Credit Suisse has only agreed to forgive 170 million euros of "hidden debts" to Mozambique and will pay a fine of more than 200 million euros for irregularities in loans Mozambiqueannounced the British Financial Conduct Authority.

In a statement issued Tuesday, the Financial Conduct Authority (FCA) concluded that Credit Suisse committed failures in the due diligence [due diligence] processes that accompany financial transactions by institutions.

According to the FCA, the bank "failed to adequately manage the risk of financial crime in its emerging market business" between October 2012 to March 2016 as it knew about the corruption risk in Mozambique. 

"It had sufficient information from which it should have recognized the unacceptable risk of bribery associated with the two Mozambican loans and a bond swap related to [Mozambican] government-sponsored projects," he criticizes.

In addition to the "high" risk of corruption of government members and officials, and the lack of transparency in the contracting processes of the projects, he says that the contractor hired by Mozambique is known as a "master of bribery.

Although it does not name the shipping group Privinvest, the FCA believes that the contractor responsible for supplying boats and other equipment "paid significant bribes estimated at more than $50 million" to Credit Suisse officials to obtain loans on more favorable terms.

"Although Credit Suisse employees took steps to deliberately conceal the bribes, the warning signs of potential corruption should have been clear to Credit Suisse's senior control officers and committees," the regulator stresses. 

The FCA's fine is part of an approximately $475 million settlement agreement involving the U.S. Department of Justice, the U.S. Securities and Exchange Commission, and the Swiss Financial Market Supervisory Authority (FINMA). 

"The FCA took into account Credit Suisse's commitment to forgive $200 million of the Republic of Mozambique's debt when determining its financial sanction," it adds. 

In light of this decision and the bank's cooperation with the investigation, the FCA decided to reduce the final fine of £174 million by 30%.

"The FCA's fine reflects the impact of the tainted transactions, which included a debt crisis and economic harm to the people of Mozambique. The fine would have been larger had Credit Suisse not agreed to the debt reduction," said FCA Executive Director of Enforcement and Market Supervision Mark Steward. 

The Mozambican state's hidden debts of about $2.2 billion were incurred between 2013 and 2014, in the form of loans with the British subsidiaries of the investment banks Credit Suisse and VTB, on behalf of the Mozambican state-owned companies Proindicus, Ematum and MAM.

The financing was for the purchase of tuna fishing boats and maritime safety equipment and services provided by the shipping group companies Privinvest.

Lawsuits are underway in the UK and Mozambique to try to cancel part of the debts and obtain compensation to cover all the losses resulting from the hidden debt scandal.

Lusa Agency