International investment bank Credit Suisse has been hit with several large penalties from global regulators, including the UK’s Financial Conduct Authority (FCA), over the issuing of corrupt loans worth $1.3 billion.

The Switzerland-based bank was fined £147 million by the British regulator, which issued the penalty for “serious financial crime” due to due diligence failures related to loans the bank arranged for the Republic of Mozambique.

The FCA fine is part of an approximate $475 million global resolution agreement announced today involving the US Department of Justice, the US Securities and Exchange Commission, and the Swiss Financial Market Supervisory Authority (FINMA).


The FCA said that these loans and bond exchange were “tainted by corruption.”
Credit Suisse has also agreed to forgive $200 million of debt owed by the Republic of Mozambique as a result of these tainted loans.

“The FCA’s fine reflects the impact of these tainted transactions which included a debt crisis and economic harm for the people of Mozambique,” said Mark Steward, executive director of enforcement and market oversight at the FCA. “The fine would have been higher if not for Credit Suisse agreeing to provide the debt write-off of US$200 million.
“The FCA will continue to pursue serious financial crime control failings by regulated firms.”

The UK authority revealed that between October 2012 to March 2016, Credit Suisse failed to properly manage the risk of financial crime within its emerging markets business.
It said that the bank had sufficient information from which “it should have appreciated the unacceptable risk of bribery associated with the two Mozambican loans and a bond exchange related to government sponsored projects.”

According to the UK watchdog, Credit Suisse was aware Mozambique was a jurisdiction where the risk of corruption of government officials was high and that the projects were not subject to public scrutiny or formal procurement processes. It added that the contractor engaged by Mozambique on the projects was described as a “master of kickbacks”.

The contractor secretly paid significant kickbacks, estimated at over $50 million, to members of Credit Suisse’s deal team, including two managing directors, in order to secure the loans at more favourable terms.

The FCA said that while Credit Suisse employees deliberately conceal the kickbacks, warning signs of potential corruption should have been clear to Credit Suisse’s control functions and senior committees.

“Time and again there was insufficient challenge within Credit Suisse, or scrutiny and inquiry in the face of important risk factors and warnings,” it said in a statement. “The Republic of Mozambique has subsequently claimed that the minimum total of bribes paid in respect of the two loans is around $137 million.”

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