U.S. asks Credit Suisse to pay $ 475 million to resolve Mozambican scandal charges

(Reuters) -Credit Suisse Group AG has agreed to pay around $ 475 million to US and UK authorities to resolve bribery and fraud charges related to the Mozambican bond deals while a subsidiary pleaded guilty to a charge of plot in New York, another blow to the scandal- plagued Swiss bank.

FILE PHOTO: A Credit Suisse sign is seen outside their US headquarters in New York’s Manhattan neighborhood on September 1, 2015. REUTERS / Mike Segar / File Photo

Charges of corruption and fraud by the Securities and Exchange Commission (SEC), the US Department of Justice and the UK Financial Conduct Authority centered on the role of the Zurich-based bank in a $ 2 billion scandal involving loans guaranteed by the Mozambican government.

The SEC said Credit Suisse fraudulently deceived investors and violated U.S. corruption laws in a scheme involving two bond offerings and a syndicated loan that raised funds on behalf of public entities in Mozambique.

The bank entered into a deferred prosecution agreement with the U.S. Department of Justice, while subsidiary Credit Suisse Securities (Europe) Limited, or CSSEL, pleaded guilty in U.S. federal court in New York to one count of conspiracy to commit electronic fraud.

As part of the settlement, Credit Suisse agreed to pay the UK authorities a fine of around $ 200 million and write off Mozambique’s $ 200 million of debt. As a result, the bank said it plans to take on $ 230 million in charges in the third quarter of 2021.

“Credit Suisse is pleased with the completion of proceedings initiated by US, UK and Swiss regulators regarding the bank’s arrangement for the financing of loans to Mozambican state-owned 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 fees related to the Mozambique loans. “VTB takes today’s settlement seriously and has fully cooperated with the SEC investigation,” the bank said.

Credit Suisse has been embroiled in a series of scandals with heavy losses due to the collapse of the US family office Archegos, customer losses resulting from the collapse of the Greensill supply chain and allegations of commercial espionage.

President Antonio Horta-Osorio, who joined the bank in April from Britain’s Lloyds, said the scandals the bank was facing were the most serious he had seen in his career.

The US settlement was announced minutes before the Swiss financial regulator took action against the bank for spying on its former top wealth management executive Iqbal Khan and others.

The Federal Financial Market Supervisory Authority, FINMA, said the bank had “serious organizational flaws” surrounding the espionage which ultimately triggered the departure of chief executive Tidjane Thiam.

FINMA said in a statement that it had imposed measures on the bank, reprimanded two people and opened enforcement proceedings against three other people, without naming them.

Credit Suisse said in its statement that with Tuesday’s actions, it “can now end” the Mozambican deal. Regarding FINMA’s cause of action, Credit Suisse added: “The bank condemns any unwarranted observations and has already taken decisive action to strengthen its governance and relevant processes.”

Tuesday’s SEC resolution is the latest development in Mozambique’s multi-year saga for Credit Suisse, with private litigation still pending. The African nation is suing Credit Suisse and shipbuilder Privinvest in the High Court in London for much of the $ 2 billion in loans that have gone missing.

Reporting by Chris Prentice in Washington, Kanishka Singh in Bengaluru and John Revill in Zurich; Editing by Jonathan Oatis and Will Dunham

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