Credit Suisse has been hit with a £147 million penalty by the Financial Conduct Authority, as part of a $475 million global resolution agreement, for serious financial crime due diligence failings related to loans worth over $1.3 billion, which the bank arranged for the Republic of Mozambique.
The loans, and a bond exchange, instituted over a four year period between 2012 and 2016 by the bank's emerging markets business, were "tainted by corruption", say global watchdogs.
Credit Suisse has also agreed with the FCA to forgive $200 million of debt owed by the Republic of Mozambique as a result of its dealings.
Mark Steward, executive director of enforcement and market oversight at the FCA, says: "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 $200 million."
He says Credit Suisse was aware Mozambique was a jurisdiction where the risk of corruption of government officials was high and that the government-sponsored projects were not subject to public scrutiny or formal procurement processes. The contractor engaged by Mozambique on the projects was described as a “master of kickbacks”.
The contractor secretly paid significant bribes, estimated at over $50 million, to members of Credit Suisse’s deal team, including two managing directors, in order to secure the loans at more favourable terms.
The Republic of Mozambique has subsequently claimed that the minimum total of bribes paid in respect of the two loans is around $137 million.
The FCA fine is part of an approximate $475 million global resolution agreement involving the US Department of Justice, the US Securities and Exchange Commission, and the Swiss Financial Market Supervisory Authority.