Credit Suisse Group AG has agreed to pay about $475 million to American and British authorities to resolve bribery and fraud charges related to Mozambican bond offerings while a subsidiary pleaded guilty to a conspiracy charge in New York, another blow for the scandal-plagued Swiss bank.
The bribery and fraud charges brought by the US Securities and Exchange Commission (SEC), the US Justice Department and Britain’s Financial Conduct Authority centered on the Zurich-based bank’s role in a $2 billion scandal involving Mozambican government-guaranteed loans.
The SEC said Credit Suisse fraudulently misled investors and violated US bribery laws in a scheme involving two bond offerings and a syndicated loan that raised funds on behalf of state-owned entities in Mozambique.
The bank has entered a deferred prosecution agreement with the US Justice Department, while subsidiary Credit Suisse Securities (Europe) Limited, or CSSEL, pleaded guilty in US federal court in New York to one criminal count of conspiracy to commit wire fraud.
As part of the settlement, Credit Suisse agreed to pay a fine of approximately $200 million to the British authorities and to forgive $200 million of debt owed by Mozambique.
As a result, the bank said it expects to take $230 million in charges in the third quarter 2021.
“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,” the bank said in a statement.
A London-based subsidiary of Russian bank VTB also agreed to pay more than $6 million to settle SEC charges related to the Mozambique loans.
“VTB takes today’s settlement seriously and fully cooperated with the SEC investigation,” the bank said.
Credit Suisse has been embroiled in a string of scandals including heavy losses from the collapse of US family office Archegos, client-losses stemming from the collapse of supply chain finance Greensill, and allegations of corporate espionage.
Chairman Antonio Horta-Osorio, who joined the bank in April from Britain’s Lloyds, has said the scandals facing the bank are the gravest he has seen in his career.
The US settlement was announced just minutes before Switzerland’s financial regulator took action against the bank for snooping on its former top wealth management executive Iqbal Khan and others.
The Swiss Financial Market Supervisory Authority, FINMA, said the bank was found to have had “serious organisational shortcomings” surrounding the espionage that ultimately triggered the departure of Chief Executive Tidjane Thiam.
FINMA said in a statement that it has imposed measures on the bank, reprimanded two individuals and opened enforcement proceedings against three additional individuals, without naming them.
Credit Suisse said in its statement that with Tuesday’s actions it “can now draw a line under” the Mozambican matter.
Regarding cause of the FINMA action, Credit Suisse added, “The bank condemns any unjustified observations and has already taken decisive steps to strengthen its relevant governance and processes.”
The SEC’s Tuesday resolution is the latest development in the multi-year Mozambique saga for Credit Suisse, with private litigation still ongoing.
The African nation is suing Credit Suisse and shipbuilder Privinvest in London’s High Court over a hefty chunk of the $2 billion in loans which went missing.
