CS employees helped organize billions in loans that were backed by undeclared state guarantees. These plunged the emerging Mozambique into ruin. The investigation into the scandal is progressing.
Participated in “massive international fraud”: Mozambique’s former finance minister Manuel Chang, here in 2019 before a South African court.
Phill Magakoe / AP
Mozambique, one of the poorest countries in the world, has achieved several legal successes in recent weeks in dealing with one of the biggest corruption scandals ever to come to light in Africa. The so-called “tuna bonds” involved loans totaling two billion dollars, which enriched the Mozambican elite, European bankers and businessmen in the Middle East. Half of the loans were organized by bankers from Credit Suisse – bypassing control rules.
On Thursday, a jury in New York found former Mozambican finance minister Manuel Chang guilty of wire fraud and money laundering. Chang accepted bribes totaling seven million dollars and participated in a “massive international fraud.”
At the end of July, a British court awarded Mozambique $825 million in damages in a lawsuit against Privinvest, a shipbuilding company based in the United Arab Emirates and Lebanon. Privinvest, which belonged to the French-Lebanese billionaire Iskandar Safa, who died a few months ago, is said to have pulled the strings in the tuna scandal.
The two court decisions advance the legal investigation into a major scandal that triggered legal proceedings on three continents. The Swiss Federal Prosecutor’s Office also opened proceedings in 2020.
Two billion dollars, 35 unusable fishing boats
The tuna loan saga began in 2013, when bankers from Credit Suisse and the Russian bank VTB organized the first bonds. These were backed by undeclared state guarantees, which Mozambique’s then government concealed from parliament and the International Monetary Fund (IMF).
Formally, the loans were intended to enable the shipbuilder Privinvest to supply Mozambique with a fleet for tuna fishing and boats for improved coastal protection. In reality, however, Privinvest, Mozambican politicians and bankers involved siphoned off millions. Mozambique did receive 35 fishing boats and half a dozen military boats, but these were billed at far too high a price and were unusable. More than half a billion dollars of the bonds disappeared without a trace.
When the scandal came to light in 2016, donors such as the IMF and the World Bank stopped their payments to Mozambique. Switzerland also suspended aid payments. Mozambique plunged into a debt crisis, and in 2017 the country was insolvent. The consequences for the population of the 30 million inhabitants country were devastating. Government spending fell by around half. The education and health sectors were particularly badly affected. According to a study published in 2021, Investigation Between 2016 and 2019, almost two million Mozambicans slipped into poverty.
At the time of the scandal, Mozambique was actually a rising star among Africa’s economies. In 2010, the American energy company Anadarko discovered huge gas deposits off the coast of Mozambique. Thanks to these deposits, Mozambique, which had been devastated by a long civil war after independence in 1975, was predicted to experience incredible economic growth. Mozambique’s potential made it easier for the bankers at CS and VTB to organize the loans. The scandal ruined the economic recovery – Mozambique has not recovered from it to this day. The country is one of the most indebted in Africa.
Thiam’s management shifted responsibility to London
In the wake of the scandal, Credit Suisse came under the scrutiny of the judiciary. Three former bankers were arrested. They pleaded guilty in a New York court in 2019 – two of them for money laundering, the third for wire fraud.
In October 2023, UBS, into which CS had since been absorbed, agreed to a settlement with the Mozambican government shortly before a trial began in London. The settlement paid off more than half a billion dollars of the debt that Mozambique had with CS. In 2021, CS had already paid 475 million dollars in fines and forgiven part of Mozambique’s debt.
The management team, led by CEO Tidjane Thiam at the time of the scandal, had tried to shift responsibility for the Mozambique affair onto a few employees in London who had undermined internal controls. However, many saw the affair as a particularly drastic example of a negligent risk culture at CS, which contributed significantly to the bank’s downfall. The British financial market regulator said in 2021 that the bank had failed to control the risk of criminal activity in its business in new markets. This despite information that bribes linked to government projects were likely.
