Credit Suisse has agreed to pay nearly $ 475 million to resolve investigations into its role in Mozambique’s âtuna bondâ corruption scandal.
A criminal fine of $ 247.5 million will be paid to the US Department of Justice, which will be reduced to $ 175.5 million after crediting the payments to other authorities, Bloomberg reports.
The Swiss bank has pleaded guilty to wire fraud and agreed to pay $ 100 million to the United States Securities and Exchange Commission and $ 200.6 million will be paid to the United Kingdom’s Financial Conduct Authority. The banking giant will also write off $ 200 million in debt Mozambique owes it.
Credit Suisse bankers received $ 50 million in hidden bribes for their role in the $ 2 billion debt deal that was supposed to fund a fishing fleet and coastguards for the industry. Mozambique’s fishing but has become one of the biggest corruption scandals of all time.
While Credit Suisse has pledged to cancel $ 200 million of Mozambique’s debt as part of the deal with Swiss regulators and authorities, more than $ 1.1 billion of debt related to the l ‘deal which is still in dispute, said Dr Stephen Connelly of Warwick Law School.
âCredit Suisse’s admission of serious breaches of financial due diligence could undermine an argument in English law that it was unaware of the alleged fraud, that any tainted contract is binding and that bribery is a risk for Mozambique. Mozambique can now strengthen any argument that Credit Suisse knew or should have known about the financial crime given the alleged breaches of due diligence, and that any tainted contract is voidable.
Mozambique was unwittingly sucked into huge debt it had no knowledge of until the scandal erupted, Connelly adds.
“Corrupt officials and employees of Credit Suisse allegedly received bribes from a contractor to have contracts signed on behalf of Mozambique, effectively leaving the Mozambican people on the hook for money that is never theirs.” reached.
“A Swiss bank and an African nation, but at the heart of it all was the London branch of that bank and those who used and allegedly abused English law to force Mozambique to foot the bill.”
A matter of fish
In September 2013, Credit Suisse raised $ 500 million for a newly established state-owned tuna fishing company, Empresa Mocambicana de Atum (EMATUM).
Given the promises of a state guarantee and a handsome 8.5% yield, the issue was oversubscribed and Russian bank VTB raised an additional $ 350 million. While some doubted that all the money would end up paying for the fishing boats, information provided to investors suggests that Mozambique has the potential to be a booming tuna hub.
Sources in Maputo, however, told African Business that a feasibility study greatly overestimated the country’s tuna potential. The bond was sold with estimates that Mozambique was currently fishing 200,000 tonnes of tuna per year worth $ 200 million. Yet the National Fisheries Bureau reported that in 2013, foreign and domestic vessels caught only 6,000 tonnes of tuna.
In the same month the bond was issued, President Guebuza visited the French shipbuilding company, Constructions MÃ©caniques de Normandie (CMN), with French President Francois Hollande, sealing a multi-million dollar deal. Under the deal, CMN, which specializes in military vessels, would supply two dozen fishing boats and six patrol boats for around $ 220 million, according to the French foreign trade ministry.
But the order included three Ocean Eagle 43 trimarans capable of launching unmanned drones and equipped with artillery cannons and large-caliber machine guns. Ship experts say the money spent on ships is remarkably high.
In 2016, the Maputo government agreed to swap the outstanding $ 697 million of the tuna bond for a sovereign Eurobond.
Additional reporting by David Thomas and Gillian Parker