Local News

Credit Suisse to pay at least $400m in Moz scandal

Credit Suisse to pay at least $400m in Moz scandal

ZURICH – A unit of Credit Suisse Group is pleading guilty for its role in a fundraising scandal that looted money from Mozambique and tipped the country into economic crisis.

The Zurich-based bank has agreed to enter into a deferred-prosecution agreement and have a subsidiary, Credit Suisse Securities Europe, plead guilty for conspiracy to commit wire fraud, an attorney for the bank said on Tuesday at hearing in Brooklyn.

The agreement is the latest action in a multi-year, international legal saga that came out of $2 billion of debt deals from 2013 to 2014 to state-owned companies that were supposed to fund a new coastal patrol force and tuna fishing fleet in Mozambique, one of the world’s poorest countries.

Credit Suisse will pay at least $400 million to settle with authorities, according to people familiar with the matter. A spokesperson for the bank declined to comment.

In a 2018 indictment, the US Justice Department alleged the contracts were a front for government officials and bankers to enrich themselves. Three former Credit Suisse bankers have pleaded guilty to US charges stemming from the scheme.

The Swiss bank has overhauled its management ranks in the aftermath of those blow-ups, and new chairperson Antonio Horta-Osorio has vowed to clean up the lender’s problematic attitude toward risk management.

Last year the bank had been forced to drastically increase provisions – driving it to a fourth quarter loss – for legacy legal cases in the US, most notably one involving financial crisis era mortgage-backed securities.

Mozambique revealed in 2016 that it had guaranteed about $2 billion of the loans, more than previously disclosed. As a result, the International Monetary Fund froze its financial support and soon after, a group of donor countries cut their aid.

The nation defaulted on $727 million of bonds in February 2017 and its currency plunged, sparking a surge in inflation.

The bonds were restructured in 2019. The tuna fishing boats they paid for are yet to operate and are rusting in the port of Maputo, the capital.

In Mozambique, the scandal has ensnared over a dozen people, including the son of the nation’s former president and the ex-head of intelligence. Former Finance Minister Manuel Chang, who signed the government guarantees for the debts, has been held in custody in South Africa since 2018. – BLOOMBERG NEWS.

Author

Related Articles