Credit Suisse has been fined nearly £350m by global regulators, pleaded guilty to wire fraud, and agreed to forgive hundreds of millions of dollars worth of debt owed by Mozambique in an attempt to draw a line under the long-running “tuna bonds” loan scandal.
The Swiss banking company had been accused of “serious” failings in its financial crime controls by the UK’s Financial Conduct Authority (FCA), and has entered into a deferred prosecution agreement with the US Department of Justice that will put the bank under heavy monitoring for three years after having “defrauded US and international investors”.
The financial settlement, which will be paid to UK and US regulators, relates to a global investigation into the “tuna bonds” loan scandal that pushed Mozambique into financial crisis.
It is the bank’s latest attempt to put a series of scandals to rest under new leadership, which is still grappling with the fallout of the collapse of Greensill Capital e Archegos Capital earlier this year.
The tuna bonds scandal arose from $1.3bn (£940m) worth of loans that Credit Suisse arranged for the Republic of Mozambique between 2012 e 2016.
The loans were said to be aimed at government-sponsored investment schemes including maritime security projects and a state tuna fishery, located in the capital Maputo.
tuttavia, a portion of the funds were unaccounted for, with one of Mozambique’s contractors later found to have secretly arranged “significant kickbacks” worth at least $137m, including $50m for bankers at Credit Suisse meant to secure more favourable deals on the loans, according to regulators.
The international scam snowballed and eventually caused the International Monetary Fund to suspend its assistance to Mozambique, leading to a crash in the country’s economy.
The FCA said Credit Suisse employees took steps to deliberately conceal the kickbacks, while the bank itself failed to properly manage the risk of financial crime within its emerging markets business, despite having “sufficient information” to appreciate the likelihood of bribery related to the government projects.
“Credit Suisse was aware Mozambique was a jurisdiction where the risk of corruption of government officials was high and that the projects were not subject to public scrutiny or formal procurement processes,” the FCA said.
“Time and again there was insufficient challenge within Credit Suisse, or scrutiny and inquiry in the face of important risk factors and warnings,” the regulator added.
Credit Suisse will pay $275m to US regulators and £147m to the FCA to settle the case. UK regulators said the figure would have been higher had the lender not agreed to forgive $200m worth of debt owed to the bank by Mozambique. The bank’s European securities arm has also pleaded guilty to one count of wire fraud in the US.
Credit Suisse said it expects to take $230m in charges in the third quarter as a result of the settlement.
“The FCA’s fine reflects the impact of these tainted transactions which included a debt crisis and economic harm for the people of Mozambique,” the FCA’s executive director of enforcement and market oversight, Mark Steward, disse.
Credit Suisse said in a statement that it “condemns any unjustified observations and has already taken decisive steps to strengthen its relevant governance and processes”.
It added: “Credit Suisse is satisfied with the completion of the proceedings by US, UK and Swiss regulatory authorities into the bank’s arrangement of loan financing for Mozambique state enterprises and can now draw a line under the observation matter.”