In 2013, two London-based banks lent $2 billion to three state-owned enterprises (SOE) in Mozambique, namely Ematum, Proindicus and Mozambique Asset Management (MAM). These entities were owned by the Mozambican security and intelligence services (Serviço de Informações e Segurança do Estado, SISE). Credit Suisse agreed to make up to $850 million available for Ematum. For Proindicus, a loan of $623 million was arranged jointly by Credit Suisse and VTB who financed MAM by a $535 million. The loans were not approved by the Parliament of Mozambique, thus violating both the Budget Law and the Constitution of Mozambique1.
This is a complex case involving three different loans across multiple jurisdictions. As the scale of these loans became clear, in 2016 the International Monetary Fund (IMF) suspended its programme with Mozambique in line with its disclosure policy2. Other donors followed suit, and all 14 donors who used to provide direct support to the state budget halted their disbursements3. The country found itself facing a severe budget deficit since the budget support amounted to hundreds of millions of dollars a year. The loans have thus led to an economic and social crisis in Mozambique, with the local currency falling by 50% against the dollar and cuts being introduced to government spending, consequently affecting drastically the already fragile provision of basic services including health, education, water and sanitation. The loans have also hindered the growth of the Mozambican economy.
In 2019, as part of the United States of America (U.S.) investigation4 into the loans, three former employees of Credit Suisse were arrested in London, and a former employee of the United Arab Emirates company Privinvest, which supplied boats as part of the loan deal, was arrested in New York. The former Mozambican Finance Minister, Mr. Manuel Chang, was also arrested in December 2018 in South Africa on charges of conspiracy to violate anti-bribery laws, money laundering and securities fraud on an Interpol warrant requested by the U.S.. Immediately after his arrest, Mozambique filed another request to extradite Mr. Chang to Mozambique instead. The U.S. indictment provides compelling evidence of the bribes and kickbacks that were paid as part of the loan deals. The indictment also presents evidence that Credit Suisse failed to prevent this fraud from happening. The bank clearly did not have adequate procedures in place to prevent the dubious transactions. Read more ….