Credit Suisse Resolves Fraudulent Mozambique Loan Case in $547 Million Coordinated Global Resolution | USAO-EDNY

BROOKLYN, NY – Credit Suisse Group AG, a global financial institution headquartered in Switzerland, and Credit Suisse Securities (Europe) Limited (CSSEL), its subsidiary in the United Kingdom (collectively, Credit Suisse), each admitted to conspiring to commit wire fraud by defrauding U.S. and international investors in an $850 million loan to finance a tuna fishing project in Mozambique.  Credit Suisse has been assessed with more than $547 million in penalties, fines and disgorgement as part of coordinated resolutions with criminal and civil authorities in the United States and the United Kingdom.  After taking account of crediting by the department of the other resolutions, Credit Suisse will pay approximately $475 million, as well as restitution to victims in an amount to be determined by the Court.  As part of these coordinated resolutions with the department, the U.S. Securities & Exchange Commission (SEC) and the U.K. Financial Conduct Authority (FCA), as well as an enforcement action by Switzerland’s Financial Market Supervisory Authority (FINMA), Credit Suisse will be subject to enhanced compliance and self-reporting, including that FINMA will impose an independent third party to monitor the bank’s transactions, risk management and internal control systems, as well as its existing credit transactions with financially weak and corruption-prone states and companies, to prevent and detect similar conduct in the future.

Credit Suisse entered into a deferred prosecution agreement with the department in connection with a criminal information filed today in the U.S. District Court for the Eastern District of New York charging the bank with conspiracy to commit wire fraud.  CSSEL pleaded guilty in the U.S. District Court for the Eastern District of New York to a one-count criminal information charging it with conspiracy to commit wire fraud.

Previously, Andrew Pearse, a former managing director of CSSEL, pleaded guilty to conspiracy to commit wire fraud.  Surjan Singh, a former managing director of CSSEL, and Detelina Subeva, a former vice president of CSSEL, pleaded guilty to conspiracy to commit money laundering.  These cases are assigned to United States District Judge William F. Kuntz II of the Eastern District of New York.

Breon Peace, United States Attorney for the Eastern District of New York, Kenneth A. Polite Jr., Assistant Attorney General of the Justice Department’s Criminal Division, and Michael J. Driscoll, Assistant Director-in-Charge, Federal Bureau of Investigation, New York Field Office (FBI), made the announcement.    

“Over the course of several years, Credit Suisse, through its subsidiary in the United Kingdom, engaged in a global criminal conspiracy to defraud investors, including investors in the United States, by failing to disclose material information to investors, including millions of dollars in kickbacks to its bankers and a high risk of corruption, in connection with a $850 million fraudulent loan to a Mozambique state-owned entity,” stated U.S. Attorney Peace.  “This coordinated global resolution demonstrates this Office’s commitment to working across borders with our global law enforcement partners to root out abuse and fraud by financial institutions in order to protect investors here in the United States.”  

“Credit Suisse Group AG, through its U.K. subsidiary CSSEL, defrauded U.S. and international investors in connection with a lending project in Mozambique,” stated Assistant Attorney General Polite.  “Among other things, Credit Suisse Group AG, CSSEL, and their co-conspirators deceived investors by hiding information about the risk that loan proceeds were used for illegal purposes in connection with the restructuring of the loan. Today’s coordinated resolution with the U.S. Securities and Exchange Commission and the Financial Conduct Authority in the United Kingdom shows that the department will not tolerate fraud by international financial institutions and is committed to working in parallel to domestic and foreign authorities to use all tools at our disposal to hold corporate wrongdoers accountable.”

According to Credit Suisse’s admissions and court documents, between 2013 and March 2017, Credit Suisse, through its subsidiary CSSEL, and its co-conspirators used U.S. wires and the U.S. financial system to defraud investors in securities related to a Mozambican state-owned entity, Empresa Moçambicana de Atum, S.A. (EMATUM), which Mozambique created to develop a state-owned tuna fishing project.  Credit Suisse, through its employees and agents, conspired to defraud investors and potential investors in EMATUM by making numerous material misrepresentations and omissions relating to, among other things (i) the use of loan proceeds; (ii) kickback payments to CSSEL bankers and the risk of bribes to Mozambican officials; and (iii) the existence and maturity dates of debt owed by Mozambique, including another private loan that Credit Suisse arranged for a Mozambique state-owned entity (ProIndicus) and a different private loan another bank arranged with Credit Suisse’s knowledge.  Credit Suisse represented to investors that the loan proceeds would only be used for the tuna fishing project.  Instead, the co-conspirators used U.S. wires to divert loan proceeds obtained from investors; specifically, the contractor paid kickbacks of approximately $50 million to CSSEL bankers and bribes totaling approximately $150 million to senior Mozambican government officials.

