$475 MLN to resolve Mozambican scandal by Credit Suisse

Credit Suisse Group AG will pay about $475 million to American and British authorities for resolving the bribery and fraud charges relating to a $2 billion Mozambican corruption scandal. Its subsidiary pleaded guilty to a conspiracy charge in New York, U.S. and UK agencies. The settlement with the U.S. Securities and Exchange Commission (SEC), the Justice Department and Britain’s Financial Conduct Authority (FCA) is the latest blow for the scandal-plagued. 

The U.S. and British charges stem from nearly $1 billion in bond offerings. Many of the proceeds were diverted via kickbacks to Credit Suisse bankers and Mozambique officials. The three former Credit Suisse bankers, along with two middlemen and three Mozambican government officials, were charged in 2018 for money laundering and defrauding U.S. investors. Through the actions of its bankers, Credit Suisse fraudulently misled investors. The bank will pay a $175 million criminal fine to the Justice Department, $99 million to the SEC, and $200 million to the British authorities, and will also forgive $200 million of debt owed by Mozambique.

Credit Suisse’s European subsidiary also pleaded guilty in a U.S. federal court. That will require the bank to continue cooperating with any ongoing investigation. Credit Suisse’s European subsidiary has also agreed with the Swiss regulator for appointing an independent third-party to monitor its transactions and risk controls. The bank stated that Credit Suisse is satisfied with the completion of the proceedings by U.S., UK and Swiss regulatory authorities.

The Swiss bank is already reeling from a string of scandals such as heavy losses from the collapse of U.S. family office Archegos, client-losses stemming from the collapse of supply chain finance company Greensill, and allegations that it snooped on its former top wealth management executive Iqbal Khan. Chairman Antonio Horta-Osorio, who joined the bank in April from Britain’s Lloyds, has said the scandals are the gravest he has seen.

The Swiss Financial Market Supervisory Authority, FINMA, said that the bank was found to have had serious organizational shortcomings surrounding the corporate espionage. And this ultimately triggered the departure of Chief Executive Tidjane Thiam. FINMA said that it had reprimanded two individuals and opened enforcement proceedings against three additional individuals. Referring to the spying matter, Credit Suisse said that it had taken decisive steps to strengthen its relevant governance and processes.

The African nation is suing Credit Suisse and shipbuilder Privinvest in London’s High Court over the missing money. The corruption scandal prompted donors including the International Monetary Fund cut off support to Mozambique. It has also embroiled other major lenders. A London-based subsidiary of Russian bank VTB, also agreed to pay $6 million to settle SEC charges it misled investors. The bank stated that the VTB takes today’s settlement seriously and fully cooperated with the SEC investigation.