The indictment refers to a fee of $44 million for the first tranche of a $372 million financing by Credit Suisse. The Swiss bank then granted another over all $600 million – which have triggered other fees.
Swiss Review
The loans weren't used for their intended purposes, millions landed in private coffers, and one of the world's poorest countries nearly went bankrupt as it drowned in debt. Credit Suisse will struggle both to distance itself from this PR nightmare as well as to escape culpability.
While U.S. prosecutors have homed in on individuals like Pearse, Swiss financial regulator Finma as well as the U.K. watchdog are looking at Credit Suisse's loans. «Finma is looking at this from the point of view of whether Credit Suisse adhered to Swiss supervisory rules in this context,» a spokesman told finews.com.
State Backing for Bribe
The scheme itself was relatively simple: the ex-Credit Suisse bankers as well as the marine investment firm Privinvest in Abu Dhabi, which belongs to the Franco-Lebanese brothers Iskandar (pictured below, Manuel Chang at right) and Akram Safa, constructed a business model to help boost Mozambique's battered economy, but ultimately generated billions in contracts for Privinvest and allegedly enriched the fraud's authors.
Mozambique's finance minister played a key role in ensuring state backing for the loans. The money, however, never made it to Mozambique; rather, the proceeds landed in Abu Dhabi bank accounts.
«Deal Team» Hoodwinks CS
How? The «deal team» around Pearse were apparently able to hoodwink their bosses as well as Credit Suisse's compliance officials repeatedly. Against bank rules, Pearse and Singh themselves conducted due diligence for the proposed credit lines, or hired a third party to do so.
Credit Suisse also accepted the lack of a bidding process for the project. In another case, Singh allegedly forged details of a bidding contest, though the project had already gone to Privinvest.
Compliance Waves Through
Red flags such as these were raised within Credit Suisse when reviewing Mozambique officials and Privinvest employees. One senior investment bank boss vetoed extending credit to the African nation for a project dubbed Proindicus for boats and other nautical equipment for coastal guarding (pictured below).
