Credit Suisse Solves Fraudulent Loan Case in Mozambique in Coordinated $ 547 Million Global Resolution | Takeover bid
Credit Suisse Group AG, a global financial institution headquartered in Switzerland, and Credit Suisse Securities (Europe) Limited (CSSEL), its UK subsidiary (together, Credit Suisse), have admitted defrauding US and international investors in financing an $ 850 million loan for a tuna fishing project in Mozambique, and were valued at over $ 547 million in penalties, fines and restitutions as part of coordinated resolutions with criminal and civil authorities from the United States and the United Kingdom. After taking into account the credit by the Other Resolutions Department, Credit Suisse will pay approximately $ 475 million to authorities in the United States and the United Kingdom, as well as restitution to victims in an amount to be determined by the court. .
“Credit Suisse Group AG, through its British subsidiary CSSEL, defrauded American and international investors in connection with a loan scheme in Mozambique,” said Deputy Attorney General Kenneth A. Polite Jr. of the Criminal Division of the Ministry of Justice. “Among others, Credit Suisse Group AG, CSSEL and their co-conspirators deceived investors by withholding information about the risk that the loan proceeds could be used for illegal purposes as part of the loan restructuring. Today’s coordinated resolution with the US Securities and Exchange Commission and the UK Financial Conduct Authority shows that the department will not tolerate fraud from international financial institutions and is committed to working in parallel with national and foreign authorities to use all the tools at our disposal. hold evil companies accountable.
According to court documents filed today with the U.S. District Court for the Eastern District of New York and statements made during the proceedings, Credit Suisse Group AG has entered into a three-year deferred prosecution agreement with the department under of criminal information indicting Credit Suisse Group AG with conspiracy to commit wire fraud, and CSSEL pleaded guilty to one count of criminal information accusing it of conspiracy to commit wire fraud.
This resolution follows the prior registration of guilty pleas by three CSSEL bankers. In July 2019, Andrew Pearse, former CEO of CSSEL, pleaded guilty to conspiring to commit wire fraud. In September 2019, Surjan Singh, former CEO of CSSEL, pleaded guilty to conspiracy to commit money laundering, and in May 2019, Detelina Subeva, former vice-president of CSSEL, also pleaded guilty to conspiracy to commit money laundering. sight of committing money laundering.
“Over the course of several years, Credit Suisse, through its subsidiary in the United Kingdom, has engaged in a worldwide criminal conspiracy to defraud investors, including investors in the United States, by failing to disclose important information to investors, including millions of dollars in bribes to its bankers and a high risk of corruption, in connection with a fraudulent loan of $ 850 million to a state-owned entity of Mozambique Said US Attorney Breon Peace for the Eastern District of New York. “This coordinated global resolution demonstrates this office’s commitment to working across borders with our global law enforcement partners to eliminate financial institution abuse and fraud to protect investors here in the United States.” . ”
According to Credit Suisse confessions and court documents, between 2013 and March 2017, Credit Suisse, through CSSEL, and co-conspirators used US cables and the US financial system to defraud investors in securities linked to a Mozambican state entity, Empresa Moçambicana de Atum SA (EMATUM), which Mozambique created to develop a state-owned tuna fishing project. Credit Suisse, through its employees and agents, conspired and defrauded investors and potential investors in EMATUM by making numerous false statements and omissions regarding, among other things, (1) the use of loan proceeds ; (2) bribes to CSSEL bankers and the risk of bribes to Mozambican officials; and (3) the existence and due dates of debt owed by Mozambique, including another loan that Credit Suisse has arranged to a Mozambique public entity (ProIndicus) and another loan that another bank has arranged to the knowledge of Credit Suisse. Credit Suisse told investors that the loan proceeds would only be used for the tuna fishing project. Instead, the co-conspirators embezzled the proceeds of loans obtained from investors. Specifically, a contractor who provided boats and equipment for EMATUM and who received the loan proceeds from Credit Suisse paid bribes of around $ 50 million to CSSEL bankers and bribes -wine totaling approximately $ 150 million to Mozambican government officials.
