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October 19, 2021 at 03:11 PM
What You Need to Know
- The scheme involved two bond offerings and a syndicated loan that raised funds on behalf of state-owned entities in Mozambique.
- Credit Suisse agreed to pay disgorgement and interest totaling more than $34 million and a penalty of $65 million to the SEC.
- Offering materials created and distributed to investors by Credit Suisse hid the underlying corruption, the SEC said.
Credit Suisse Group AG agreed Tuesday to pay nearly $475 million to U.S. and U.K authorities, including nearly $100 million to the Securities and Exchange Commission, for fraudulently misleading investors and violating the Foreign Corrupt Practices Act.
The scheme involved two bond offerings and a syndicated loan that raised funds on behalf of state-owned entities in Mozambique.
According to the SEC’s order, these transactions, which raised over $1 billion, were used to perpetrate a hidden debt scheme, pay kickbacks to now-indicted former Credit Suisse investment bankers along with their intermediaries, and bribe corrupt Mozambique government officials.
The SEC’s order finds that the offering materials created and distributed to investors by Credit Suisse hid the underlying corruption and falsely disclosed that the proceeds would help develop Mozambique’s tuna fishing industry. Credit Suisse failed to disclose the full extent and nature of Mozambique’s indebtedness and the risk of default arising from these transactions.
The SEC’s order also finds that the scheme resulted from Credit Suisse’s deficient internal accounting controls, which failed to properly address significant and known risks concerning bribery.
“When it comes to cross-border securities law violations, the SEC will continue to work collaboratively with overseas law enforcement and regulatory agencies to fulfill its Enforcement mission,” said Gurbir Grewal, director of the SEC’s Division of Enforcement in a statement. “Our action against Credit Suisse today is yet another example of our close and successful coordination with counterparts in Europe and Asia.”
Anita Bandy, associate director of the SEC’s Division of Enforcement, added in the statement that Credit Suisse “provided investors with incomplete and misleading disclosures despite being uniquely positioned to understand the full extent of Mozambique’s mounting debt and serious risk of default based on its prior lending arrangements. The massive offering fraud was also a consequence of the bank’s significant lapses in internal accounting controls and repeated failure to respond to corruption risks.”
