Three former Credit Suisse Group bankers were arrested in London this week following U.S. fraud charges related to their involvement in $2 billion loans to state-owned companies in Mozambique.
The implicated bankers are New Zealander Andrew Pearse, Britain’s Surjan Singh, and Bulgarian Detelina Subeva, according to Reuters.
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The trio was charged in a federal court in Brooklyn, New York, with conspiring to violate U.S. anti-bribery law and to commit money laundering and securities fraud, in a case involving a secret $2 billion loan.
The three former Credit Suisse employees have been released on bail in the English capital while the U.S. seeks extradition.
Former Mozambique finance minister Manuel Chang was arrested in South Africa five days prior to the arrest of the bankers as part of the same case, according to IOL.
He was on his way to Dubai when he was arrested in Johannesburg on Dec. 30, and is now waiting to find out if South African courts will extradite him to the U.S.
In addition to the initial arrests, a Lebanese citizen named Jean Boustani, was arrested at New York’s John F. Kennedy Airport. Boustani worked for an Abu Dhabi-based shipbuilder, Privinvest, which was contracting for the Mozambican state-owned companies, according to DailyMaverick.
The case involves the creation of three state-owned companies that were supposed to undertake maritime projects for the benefit of Mozambique. These were actually money laundering fronts for Chang, Boustani and the three bankers to enrich themselves with public funds, the 47-page indictment reveals, according to NewBusiness.
The three state-owned companies borrowed more than $2 billion in secret through loans guaranteed by the government between 2013 and 2016. These were arranged by Credit Suisse and Russian state-owned bank VTB Capital.
Prosecutors said at least $200 million ended in the hands of the defendants and other Mozambican government officials as bribes and kickbacks. The defendants hid the corruption and misuse of funds while misleading investors, including some in the U.S., about Mozambique’s creditworthiness, Marketwatch reports.
Chang, the then finance minister, signed off on the guarantees at the time, but did not disclose them as required.
This week Mozambique’s attorney general’s office announced that it is indicting 18 citizens for their involvement in the case, according to AFR.
The 18 Mozambicans include public workers and other citizens who are charged with abuse of power, abuse of trust, swindling and money laundering.
The scandal appears to have been a trigger for Mozambique’s crippling debt crisis. The irregularities in the loan led to a breakdown in trust between Mozambique and its creditors, causing the International Monetary Fund and the World Bank to suspend all financial aid to the country, according to WorldFinance.
This produced the debt crisis, which saw the debt-to-GDP ratio reach an estimated 125 percent at the end of 2016, while the local currency, the metical, registered a 40 percent devaluation against the U.S. dollar and inflation saw a 10-fold increase to 19.8 percent, according to the African Development Bank.
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