Credit Suisse risks $300m fine for involvement in Mozambique’s hidden debt scandal

Login

Register

http://www.clubofmozambique.com/

Credit Suisse risks $300m fine for involvement in Mozambique’s hidden debt scandal

3:37 CAT | 08 Jan 2019

in file CoM

Consulting firm Bloomberg Intelligence believes Credit Suisse, despite not being charged by US courts, risks paying up to $300 million for involvement in the hidden debt scandal in Mozambique.

“Despite the accusation of the U.S. Department of Justice…that bankers bypassed the bank’s internal controls, individuals’ misconduct may still be imputed to Credit Suisse because bankers allegedly acted as part of their employment at Credit Suisse,” say analysts who also support the Bloomberg financial intelligence agency.

“We estimate a potential deal with US authorities of $100-300 million,” analysts say.

For these analysts, bankers Andrew Pearse, Surjan Singh and Detelina Subeva had “the intention, at least partially, of benefiting the bank they worked for”, so the authorities “may also seek to prosecute Credit Suisse for breach of investment rules in the financial markets and failed to stop the alleged misconduct despite the existence of ‘red flags’.”

The bank, they stress, “looks bad in the picture,” though it was not charged, “because it has exposure and recalls the $ 1 billion problem of Goldman Sachs, but on a smaller scale.”

The amount of $ 100-300 million is found by adding fees and commissions that Credit Suisse would have to pay back, to the penalties it could incur if the US court decides to go after the Swiss bank.

“Credit Suisse’s rates linked to Mozambican loans may suggest a potential agreement with US authorities of $ 100-300 million,” they write, explaining that “the charge against bankers states that the bank earned commissions of $44 million in one of the $372 million loans to ProIndicus.

“This may imply total rates of about $100 million for the total of $1 billion that Credit Suisse lent in these businesses,” analysts add, concluding that “the potential deal may include tax refunds and a fine that can go up to double the amount of commissions collected “.

As the bank is “cooperating with the authorities and working with investors in sovereign debt securities to restructure debt, penalties can be mitigated because of these two factors”, according to the analysts.

Source: Lusa