VTB Capital: Settlement of U.S. probe into Mozambique transactions – press release and comment

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VTB Capital: Settlement of U.S. probe into Mozambique transactions – press release and comment

10:08 CAT | 21 Oct 2021

FILE PHOTO - The logo of VTB Group is seen through a window of Imperia Tower on a facade of the Federatsiya (Federation) Tower at the Moscow International Business Center also known as "Moskva-City", in Moscow, Russia. [File photo: VTB LInkedin]

Press Release

October 19 2021

Earlier today, VTB Capital plc (VTB) entered into a settlement with the United States Securities and Exchange Commission (SEC) to end the SEC’s investigation into VTB’s involvement in a series of transactions with the Republic of Mozambique. VTB does not admit or deny the allegations in the SEC’s order.

In its order, the SEC expressly recognises that VTB had no knowledge of or involvement in the corrupt kickback scheme hatched by Mozambican officials and others. The SEC also did not find that VTB engaged in intentional misconduct or fraud.

Instead, the SEC’s findings with respect to VTB center on alleged disclosure failures in a single transaction: the 2016 EMATUM Exchange offering. Specifically, the SEC has found that VTB was negligent because the offering materials contained misleading statements by Mozambique and omissions that VTB failed to prevent. These alleged disclosure failures, the SEC found, relate to (1) the full nature of Mozambique’s indebtedness, and (2) VTB’s role as a lender on two earlier transactions.

The SEC order recognises the difficult position which VTB was put in by senior Mozambique officials during the offering process, and that VTB itself was defrauded by Mozambique officials.

Neither VTB nor any of its personnel were charged with criminal conduct by the U.S. Department of Justice. No VTB personnel were charged by the SEC in today’s order.

VTB takes today’s settlement seriously and fully cooperated with the SEC investigation. The settlement announced today marks the end of the SEC’s investigation into VTB’s role in the Mozambique transactions. VTB seeks to hold itself to the highest standards and remains committed to ensuring that VTB clients have the information they need to invest in today’s markets.

VTB has for years cooperated extensively with all government enquiries. VTB also tried for years to cooperate with the Mozambican government to find a constructive solution to the country’s debt situation. Those efforts to date have been unsuccessful. Accordingly, in 2020, VTB commenced legal proceedings in the English courts to recover the sums due to it. VTB expects to prevail.

VTB will pay a $4 million penalty and disgorge $2 million in fees.

Comment on behalf of VTB Capital:

“The settlement reached today marks the end of the SEC’s investigation into VTB’s role in the Mozambique transactions. As we have previously said, VTB took significant steps to ensure the accuracy of the Eurobond disclosure, which were met with resistance and pressure from a number of other parties engaged in the deal, as the SEC recognised.

“We’d like to emphasise that throughout the numerous international litigations and investigations related to the Mozambique loans, none of our employees have been charged with unlawful conduct.

“VTB operates in a completely open and transparent manner observing the highest levels of corporate governance and compliance in our daily operations, and we remain confident that VTB acted responsibly in this matter, notwithstanding an extensive scheme perpetrated by others. We are confident of our legal position and look forward to finding a solution in the remaining proceedings related to this situation.”

VTB Bank

Presnenskaya embankment, 12

Federation Tower Wes

Source: VTB Bank / Press Release and Comment