Credit Suisse also admitted that it identified important red flags before and during EMATUM funding. For example, Credit Suisse was aware of significant corruption and bribery issues associated with the entrepreneur. In addition, around 2015, Credit Suisse learned that EMATUM had encountered problems servicing the loan, which increased the risk of default. Credit Suisse has agreed to organize the restructuring and exchange of the original EMATUM stock for a bond with a longer maturity. During the restructuring, Credit Suisse employees raised concerns about allegations of corruption in the press and disparities in the use of loan proceeds. To address these concerns, Credit Suisse engaged two independent industry experts to conduct a market assessment of the tuna fishing vessels and other goods provided by the contractor for the EMATUM project. Credit Suisse knew that experts had identified a shortfall of between $ 265 million and $ 394 million between the funds raised for the EMATUM loan and the fair market value of the boats and accompanying infrastructure and training that the entrepreneur sold. at EMATUM. Credit Suisse did not disclose this important information to investors during the restructuring and exchange. Aspects of Credit Suisse’s fraudulent conduct came to light from April 2016, leading to a drop in the price of EMATUM securities and resulting in losses for investors.
Under its agreements, Credit Suisse’s penalty is approximately $ 247.5 million. After crediting the department for payments to other authorities, Credit Suisse will pay approximately $ 175.5 million to the United States. Credit Suisse has also agreed to a methodology for calculating immediate fraud losses for victims of its criminal conduct; the amount of compensation payable to victims will be determined in a future procedure. Credit Suisse has also entered into separate side resolutions with the United States Securities and Exchange Commission (SEC) and the United Kingdom’s Financial Conduct Authority (FCA). The Swiss Financial Market Supervisory Authority (FINMA) has also taken enforcement action, which includes the appointment of an independent third party to review the implementation and effectiveness of compliance measures for business conducted in countries financially. low and high risk, subject to the administrative provisions of FINMA. to treat.
The department reached this resolution with Credit Suisse based on several factors, including its inability to voluntarily disclose the conduct to the department and the nature and seriousness of the breach, which included the involvement of bankers within CSSEL. Credit Suisse received only partial credit for its cooperation with the department’s investigation, as it significantly delayed the production of relevant evidence. Therefore, the total penalty reflects a 15% reduction from the lower end of the applicable US sentencing guidelines. Credit Suisse has also agreed to continue to cooperate with the department, improve its compliance program and internal controls, and provide improved reporting to the department on Credit Suisse’s remediation and compliance program. Among other things, the enhanced reporting provisions require Credit Suisse to meet with the department at least quarterly and submit annual reports regarding the status of its remediation efforts, the results of its tests of its compliance program and its results. proposals to ensure that its compliance program is reasonably designed, implemented and enforced so as to be effective in deterring and detecting violations of fraud, money laundering, corrupt practices law to the foreign and other applicable anti-corruption laws.
The FBI is investigating the case.
Trial lawyers Margaret A. Moeser of the Money Laundering and Asset Recovery Section (MLARS) of the Criminal Division, David M. Fuhr and Katherine Nielsen of the Fraud Section of the Criminal Division, and Assistant United States Attorney Hiral D. Mehta of the United States Attorney’s Office for the Eastern New York District is pursuing the case. The Office of International Affairs of the Criminal Division provided crucial assistance in this case.
The department appreciates the important help provided by the SEC and the FCA. The Department also expresses its appreciation for the assistance provided by the authorities of Switzerland and the United Kingdom in responding to requests for mutual legal assistance.
MLARS ‘Banking Integrity Unit investigates and prosecutes banks and other financial institutions, including their officers, managers and employees, whose actions threaten the integrity of the individual institution or the financial system at large.
Additional information on the role of the Fraud Section in the Criminal Division’s efforts to combat economic crime is available at www.justice.gov/criminal-fraud.