Credit Suisse, the Switzerland-based investment banking company, has reportedly agreed to pay up more than US$475 million to the US and UK authorities to settle charges of misleading investors and breaking anti-corruption law in bond offers in Mozambique.
Apparently, the so-called ‘hidden debt’ Mozambique scandal can be traced back to loans to three public firms in 2013 and 2014 to fund a tuna fishing project, loans that the government kept hidden from the country's parliament.
In 2016, when the truth finally came out, financial donors including the International Monetary Fund pulled out their financial support, plunging southern African nation into financial crisis, as its currency collapsed and as it defaulted on its debt payments.
The US Securities and Exchange Commission (SEC) stated that around US$1 billion in transactions were used to carry out a hidden debt scheme, paying kickbacks to Credit Suisse’s now-accused former investment bankers and their intermediaries, and paying-off corrupt government officials of Mozambique.
The SEC further stated that Credit Suisse bankers misrepresented to investors that the proceeds from the loans in question would be exclusively used to grow Mozambique's tuna fishing sector and raise profit to make debt payments.
According to SEC, the bankers apparently bagged around US$50 million in bribes, as part of at least a total US$200 million paid to participants in the fraud, which also involved government officials of Mozambique.
The eldest son of Armando Guebuza, Mozambique's ex-president, is facing trial in capital Maputo, among the other 19 high-profile offenders, of which one has admitted receiving bribes.
The new settlement trails two former Credit Suisse bankers' guilty pleas to money laundering charges in 2019 as well as a third banker's guilty plea to scheme to commit wire fraud.
Credit Suisse was also shocked by the collapses of financial companies Greensill and Archegos earlier this year, which cost the bank US$5.5 billion.
An independent external inquiry into the Archegos debacle discovered a failure to adequately mitigate risk at Switzerland's second-largest bank. The business has appointed a new risk committee.