Credit Suisse concluded agreements with the American, British and Swiss authorities on Tuesday, October 19, providing in particular for the payment of $ 475 million, to put an end to the lawsuits related to loans granted to Mozambique state enterprises in the heart of a vast affair of corruption. The transactions in question, organized by the Swiss firm between 2013 and 2016, were partly used to pay bribes even though they were presented to investors as a means of financing the development of fishing in Mozambique, the authorities detailed in separate press releases.
At the same time, the Swiss establishment has not fully disclosed the extent of Mozambique’s indebtedness, and therefore the risks of non-repayment, and has shown significant deficiencies in its internal controls, the authorities accuse. The Swiss bank, which is already facing the fallout from the Greensill and Archegos scandals, was consequently sentenced in total to $ 547 million in penalties, fines and restitution in the United States and the United Kingdom, said the US Department of Justice.
The number two of the Swiss banking sector having already paid certain sums, it will have to pay another 475 million dollars: 200 million to the British financial authority FCA, nearly 100 million to the American policeman of the markets, the SEC, and 175.5 million at the US Department of Justice. The bank also agreed with the British authorities to cancel for 200 million dollars owed by Mozambique.
“Hidden Debt” Scandal
At the same time, the institution has entered into an agreement with the Swiss Financial Markets Authority (Finma), providing for third-party verification of measures intended to improve its internal control and risk management system at group level. Finma has also imposed, for a limited time, specific conditions for any new credit operation organized by the bank on behalf of countries “Financially weak or exposed to corruption”.
This case is part of a large scandal of loans granted to three Mozambican public companies – ProIndicus, Ematum and MAM – by Credit Suisse and the Russian bank VTB, theoretically to finance projects of maritime surveillance, fishing and shipyards. They would in fact have largely served to maintain corruption for the benefit of those close to power. The affair erupted in 2016, when the Mozambican government revealed that it had taken out these loans without notifying Parliament or its donors. After this scandal, the IMF and most of the country’s donors, one of the poorest in the world, suspended their aid.
As a result of this so-called “hidden debt” scandal, Maputo was forced to stop paying down its debt and its currency, the metical, collapsed, plunging the country into the most serious financial crisis since its independence in 1975. Credit Suisse, which claims to have already taken measures to strengthen its governance and its processes, recorded a charge of $ 230 million in its accounts for the third quarter. The bank says to itself ” satisfied “ the end of the prosecutions initiated by the American, British and Swiss authorities, which allow him to ” draw a line “ on this part of the scandal.