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Charges against three former Credit Suisse bankers in the Mozambique «tuna bond» case distract from the role of the Swiss bank itself in the loan scandal. Credit Suisse's controls failed.

Credit Suisse was quick to respond to charges levied against three former employees of the Swiss bank's London investment banking arm in connection with a billion-dollar bond scandal.

The bankers went rogue to circumvent Credit Suisse's compliance controls in order to enrich themselves, Credit Suisse said. The bank also pointed out that Credit Suisse itself isn't the focus of investigators, and is cooperating with the clean-up.

Gaps, Laxness, Mistakes

That is all true – and yet only part of the full picture. The charges do focus entirely on an allegedly fraudulent scheme propped up by the former Credit Suisse bankers, the then-finance minister of Mozambique Manuel Chang and an employee of shipyard Privinvest in Abu Dhabi, Jean Boustany.

But the U.S. indictment also exposes alarming loopholes, acts of carelessness and mistakes within Credit Suisse and its compliance department. 

Payments to Private Entity 

The indictment also lays bare that Credit Suisse wasn't entirely honest with investors about the so-called tuna bonds – money raised ostensibly to bolster Mozambique's fleet of fishing boats. The bank kept shtum about the fact that it had also extended two other loans to Mozambique in 2017.

In another passage of the charge sheet, prosecutors accuse the three former Credit Suisse bankers of intending to at least in part benefit Credit Suisse with their actions.

The bank needs to explain why it repeatedly sent hundreds of millions in loans to Mozambique, backed by the state, directly to a private holding called Privinvest in Abu Dhabi.

Fee Windfall for CS

Credit Suisse may well also be held accountable, the «Financial Times» (behind paywall) reported recently. Andrew Pearse and Surjan Singh, both senior investment bankers, as well as Detelina Subeva, who reported to Pearse, won considerable revenue for Credit Suisse with their alleged scheme.