Credit Suisse won’t forego its demands for repayment of loans owed by Mozambique. The legal document compiled by Credit Suisse, which was made available to finews.asia, sounds more than just a little cynical.

The case of misappropriation of money intended for the economic development of Mozambique that was secured through a loan by Credit Suisse is now in its fifth year. The British and Swiss banking authorities, which are investigating the case – the Financial Conduct Authority (FCA) and Finma – keep their silence on progress made.

But the legal process – which led to the surprise freeing of the main culprit by a U.S. court – and the documentation filed by Mozambique against Credit Suisse at the High Court in London and the counterclaim by the bank are in the public domain.

Claim: Credit Suisse Compliance Failed

Swiss information site «Infosperber» recently published both sets of documents – the lawsuit by Mozambique and the bank's counterclaim.

Mozambique wants Credit Suisse to forego on part of the loans – the so-called Proindicus-loan worth $622 million. The argument in favor of the claim is that the Swiss bank had failed in its compliance process before granting the loan.

The answer and counterclaim by Credit Suisse lawyers extend over 114 pages in total and intends to show that the bank couldn’t possibly know in advance that its partners in the deal, the government of Mozambique and shipbuilder Privinvest, were corrupt and would be pocketing assets worth more than $200 million.

Not Responsible

Furthermore, the bank also proclaimed that it wasn’t to be held responsible for the misdemeanors of its investment bankers – Andrew Pearse, Detelina Subeva and Surjan Singh. Credit Suisse said it had no responsibility for keeping secret further loans to Mozambique when a first debt rescheduling became necessary. Therefore, Mozambique was liable to repay the loan in question with interest.

The counterclaim by Credit Suisse smacks of cynicism, with page upon page devoted to alleged formal mistakes made in the claim from Mozambique and its perceived sense of inaccuracy.

Credit Suisse on Thin Ice

The bank is treading on thin ice. The question surrounding the state guarantee is based on the signature of ex-Finance Minister Manuel Chang, who manifestly has held a key role in the corruption scandal. The bank also concedes that the loans were excessive and that the minister overstepped his authority – but also says that it wasn’t aware of such a constitutional clause at the time.

Credit Suisse says it knew that there was a corruption in Mozambique but cannot explain why more than $2 billion went directly to Franco-Lebanese billionaire Iskandar Safa’s Privinvest, even though the loan contract had been concluded with the semi-public companies in Mozambique.

Business With High-Risk Client

Safa was known to the Swiss bank. Credit Suisse refused to open an account for him in 2010 because of an elevated risk involved. In the compliance procedure, then Credit Suisse executive Fawzi Kyriakos-Saad had warned of Safa and called him a «Master of Kickbacks».

The lawyers of the bank now say that Safa had been struck off a «Worldcheck»-list of people with elevated risk levels shortly after it had refused to open an account for him and that he had been cleared of wrongdoing.

Pearse – in his Role as Adviser to Mozambique

The bank is guilty of sophistry when it explains why it wasn’t to be held accountable for the fact that creditors of the South-African country had been kept in the dark about other loans. It was Pearse who conducted the restructuring of the Tuna-loan (Ematum) – in his function as the head of Palomar Capital Advisors, a firm he founded together with Privinvest in 2013.

Credit Suisse was aware of his involvement in the loans but didn’t do anything about it, because he had acted in a capacity as adviser to Mozambique.