UK’s financial watchdog drops criminal probe into Mozambique’s hidden debt – Financial Times

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UK’s financial watchdog drops criminal probe into Mozambique’s hidden debt – Financial Times

8:55 CAT | 12 Nov 2018

Mozambique first sold bonds to international investors five years ago to finance a new state-owned fishing company, Ematum, but was found to have spent most of the funds on naval vessels . Picture: Shutterstock

The UK’s financial watchdog, the Financial Conduct Authority (FCA), has decided to drop its criminal probe into Credit Suisse in the case of the undisclosed loans to two Mozambican public companies, the Financial Times reported today.

According to today’s edition of the British newspaper, “escaped criminal prosecution by the UK’s financial watchdog over the $2bn “tuna bond” scandal in Mozambique, where loans to set up a state fishing fleet vanished.” The Financial Conduct Authority “has downgraded the case to a regulatory investigation” which ” focuses on both the bank and individuals involved in the tuna-bond scandal, who now face a fine or a ban at worst, rather than potential jail time,” reads the report.

Although it is only being reported now, the decision was taken in August, according to unidentified sources cited by the Financial Times. This is positive news for the bank, as FCA was looking to use criminal money-laundering powers, in what would have been one of the first cases of its kind.

Credit Suisse, according to FT, is already under investigation by the Swiss regulators for money-laundering weaknesses exposed by a number of corruption scandals, from Fifa to Petrobras, the Brazilian oil company.

“The FCA started scrutinising the matter after the International Monetary Fund suspended lending to Mozambique over $2bn of ‘hidden loans’, arranged by Credit Suisse and Russian bank VTB, for a new state-owned fishing company and two other companies owned by Mozambique’s national intelligence agency,” reads the Financial Times report.

The US Department of Justice still has a criminal investigation open into the matter, adds the Financial Times. ” The DoJ is probing not only Credit Suisse but also VTB and BNP Paribas for their roles in the affair, while the US Securities and Exchange Commission is running a parallel regulatory probe. Swiss authorities are also investigating”.

According to the FT, Credit Suisse, the FCA, VTB and BNP Paribas declined to “comment on the news, which comes a week after the Mozambican government reached a preliminary agreement with holders of public debt securities to restructure the sovereign debt of $ 726.5 million”.

Following the announcement of this agreement, Credit Suisse last week argued that the same conditions should also be given for the commercial loans that were granted to these two public companies, and which have not been paid for two years either.

Source: Lusa / Financial Times