Pearse implicates VTB in Mozambique fraud – AIM report

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Pearse implicates VTB in Mozambique fraud – AIM report

7:29 CAT | 18 Oct 2019

FILE: A sign for the logo of VTB Bank on the top of a building is pictured behind a monument of Soviet state founder Vladimir Lenin in Stavropol, Russia, July 17, 2014. [File photo: Reuters]

Former Credit Suisse banker Andres Pearse on Thursday for the first time directly implicated an executive of the Russian bank VTB in the fraudulent scheme commonly known as the scandal of Mozambique’s “hidden debts”.

The term refers to the scheme whereby, in 2013 and 2014, three security-linked Mozambican companies, with no business record whatsoever, obtained over two billion dollars in loans from Credit Suisse and VTB. The loans were only possible because the Mozambican government of the day granted illegal loan guarantees, in violation of the budget law.

American prosecutors have been pursuing the case, because some of the money laundered passed through US banks, and because US investors were defrauded when they purchased chunks of the debts. The US investigators concluded that at least 200 million dollars of the loan money was spent on bribes and kickbacks.

ALSO READ: Ex-Credit Suisse banker says secret affair helped fuel $45 million fraud

The prosecutors claim that the bribes were paid by the Abu Dhabi-based group Privinvest (an accusation which Privinvest denies), and a Privinvest sales executive, Jean Boustani, regarded by the Americans as the mastermind behind the fraud, is currently on trial in a New York court.

Pearse, who negotiated with the prosecutors and pleaded guilty to one count of conspiracy, testified for the second day on Thursday. According to the report of the trial carried by the Bloomberg agency, Pearse said Boustani told him that Privinvest paid a bribe of two million dollars to Makram Abboud, a senior banker at VTB, who was working on the Mozambican loans.

The majority shareholder in VTB is the Russian government, and the bank is under United States sanctions.

VTB issued a routine denial of Pearse’s testimony, calling him a “convicted fraudster”, and claiming “We have seen no evidence that Mr. Abboud or any other VTB employee received improper payments of any kind”.

ALSO READ: Russia’s VTB: Mozambique must restructure loan by year-end

Pearse dated his corrupt deals with Privinvest to 2013. He said that, while sitting by a hotel swimming pool in Maputo, Boustani offered him a bribe in exchange for lower transaction fees Credit Suisse would charge on the first of the illicit loans.

“I remember it clearly because it was the first time in my life I’d been offered a kickback,” Pearse told the New York jury.

He said he was trying to leave Credit Suisse and offered not only to cut some of the fees his bankers collected in the deal, but asked for Boustani’s help in setting up a new company with Privinvest’s chief executive officer Iskandar Safa.

Pearse also revealed he had been having an affair with another Credit Suisse banker, Detelvina Subeva. She too has pleaded guilty and will testify as a prosecution witness against Boustani.

Assistant U.S. Attorney Mark Bini asked Pearse if his affair with Subeva played any role in his decision to quit in 2013. He replied he was trying to hide the “very deep romantic relationship” from his superiors.

“We were both married at the time and it was difficult to see each other unless we were travelling,” Pearse said. “I wanted that relationship to continue. I wanted to leave Credit Suisse. I wanted to establish a deeper relationship with Ms. Subeva.”

Privinvest lawyers have repeatedly denied that the company did anything criminal. One of them, Stephen Hauss, quoted by Bloomberg, said “Obviously Pearse has a sweetheart deal from the US government to say what the government wants him to”.

But the paper trail is not so easy to shrug off. The New York jurors saw records showing that Privinvest made regular one million dollar deposits into Pearse’s bank account in Abu Dhabi. Pearse testified he shared at least two million dollars of the payments he got from Boustani with Subeva.

ALSO READ: Ex-Credit Suisse banker says he hid $45 million worth of bribes

Source: AIM