based bankers.

Mr Pearse is currently on bail, awaiting extradition proceedings to have him taken to the United States to face the charges.

- Additional reporting by Reuters

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