According to an article published on the Financial Times last Sunday Credit Suisse has escaped criminal charges by the UK’s Financial Conduct Authority (FCA) over the US$2B+ “tuna bond” scandal in Mozambique. The loans where contracted to set up a state-owned tuna fishing fleet (US$850M) and to establish a maritime radar surveillance and a fleet of patrol boats (US$1.2B).
The FCA decided to downgrade the case from money-laundering to a regulatory investigation, according to sources familiar with the matter. According to U.S Securities and Exchange Commission, the other main banks which were involved in the sale and the facilitation of the Tuna Bond were BNP Paribas and VTB Bank.
The progress of the tuna bond was relatively successful after Mozambique managed to reach an agreement with bondholders on the defaulted US$726M bond. The Ministry of Economy and Finance issued a fresh debt from the previous debt and committed to pay using the revenue from offshore natural-gas projects.
The country has been fighting to recover from a debt crisis since acknowledging in 2016 to the undisclosed debt. The admission by the government triggered the International Monetary Fund and Foreign Aid providers to halt budgetary support. At the time, the loans and aid provided by IMF financed about a quarter of the country’s budget. As a result, Mozambique faced fiscal challenges leading to a sharp fall in its currency and a significant reduction in its foreign reserves.
The FCA has decided to focus its investigation on both the bank and individuals involved in the tuna-bond scandal. Rather than facing potential jail time, they can now face a harsh fine or a ban at worst. However, the US Department of Justice has a criminal investigation open into the matter as it is probing all three banks, Credit Suisse, VTB and BNP Paribas for their participation in the matter. Furthermore, the US Securities and Exchange Commission is running a parallel regulatory probe as well as the Swiss Authorities. The FCA in 2018 stated that it had 75 cases of money-laundering open on both companies and individuals many of which had both a criminal and regulatory element.
On November 6th, the Ministry of Economy and Finance of Mozambique issued a communique stated that the government and bondholders have agreed to work in good faith with their respective advisers to reach an agreement on mutually acceptable terms.