Credit Suisse is more transparent than many other major banks when it comes to lending to poor countries, yet it was unable to prevent the Mozambique «tuna bonds» scandal. Another round has begun in the legal dispute.
In the US, the trial of Mozambique's former finance minister, Manuel Chang, began on Thursday. Credit Suisse is involved in the corruption and credit drama known as the «tuna bonds» scandal.
It was among the banks that arranged $2 billion in loan financing between 2013 and 2016 for the expansion of Mozambique's shipping fleet and tuna industry, among other projects. But the money seeped into an elaborate bribery and kickback scheme, US authorities allege.
As a result, the African country was plunged into a severe financial crisis, with the case becoming a cautionary tale about the hidden risks of lending to poor countries.
Hidden Credit Risks
Apart from this legal dispute, however, the Swiss bank is now distinguished by its transparency in lending to emerging countries, according to a «Bloomberg» (behind paywall) report citing the study «Hidden billions: The secrecy of bank loans to governments». The British non-profit organization Debt Justice, says Credit Suisse is one of the few global banks that publicly discloses some of its lending to poor countries, while the rest of the industry remains silent.
Debt Justice examined several sets of data from the past half-decade and the first half of 2023. The only other bank to provide similar data was Japan's Mitsubishi UFJ Financial Group, a major Japanese bank, the analysis found.
Under Wraps
According to the researchers, global banks have kept about $37 billion in loans to sovereigns in developing countries under wraps since 2021. The opacity stems from 2019 guidelines known as the Voluntary Principles for Debt Transparency, endorsed by global banks and enforced by the Institute of International Finance.
The goal of the principles was to monitor the relationship between poor countries and their creditors to promote sustainable lending and fight corruption. However, in total, global banks have disclosed only $2.9 billion in loans since the voluntary principles were adopted, according to Debt Justice.
Research by the UK-based organization, shows some 19 banks withhold information about loans to fragile states, including Standard Chartered, Société Générale, and Deutsche Bank.
