U.S. authorities are investigating Credit Suisse Group AG, BNP Paribas SA and VTB Group for their roles in selling about $2 billion of bonds for Mozambique, the Wall Street Journal reported, citing unidentified people familiar with the matter.
The Federal Bureau of Investigation is examining whether the banks facilitated corruption by enabling officials from the African nation to take money raised in the debt sales, the newspaper reported. The Justice Department is probing whether the firms helped Mozambican officials borrow more than the economy could reasonably repay, the Journal said.
Regulators in the U.S., U.K. and Switzerland began probes into potential violations of securities laws by the banks last year, the Journal reported. The latest inquiries broaden the investigations to examine the possibility of criminal prosecution, it said.
Mozambique last year disclosed more than $1 billion of previously hidden loans, leading the International Monetary Fund and 14 donor countries to freeze aid to the impoverished nation. The country defaulted on its debt this year, and has since missed further interest payments on loans arranged by banks including Credit Suisse. Talks with bondholders and the IMF on any debt restructuring remain stalled, Bloomberg reported last month.
Credit Suisse fell 0.9 percent to 16 francs as of 10:55 a.m. in Zurich and has gained about 19 percent this year, while BNP declined 1.6 percent to 64.71 euros and VTB’s depositary receipts were trading 0.3 percent higher at $2.056 as of 10:04 a.m. in London. The Moscow exchange is closed Monday due to a national holiday.
Nicole Sharp, a spokeswoman for Credit Suisse in New York, declined to comment on the Journal article and referred to the bank’s disclosure in its latest annual report. The Swiss lender is responding to requests from authorities related to matters including its arrangement of loan financing to Mozambique state enterprises, Credit Suisse said in its 2016 annual report.
The bank earlier this year disputed a report by Kroll LLC that it and Russia’s VTB Bank PJSC were paid almost $200 million in arrangement and contractor fees.
A Hong Kong-based spokeswoman for French bank BNP Paribas declined to comment. Representatives for Russia’s VTB Group also declined to comment. Two Mozambican government spokesmen didn’t reply to the Journal’s requests for comment, the newspaper said.