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Credit Suisse and Mozambique have reached an out-of-court settlement over the hidden debt scandal, which was hanging over them for quite some time. Both the parties mutually released each other from any liability, through a carefully worked out settlement. This was revealed by UBS, which bought out its Swiss rival
Significantly, Credit Suisse and Mozambique have reached an out-of-court settlement over the hidden debt scandal, which was hanging over them for quite some time. Both the parties mutually released each other from any liability, through a carefully worked out settlement. This was revealed by UBS, which bought out its Swiss rival.
The trial of the case was due to open in London’s High Court into the scandal that plunged Mozambique, one of Africa’s poorest countries, into deep crisis. The agreement states that Mozambique and Crédit Suisse have amicably settled the legal proceedings initiated in London. It states that the parties have mutually released each other from all liability and claims relating to the transactions indicating that the long-standing dispute is resolved. There were reports earlier that UBS was trying to settle the matter before trials started in the London Court.
To prevent Credit Suisse from going bankrupt, UBS was forced in March to buy out its former subsidiary under pressure from the Swiss authorities. That forced UBS to settle the numerous cases that had rocked the bank.
In October 2021, Credit Suisse was notably hit with US$475 million in penalties following an agreement with US, UK, and Swiss authorities to end prosecutions over loans to Mozambique. In 2013, the bank granted loans to state-owned companies intended to finance maritime surveillance, tuna fishing, and shipyard projects. But those loans were partly diverted for bribes. The government hid the debt from parliament, with loans from several banks, including Credit Suisse, estimated at around US$2 billion.
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When the scandal broke in 2016, the IMF and World Bank suspended their financial support to Mozambique, and the country defaulted on its sovereign debt. Its currency collapsed. At the time of the agreement in October 2021, Credit Suisse had agreed with the British authorities to cancel US$200 million owed by Mozambique. However, the country had taken legal action against the shipbuilding company Privinvest and Credit Suisse, among others.
