Credit Suisse Securities Europe, a subsidiary of Zürich, Switzerland-based global investment bank and financial services firm Credit Suisse Group AG, has agreed to pay USD 22.6 million (EUR 22.1 million) in restitution to 18 investors who were defrauded in what anti-corruption experts called “the most-egregious corruption offense of the decade.”
Credit Suisse admitted to committing fraud in a Mozambican bonds’ scandal that involved a tuna-fishing industry project, a scandal that triggered the biggest corruption trial in the country’s history. Credit Suisse had previously been fined GBP 147 million (USD 176 million, EUR 173 million) by U.K. authorities over the scandal, with the investment bank agreeing to also write off USD 200 million (EUR 195.7 million) in debt owed by Mozambique. That penalty was part of a USD 475 million (EUR 464.8 million) fine Credit Suisse settled on paying to U.K., Swiss, and U.S. regulators.
Credit Suisse's agreement on restitution payments came after prosecutors asked U.S. District Judge William Kuntz, on 19 July, 2022, to direct the bank to make amends with investors in the Mozambican bonds the entity had arranged but whose proceeds were diverted through kickbacks to Credit Suisse bankers and some Mozambique state officials, according to Reuters.
The scandal involved more than USD 2.7 billion (EUR 2.6 billion) in secret government debts that Mozambican authorities had borrowed to set up a modern tuna industry – including purchase of a tuna-fishing fleet, a coastal monitoring and security system, and development of Mozambique’s shipbuilding business under a contract with shipbuilder Privinvest. However, a large share of the funds was allegedly diverted to corrupt individuals. Between 2013 and 2017, Credit Suisse subsidiary CSSEL used U.S. wire transactions and the U.S. financial system to defraud investors in securities related to Mozambican state-owned entity Empresa Moçambicana de Atum.
“Members of the conspiracy made numerous material misrepresentations and omissions relating to, among other things, the use of loan proceeds, kickback payments to CSSEL bankers and the risk of bribes to Mozambican officials and the existence and maturity dates of debt owed by Mozambique, including another loan that Credit Suisse arranged to a Mozambique state-owned entity (ProIndicus) and a different loan another bank arranged with Credit Suisse’s knowledge,” a 19 July, 2022 statement by the U.S. Department of Justice said.
At least 19 people, including the son of a former Mozambican president, have been arraigned for their involvement in the scandal, which was investigated by governmental authorities in at least three continents.
The latest restitution was calculated using a methodology agreed upon between the Mozambican government and Credit Suisse, and on reception of submissions from alleged victims.
“The government applied the event study methodology to each victim’s holdings and assessed the restitution amounts due each victim [and] these amounts are set forth in the attached proposed order and total USD 22,619,174 [EUR 22,136,096],” the U.S. Department of Justice said.
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