October 5, 2023

Credit Suisse has to pay a $1 million fine

Credit Suisse has to pay a $1 million fine


In the Moçambique case, Credit Suisse has to pay fines of about $475 million

A bad corruption scandal in the South African country is catching up with the big bank. Now she has agreed to a global solution to the scandal with the investigative authorities in Washington and London.

As early as 2015, it became known that everything did not go smoothly when Credit Suisse International in London granted a loan to state-owned companies in Mozambique.

Walter Perry / Keystone

Credit Suisse solved a corruption scandal in Mozambique. On Tuesday, the main Swiss bank agreed a global solution with the US Securities and Exchange Commission, the Department of Justice in Washington and Britain’s Financial Conduct Authority.

Accordingly, Credit Suisse admitted to defrauding investors, as can be read in a statement issued by the Ministry of Justice. The bank agreed to pay Penalties of approximately $475 million a. In turn, civil and criminal proceedings will take place in the United States and Great Britain Puts.

Credit Suisse also agreed to financially compensate the aggrieved party. The Department of Justice stated that the amount of this damages will be determined at a later time by a federal court in New York. In a separate action, Finma in Bern came to the conclusion that the Credit Suisse Group’s risk management system “in relation to the lending business” in Mozambique has “serious deficiencies”. The watchdog announced this on Tuesday.

Big fish – but not in the water

Eight years ago, Credit Suisse, together with the main Russian bank VTB and in some cases also with France’s BNP Paribas, arranged billions in loans to the government of the state of Mozambique in Southeast Africa, which, among other things, should have been used to build a fishing fleet . Nothing came of fishing. But the most profitable were the secret loans duped by the national parliament to a group of novice investment bankers, businessmen and political elites in Maputo.

Of the almost two billion dollars that the third poorest country in the world, according to the statistics of the World Bank, had to invest for the benefit of its population, according to the results of American corruption investigators, about 200 million dollars were stolen. The rest of the money is in a mountain of debt, which rose in 2016 in the wake of an economic crisis in the gas-rich country.

The International Monetary Fund is sounding the alarm

With the crisis at that time, dizziness began to appear. The International Monetary Fund realized in the spring of 2016 that the government had hidden two of three large loans. Until then, only one public bond, arranged by Credit Suisse, VTB and BNP, amounting to $850 million was known. The fact that all three loans were provided with government guarantees raised alarm bells at the IMF.

The investigation made decisive progress only when the US judiciary brought charges against eight alleged main actors. Including three former Credit Suisse bankers who were arrested in London in 2018 and extradited to the United States. The trio pleaded guilty in subsequent criminal proceedings and were waiting for the verdict to be announced.

New Zealander Andrew Pierce admitted that he received $45 million to organize loans. Mozambican politicians and officials, who made the secret deals possible, are said to have raised about $150 million.

Typical experience in Maputo and more difficulties for Credit Suisse

In the capital, Maputo, criminal proceedings are currently underway against 19 alleged key figures in the corruption case. Among them was the eldest son, former President Armando Guebuza.

Many observers predicted that the process could quickly deteriorate into backbiting, especially since the country’s current president, Philip Nyusi, was already defense minister under the old regime and was unlikely to have any interest in the full handling of the scandal. . In the meantime, the process is seen as a benchmark for the independence of the judiciary in Mozambique. The population of 30 million people participates extensively via live TV.

For Credit Suisse, it’s not over the US and Great Britain comparison. Another operation awaits the bank in London in 2023, which was initiated by an investor lawsuit. The bank will have to explain to the High Court of Justice why it has accepted government loan guarantees, which have since been rescinded as unconstitutional, and sold to investors as investment protection.

Until now, Credit Suisse has always seen itself in the role of a fraudster. The bank argued in each case that its three former employees had threaded the criminal acts behind the bank’s management themselves. It will be interesting to see how the admission of guilt changes this logic.

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