In Mozambique case, Credit Suisse will pay at least R6 billion.
Listen to this Article Now
Credit Suisse Group has entered a guilty plea for its role in a fundraising scheme that resulted in the looting of money from Mozambique and threw the country into economic chaos.
A representative for the Zurich-based bank said Tuesday at a hearing in Brooklyn that the bank has agreed to enter into a deferred prosecution agreement and have a subsidiary, Credit Suisse Securities Europe, plead guilty to conspiracy to commit wire fraud.
The arrangement is the latest development in a multi-year international legal saga stemming from a $2 billion debt contract with state-owned enterprises in 2013 and 2014, which was supposed to support a new coastal patrol force and tuna fishing fleet in Mozambique, one of the world’s poorest countries.
According to persons’ familiar with the situation, Credit Suisse would pay at least $400 million (R5.8 billion) to settle with authorities. The bank’s spokesman declined to respond.
The US Justice Department said in a 2018 indictment that the contracts were a front for government officials and bankers to benefit themselves. Three former Credit Suisse bankers have pled guilty to charges in the United States resulting from a bribery scheme.
The arrangement will assist the bank in moving on from one of several recent scandals. This year, the lender was compelled to freeze $10 billion in supply-chain finance funds tied to the collapsed finance company Greensill Capital, and it was struck by the collapse of prime brokerage customer Archegos Capital Management for $5.5 billion.
Following previous meltdowns, the Swiss bank restructured its management ranks, and new chairperson Antonio Horta-Osorio has committed to clean up the lender’s faulty risk management mentality.
Hebeen debating strategic choices for the past few months, with the goal of finalising the long-term vision and mid-term goals before the end of the year. As of year-end 2020, Credit Suisse had set aside 1.7 billion Swiss francs (R26 billion) for legal matters, with a maximum of 900 million Swiss francs in litigation damages not covered by the provisions.
Last year, the bank was obliged to dramatically boost provisions for historical litigation actions
in the US, including one concerning financial crisis-era mortgage-backed assets, which resulted in a fourth-quarter loss. In 2016, Mozambique reported that it had guaranteed roughly $2 billion in loans, which was more than it had previously acknowledged.
As a result, the International Monetary Fund (IMF) halted its financial assistance, and a group of donor countries cut help shortly after. In February 2017, the country defaulted on $727 million in bonds, and its currency plummeted, causing inflation to soar.
Story by : Norvisi Mawunyegah