Credit Suisse also admitted that, prior to and during the EMATUM financing, it identified significant red flags concerning the transaction.  For example, Credit Suisse identified significant corruption and bribery concerns associated with the contractor that supplied the boats and equipment for EMATUM and which received the loan proceeds directly from Credit Suisse.  In addition, in or about 2015, Credit Suisse became aware that EMATUM had encountered problems servicing the loan, raising the risk of default.  Credit Suisse agreed to arrange the restructuring and exchange of the original EMATUM security into a sovereign bond with a longer maturity date (the “EMATUM Exchange”).  Credit Suisse did so, in part, to protect its reputation.  During the EMATUM Exchange, Credit Suisse employees raised concerns about corruption allegations made in the press about the ProIndicus loan and disparities in the use of EMATUM loan proceeds.  To address these concerns, Credit Suisse retained two independent industry experts to conduct a market valuation of the tuna fishing boats and other goods the contractor provided for the project.  Credit Suisse knew that these experts identified a shortfall of between $265 million and $394 million between the funds raised for the EMATUM loan and the fair market value of the boats and accompanying infrastructure and training the contractor sold to EMATUM.  Credit Suisse did not disclose this material information to investors during the EMATUM Exchange.  Aspects of Credit Suisse’s fraudulent conduct were revealed beginning in April 2016, causing the price of the EMATUM Securities to drop and resulting in losses to investors.

Under the terms of the agreements, Credit Suisse will be assessed a criminal penalty of over $247 million, and after crediting by the department to the other resolutions, will pay approximately $175 million to the United States.  Credit Suisse has also agreed to an event study methodology to calculate proximate fraud loss for victims of its criminal conduct, and the amount of restitution that Credit Suisse will pay to those victims will be determined at a future proceeding.  Credit Suisse also reached separate parallel resolutions with the SEC and the FCA.  In addition, as part of FINMA’s enforcement action, Credit Suisse will be subject to FINMA’s supervisory powers and enforcement tools, including an independent third-party monitor, to determine the effectiveness of the bank’s compliance measures for business conducted in financially weak and high-risk corruption countries.

The department reached this resolution with Credit Suisse based on several factors, including the nature and seriousness of the offense, which included the involvement of several bankers within CSSEL.  Credit Suisse received credit for its cooperation with the department’s investigation because, among other things, it provided documents and information to the department and made several employees available as witnesses.  Accordingly, the total criminal penalty reflects a 15 percent reduction off the bottom of the applicable United States Sentencing Guidelines range.  Credit Suisse has also agreed to continue to cooperate with the department, to enhance its compliance program and internal controls, and provide enhanced reporting to the department on the bank’s remediation and compliance program.  Among other things, the enhanced reporting provisions require Credit Suisse to meet with the department at least quarterly and to submit yearly reports regarding the status of its remediation efforts, the results of its testing of its compliance program, and its proposals to ensure that its compliance program is reasonably designed, implemented, and enforced so that is effective in deterring and detecting violations of fraud, money laundering, the Foreign Corrupt Practices Act, and other applicable anti-corruption laws.

The investigation was conducted by the FBI’s New York Field Office.  The prosecution is being handled by the Business and Securities Fraud Section of the U.S. Attorney’s Office for the Eastern District of New York and the Criminal Division’s Fraud Section and Money Laundering and Asset Recovery Section.  Assistant U.S. Attorney Hiral Mehta of the Eastern District of New York and Trial Attorneys Molly Moeser, David Fuhr and Katherine Nielsen of the Criminal Division are prosecuting the case.   The Justice Department’s Office of International Affairs of the Criminal Division provided critical assistance in this case.  

The department also appreciates the significant assistance provided by SEC and the FCA.  The department also expresses its appreciation for the assistance provided by authorities in Switzerland and the United Kingdom in responding to Mutual Legal Assistance requests.

The Defendants:


E.D.N.Y. Docket No. 21-CR-521

CREDIT Suisse Securities (Europe) limited

E.D.N.Y. Docket No. 21-CR-520