On Tuesday, the Swiss Financial Market Supervisory Authority (FINMA) announced that it had concluded its proceedings against Credit Suisse Group AG, saying that the firm ‘seriously’ violated the requirements and the AMLA Obligations in connection with loans it had made to state-owned companies in Mozambique in 2013.
The proceedings were coordinated with the British Financial Conduct Authority (FCA) and the US Securities and Exchange Commission (SEC), who closed this case. That said, the US Department of Justice (DOJ) said in a press release that Credit Suisse admitted to defrauding the US and overseas investors in the financing of the $850 million loans for a tuna fishing project in Mozambique.
As a result, Credit Suisse Group AG and CSSEL have entered into a deferred prosecution agreement for three years in connection with a criminal information charging the Swiss firm with conspiracy to commit wire fraud. “Over the course of several years, Credit Suisse, through its subsidiary in the United Kingdom, engaged in a global criminal conspiracy to defraud investors, including investors in the United States, by failing to disclose material information to investors, including millions of dollars in kickbacks to its bankers and a high risk of corruption, in connection with an $850 million fraudulent loan to a Mozambique state-owned entity,” Breon Peace, the US Attorney for the Eastern District of New York, commented.
Also, the UK FCA fined Credit Suisse with a $200,664,594 million penalty for ‘serious financial crime’ in connection to the loans. The British financial watchdog noted that Credit Suisse agreed to forgive $200 million of debt owed by the Republic of Mozambique. “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 fine would have been higher if not for Credit Suisse agreeing to provide the debt write-off of US$200 million. The FCA will continue to pursue serious financial crime control failings by regulated firms,” Mark Steward, Executive Director of Enforcement and Market Oversight at the FCA, said in a statement.
Additionally, FINMA imposed new conditions on new loans businesses in financially weak countries as a result of Credit Suisse's loan case. The Swiss regulator said that it will review Credit Suisse's implementation of the measures asked by them to ensure compliance.
Case Background
According to FINMA, the British subsidiary of Credit Suisse (Credit Suisse UK) arranged two loans totaling $1 billion in 2013 to two Mozambican state-owned companies: ProIndicus S.A. (ProIndicus) and Empresa Moçambicana de Atum S.A. (EMATUM). The regulator said that these loans made up almost 6% of Mozambique’s GDP and were aimed to fund maritime security vessels and a tuna fleet.
As of press time, Credit Suisse has not issued an official statement addressing the authorities' findings.
