Archegos, Greensill, “tuna bonds”: Credit Suisse, the bank that has a series of scandals

“Credit Suisse has now replaced Deutsche Bank as the main supplier of scandals in the global financial center. “ This severe observation, published on October 21 in the columns of The New Zurich Times, contrasts with the usual tone of the Zurich liberal daily. At the origin of this disavowal, a succession of scandals of all kinds which have weakened, over the past two years, Switzerland’s second-largest bank, to the point of reviving rumors of a merger with its rival UBS before the summer.

The latest problem is linked to the so-called “tuna bonds” affair in Mozambique. On October 19, Credit Suisse reached agreements with the American, British and Swiss authorities to end the prosecution of suspicious loans granted to state-owned enterprises in Mozambique at the heart of a large corruption case. The bank will have to pay $ 475 million in penalties and has agreed with UK authorities to write off $ 200 million in debt owed by Mozambique. The Swiss financial market authority, Finma, will also impose restrictions on the granting of loans to countries “Financially weak or exposed to corruption”.

“Constraints and threats”

The transaction dates back to 2013: the British subsidiaries of Credit Suisse organize two loans guaranteed by the State of Mozambique, for a total of one billion dollars, to two state-owned companies. These credits, which represented almost 6% of the country’s gross domestic product, are then converted into bonds, placed with investors. They were initially intended to finance the purchase of coastal patrol vessels and a fleet for tuna fishing. They would in fact have largely served to maintain corruption for the benefit of those close to power.

The case broke out in 2016, when the Mozambican government revealed that it had contracted these loans without notifying Parliament or its donors. After this scandal, the IMF and most of the donors suspended their aid. Mozambique then interrupts the repayment of its debt, its currency collapses, plunging the country – one of the poorest in the world – in a serious financial crisis.

Read also Mozambique: suspicion of scandal at the top of the state at the trial of the “hidden debt”

A completely different scandal comes to shake the banking group in September 2019. The country discovers from the press that a former star banker of Credit Suisse, Iqbal Khan, who went to his competitor UBS, has filed a complaint for “Constraints and threats”. While driving in Zurich, he thinks he is being followed, stops to take a picture of the license plate of the perpetrator of the spinning, which goes down and comes to blows. The man turns out to be an employee of a detective agency commissioned by Credit Suisse. The group set up this operation, fearing that Iqbal Khan would debauch ex-collaborators, or even clients. The case stunned the financial center, used to treating its disputes with discretion. Three months later, the bank recognizes the existence of a second espionage case, which will eventually cause the departure of Tidjane Thiam, the Franco-Ivorian general manager of the Swiss bank, in February 2020.

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Archegos, Greensill, “tuna bonds”: Credit Suisse, the bank that has a series of scandals