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The son of a former president of Mozambique has been sentenced to 12 years in prison after being found guilty, along with 10 other people, on charges related to a corruption scandal in which the government concealed large debts, crashing the country’s economy.

Ndambi Guebuza, the son of former president Armando Guebuza, was one of 19 defendants, including two intelligence service officials – Gregorio Leao, the former head of the economic unit and Antonio do Rosario, who headed three state-owned firms that illicitly borrowed billions.

“The defendants tarnished the good image of the country abroad and in the international markets, with enduring and hard-to-repair effects,” said Judge Efigenio Baptista, addressing the courtroom on the grounds of a high-security jail in the capital, Maputo.

“The crimes committed have brought consequences whose effects will last for generations.”

Hidden debt

The so-called “hidden debt” scandal involved state-owned companies that illicitly borrowed $2 billion (1.9 billion euros) in 2013 and 2014 from international banks to develop a tuna fishing industry and buy surveillance vessels. The money went directly to three companies managed by Rosaro, who called himself a “super CEO” during the trial.

Much of the money raised for the fishing project was diverted via kickbacks to bankers and Mozambique officials. The government masked the loans from parliament and protected the shady transactions from public scrutiny.

When the “hidden debt” came to light in 2016, the International Monetary Fund and other donors cut off financial support to Mozambique, triggering a sovereign debt default and currency collapse, pushing the country into the worst economic crisis in its history.

Criminal abuse of power

Leao and do Rosario were found guilty of embezzlement and abuse of power, while Guebuza was convicted for embezzlement, money laundering and criminal association, among other charges.

Guebuza’s father, who was president when the loans were contracted, testified at the trial.Judge Baptista said Ndambi Guebuza acted deliberately “to exert influence on his father” and get the government to approve the purchase of the vessels.

Guebuza took a $33 million (31.3 million euro) bribe that went to satisfy his “desire for luxury”, the judge said, listing some of the assets the former president’s son acquired with the money, which included 15 luxury cars and a mansion in a high-end suburb of Johannesburg, in neighbouring South Africa.

Baptista said the scam had “aggravated the impoverishment of thousands of Mozambicans.” However, the former president’s son was adamant that he did not commit any wrong and stressed that “ he was being targeted for political reasons”.

Beyond Mozambique

Other legal cases were filed in connection to the scandal, including one against Swiss bank Credit Suisse, which was required to pay about $475 million (451 million euros) to US and British authorities last year over its part in issuing the scandalous loans.

Former finance minister Manuel Chang, who signed off the loans, has been held in South Africa since 2018, pending extradition to the US for allegedly using the US financial system to carry out the fraudulent scheme.

In March, the IMF awarded $456 million (433.6 million euros) in credit to Mozambique, the first such aid awarded since the scandal erupted, to support economic recovery and public debt reduction programmes.