Credit Suisse faces ‘tuna bonds’ trial

Credit Suisse Group AG Updates

Credit Suisse will face trial over its role in the $2 billion “tuna bond” scandal in Mozambique, a fresh blow as the bank struggles to undo a series of crises that have plagued the group in recent years.

The High Court judge presiding over a London lawsuit brought by creditors against Credit Suisse set a date last month in September 2023 for a 13-week trial, according to people familiar with the matter.

The resurgence of an eight-year-old scandal is another blow to the Swiss lender’s attempts to move forward in a series of crises that culminated in the collapse of specialist finance firm Greensill Capital and family office Archegos Capital this spring.

Two failures – resulting in the bank Liquidation of 10 billion dollars of Greensell-linked mutual funds and a $5.5 billion loss after the Archegos collapse highlighted severe shortcomings in the bank’s risk management systems and culture.

the tuna bond case It stems from a 2013 deal for Mozambique, one of the world’s poorest countries, to borrow from ostensibly international investors to finance offshore projects, including the state’s tuna fishery, before investing in offshore gas.

Credit Suisse helped arrange the issuance of $2 billion in loans and bonds, which were partially hidden from the International Monetary Fund and other donors to the country. When the loans were discovered in 2016, the International Monetary Fund and international donors cut budget support for the Mozambican government, slowing what was once one of Africa’s fastest growing economies.

Auditors later found that $500 million in funds raised through the loans could not be accounted for and that the companies behind the debts paid for the odds of the equipment. It also found that $200 million of the loans were used for bank charges.

Investors representing $622 million in loans, including Banco Comercial Português and United Bank for Africa, filed suits in the Supreme Court in December 2020 against Credit Suisse in Mozambique and a state-owned company that received the funding.

“Credit Suisse has been trying hard to delay substantive proceedings for many years,” said someone close to the case. “But she will now have to reveal her own documents and provide evidence of her actions.”

They added: “Serious allegations of fraud and conspiracy against Credit Suisse, in the millions [dollar] Claiming damages, it will be heard publicly in September 2023.”

Three former Credit Suisse employees — Andrew Pearce, Ditellina Supiva and Surjan Singh — have pleaded guilty to US criminal courts. accepting bribes to arrange loans.

Credit Suisse previously blamed the three individuals, saying they circumvented the bank’s compliance rules

In 2018, the UK’s Financial Conduct Authority dropped its criminal investigation into Credit Suisse’s conduct.

The creditors are represented by Boies Schiller Flexner, an American law firm with an office in London. The company is also arranging a class action lawsuit against Credit Suisse on behalf of investors in Greensill funds.

Credit Suisse and Boise Schiller declined to comment.

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