- Credit Suisse Group AG is close to an agreement with the U.S. government that would resolve a Mozambique probe regarding its role in the 2 billion dollar bond scandal, according to people familiar with the matter.
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The discussions with the US Justice Department include a confidential defense agreement that would include a fine, according to the people, who asked not to be identified because of the talks are delayed. An agreement is expected to be announced on Tuesday.
Any deal with U.S. prosecutors would be the latest action in a multi-year, international legal saga arising out of the 2013-14 deals which were supposed to fund a new coastal patrol force and the tuna fishing fleet in Mozambique, one of the world's poorest countries. In an indictment issued in August 2018, the U.S. Justice Department alleged that the contracts were a front for government officials and bankers to enrich themselves. Three US businesses and bankers have admitted guilty to charges stemming from the scheme.
Credit Suisse declined to comment on any agreement, as did the U.S. Justice Department.
A deal could help put one scandal in bed, even as the bank is trying to put past others. This year the lender was forced to freeze $5.5 billion in supply-chain financing funds related to defunct finance company Greensill Capital and took an amount of $10 billion. billion from the collapse of prime brokerage client Archegos Capital Management.
The Swiss bank has overhauled its management ranks in the aftermath of those blow-ups and new chairman Antonio Horta-Osorio has vowed to clean up the lender's problematic attitude toward risk management. He had spent the last few months debating strategic options, with an expectation to finalize the long-term vision and mid-term targets by the end of the year.
As of year-end 2020, Credit Suisse had provisioned 1.7 billion Swiss francs $1.8 billion in litigation matters and estimated a maximum of 900 million Swiss francs $977 million in litigation losses not covered by the provisions.
Last year the bank had to drastically increase provisions - driving it to a fourth quarter loss - for legacy legal cases in the U.S., most notably one involving mortgage-backed securities.
Credit Suisse ordered to pay $604 million in mortgage case 1 Mozambique filed suit against Credit Suisse and shipbuilder Privinvest, one of several cases in the U.K. courts that involve the bond deal. The English High Court is scheduled to begin a trial in this matter in October 2023, according to the bank s most recent quarterly filings.
Credit Suisse has insisted that it was deceived by rogue banks in its London lawsuit in early 2013 when it arranged the loans and couldn t be held responsible for their unlawful conduct. The Swiss bank has said it carried out its usual due diligence before the transactions and was aware of the risk of corruption and corruption.
Andrew Pearse, who led the London banking group's criminal prosecution office, testified at a federal trial in Brooklyn, New York that he d pocketed at least $45 million for his role in the arrangement of the loans.
The Credit Suisse loans were for three separate maritime projects including a tuna fishing fleet, the building of a shipyard and surveillance operation to protect Mozambique s coastline and protect against pirates, according to Pearse. Mozambican govt officials, corporate executives and investment banksers stole about $200 million, prosecutors said.
Both Pearse and his successor at the bank, Surjan Singh, who also pleaded guilty, testified in the 2019 trial of Jean Boustani, a Privinvest Group executive accused by the U.S. of being behind the plan to get Mozambique to borrow billions of dollars and overpay for unnecessary maritime projects. A third banker, Datelina Subeva s subordinate, pleaded guilty but didn't testify.
All three bankers are awaiting sentencing. After a six-week trial in late 2019, a federal jury cleared Boustani of all charges.
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