Switzerland’s federal prosecutors have initiated legal action against both Credit Suisse and its new owner, UBS, in connection with the notorious “tuna bonds” scandal. This case dates back nearly a decade and has had a profound impact on the economy of Mozambique. The Swiss Attorney General’s office announced on Monday that it has filed money laundering charges against an unnamed employee of Credit Suisse, while also holding both banks accountable for their roles in the scandal.
The prosecutor’s office highlighted significant “organizational deficiencies” in the banks that contributed to the failure to prevent misconduct. According to the announcement, suspicious transactions linked to the scandal were not reported until 2019, following the U.S. Department of Justice’s declaration of its own criminal investigation. The Attorney General’s office noted that “in 2016, considerable defects existed in the companies’ risk management, compliance and internal directives systems in connection with combating money laundering.”
Background of the Tuna Bonds Scandal
The tuna bonds scandal revolves around loans totaling approximately $2 billion that Credit Suisse arranged for the Republic of Mozambique between 2013 and 2016. These loans were purportedly intended to finance government-sponsored projects, including maritime security initiatives and a state tuna fishery in the capital, Maputo. However, a significant portion of the funds remains unaccounted for, with investigations revealing that one contractor involved in the projects facilitated “significant kickbacks.” These kickbacks amounted to at least $137 million, which included $50 million designated for bankers at Credit Suisse to secure more favorable loan terms, as reported by the Financial Conduct Authority.
The fallout from this scandal was severe. The International Monetary Fund (IMF) suspended its assistance to Mozambique, triggering a widespread economic crisis in the country. A settlement was reached in 2021, with Credit Suisse paying $275 million to U.S. regulators and £147 million to the UK’s Financial Conduct Authority.
In October 2023, UBS also agreed to settle its case related to the tuna bonds scandal with Mozambique, just prior to a trial scheduled in London. Mozambique has been pursuing $1.5 billion in damages due to the economic fallout following the withdrawal of financial support from the IMF and international donors.
Legal Implications for Credit Suisse and UBS
The Attorney General’s office accused Credit Suisse and UBS of failing to implement necessary organizational measures during the critical period in 2016 to prevent the alleged money laundering activities. This comes on the heels of Credit Suisse’s forced sale to UBS in an emergency deal orchestrated by Swiss authorities in March 2023. The acquisition was prompted by a crisis of confidence that led customers to withdraw funds from Credit Suisse amid a broader banking crisis that initially affected U.S. lenders.
As the situation unfolded, panic increased regarding Credit Suisse’s stability, particularly after its largest shareholder, Saudi National Bank, ruled out any further financial assistance. The subsequent lack of trust prompted Swiss authorities to extend emergency loans to Credit Suisse, which ultimately resulted in its acquisition by UBS for 3 billion Swiss francs. This takeover has left UBS responsible for managing the legacy scandals of its predecessor, Credit Suisse.
In response to the legal developments, UBS stated, “We firmly reject the office of the attorney general’s conclusions and will vigorously defend our position.” This statement underscores the banks’ intent to contest the allegations and protect their reputations amid a complex and evolving legal landscape.
As the case progresses, the impact of the tuna bonds scandal continues to resonate, affecting not only the financial institutions involved but also the broader economic stability of Mozambique.
