The credit was officially earmarked for the development of the tuna fishery in the East African country, but according to US and UK regulators, some of it was used to bribe Mozambican officials and a Credit Suisse banker. The scandal plunged the country into an economic crisis.
The Swiss bank helped Mozambique’s state-owned companies raise more than $1 billion in credit around 2013, according to the US Financial Supervisory Authority and its British counterpart, the FCA. Investors were told that the money would be invested in the coast guard and fishing boats. But much of the money could not be traced back later.
The Securities and Exchange Commission says at least $200 million in bribes and other questionable payments to employees and officials of Credit Suisse in Mozambique. According to the regulator, the bank misled the investors and therefore has to pay a fine. The FCA blames Credit Suisse for ignoring the obvious signs of corruption.
Altogether, loans totaling US$2 billion to state-owned enterprises in Mozambique are in poor shape. In addition to the corruption for which a large part of the money was used, those involved also hid loans from the International Monetary Fund (IMF). As a result, the fund did not have a good view of the country’s overall debt burden.
After this was revealed, the International Monetary Fund froze its financial assistance to the country in 2016. A group of donor countries also stopped transferring development funds, leaving Mozambique unable to meet its financial obligations in 2017. The national currency, the Mozambican metical, slumped after That, causing Mozambicans to face massive inflation.
Two years ago, three former Credit Suisse investment bankers pleaded guilty to violating US anti-corruption laws. Mozambique also has a lawsuit pending in London against the bank.
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