Credit Suisse fined US$475mln over Mozambique ‘tuna loan’ scandal

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Credit Suisse Group AG (NYSE:CS) was fined US$475mln by US, UK and Swiss financial regulators over corruption related to loans to government-sponsored projects in Mozambique which caused an economic crisis in the country.


The Swiss bank also agreed to forgive US$200mln of Mozambican debt.


The scandal arose from loans worth US$1.3bn that Credit Suisse arranged for Mozambique between 2012 and 2016 to finance government-sponsored projects, including a tuna fishery.


The contractor engaged by Mozambique on the projects secretly paid kickbacks estimated at over US$50mln to staff at Credit Suisse in order to secure the loans at more favourable terms, the UK’s Financial Conduct Authority (FCA) said in a statement.


Mozambique estimates that in total the bribes paid in respect of the loans amounted to US$137mln.


The FCA said Credit Suisse was aware that the risk of corruption among government officials in Mozambique was high and that the projects were not subject to public scrutiny or formal procurement processes.


“While those Credit Suisse employees took steps to deliberately conceal the kickbacks, warning signs of potential corruption should have been clear to Credit Suisse’s control functions and senior committees,” the FCA said. “Time and again there was insufficient challenge within Credit Suisse, or scrutiny and inquiry in the face of important risk factors and warnings.”


The fine of US$475mln will be paid to the US Department of Justice, the US Securities and Exchange Commission, the UK’s FCA and the Swiss Financial Market Supervisory Authority (FINMA).


The FCA portion of the fine amounts GBP147mln. The UK regulator said the penalty would have been significantly higher had Credit Suisse not agreed to forgive US$200mln of the Mozambican loans.


Mark Steward, executive director of Enforcement and Market Oversight at the FCA, said: ‘The FCA’s fine reflects the impact of these tainted transactions which included a debt crisis and economic harm for the people of Mozambique.”


Anita B Bandy, associate director of the US Securities and Exchange Commission’s Division of Enforcement, said: “Credit Suisse provided investors with incomplete and misleading disclosures despite being uniquely positioned to understand the full extent of Mozambique’s mounting debt and serious risk of default based on its prior lending arrangements.”


Credit Suisse said in a statement that is expects to take US$230mln in charges in the third quarter 2021 as a result of the settlements with the regulators.


“Credit Suisse is satisfied with the completion of the proceedings by US, UK and Swiss regulatory authorities into the bank’s arrangement of loan financing for Mozambique state enterprises and can now draw a line under the observation matter,” the bank said.

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