Credit Suisse is to pay $22.6mn in restitution to investors who were defrauded when they purchased debt to help finance a tuna fishing project in Mozambique.
The Swiss bank had agreed to the amount earlier in the week and it was signed off on by US District Judge William Kuntz in the eastern district of New York in sentencing on Friday.
It draws a line under a legal case that has dogged Credit Suisse for nearly a decade, one of a number of scandals the Swiss bank has faced in recent years including the twin implosions in 2021 of Greensill Capital and Archegos Capital Management.
Credit Suissehad in October 2021 agreed to pay $475mn in fines to US, UK and Swiss regulators and forgave $200mn of debt to Mozambique. In the US, it had entered into a deferred prosecution agreement while its European subsidiary pleaded guilty to commit wire fraud.
In a statement on Friday, Credit Suisse said the completion of this step in relation to the October settlement “marks further progress in our efforts to deal with legacy issues and to focus on executing our strategic plan for clients, colleagues and investors”.
The Mozambique case dates back to 2013 when Credit Suisse and VTB, the Russian investment bank, arranged $2bn of bonds and loans for the impoverished African country, ostensibly to set up a state tuna fishing fleet and develop maritime security after it discovered offshore natural gas.
The loans were taken out by companies to buy equipment including boats from Privinvest, a Gulf shipbuilder, using state guarantees that were issued without the approval of Mozambique’s parliament.
The scale of the debt was concealed from international donors and the IMF until 2016. The discovery of the loans, the collapse of the companies and subsequent defaults plunged Mozambique into years of financial turmoil as donors cut off aid.
Mozambique’s Centre for Public Integrity has estimated the fallout forced 1.9mn more people into poverty, and cost the country’s economy $11bn, or $400 per citizen.
Three former Credit Suisse bankers who arranged the bonds pleaded guilty to handling kickbacks, although, in a landmark trial in the US in 2019, a Privinvest salesman was acquitted on all counts. Privinvest denies wrongdoing.
