Credit Suisse’s complicity in the $2.4 billion corruptly lent to the Mozambican government dampened festivities at its April 26 annual shareholders’ meeting. While shareholders celebrated receipt of a fat dividend, a representative from Mozambique reminded them that some of this money comes at the expense of the citizens of Mozambique – 28 million persons, most desperately poor, saddled with repaying loans foisted off on their government through corruption. Three senior Credit Suisse employees have been indicted for their role in the scheme, one Credit Suisse management (rewarded with a hefty pay hike at the meeting) claims cleverly circumvented its controls preventing unlawful deals.
The statement to shareholders, delivered by a representative of the civil society organization Fórum de Monitoria do Orçamento (FMO, budget monitoring forum in English), asks Credit Suisse to support restorative justice to atone for its role in the Mozambican debt crisis. To this end, Credit Suisse is asked to: i) accept accountability for its actions in the debt issue; ii) commit to return to Mozambique all proceeds from the Mozambican Illegal debt scandal; iii) collaborate with authorities to ensure that all responsible parties are held accountable for their roles in the scandal; iv) write off outstanding debt arising out of debt crisis; and v) help ensure the people of Mozambique do not have to make good on debts they had no part in incurring and which did nothing to benefit them.
Full text below; video here (at 2:18:50 – 2:28).
- Chairperson, we appear at this Annual General Meeting (AGM) on behalf of millions of Mozambican people, the real victims of the multibillion-dollar illegal debt scandal involving Credit Suisse. We, the Budget Monitoring Forum (FMO), a coalition comprising 21 civil society organizations working on transparency and accountability of public finance and with a constituency of over 4 million people in Mozambique, are cognisant that the Mozambican debt crisis is a direct result of fraudulent and illegal collusion between Credit Suisse, contractors, and Mozambican Government officials, which consciously and intentionally acted to cause harm to an already weakened Mozambican society and economy, and triggered a macroeconomic and social crisis in the country.
- Last month, close to a thousand Mozambican people were killed by Cyclone Idai, a climate related natural disaster that had its origins elsewhere. Many more casualties can be expected from Cyclone Kenneth, which reached Mozambique as we speak. Various organizations, IMF, UN, WORLD BANK, estimate that climate relate disaster recovery will cost more than $2 Billion Dollars, almost the same amount as the illegal debt scandal – which according to the charges brought by the U.S. Justice Department – was orchestrated by various parties including former Credit Suisse Bankers who “were agents acting within the scope of their employment on behalf of Investment Bank 1, with the intent, at least in part, to benefit Investment Bank 1”. That Credit Suisse did not have sufficient controls in place to prevent these employees from committing multiple acts of fraud and corruption, did not report these officials to authorities, even when the wrongdoing was established, shows a shocking failure on the part of its management. One that shareholders must not and cannot ignore.
- Credit Suisse has continued to act as an advisor to investors holding Mozambican debt and has sought payments on the portion of the debt it still owns. We are dismayed that, after having failed to demonstrate robust systems and processes, Credit Suisse continues this mandate without addressing the glaring conflict of interests, given its role in the illegal At the very least, FMO would have expected Credit Suisse to have offered to return the fees made from the transaction.
- The debt crisis exacerbated economic vulnerabilities as donors and other development partners withdrew in response to the growing evidence of illegal and criminal conduct by the banks and Mozambican government officials involved in the fraud which pushed Mozambican people deeper into poverty. People are dying due to lack of water and sanitation, luck of medicines in hospitals and millions of pupils don’t have access to books and quality education.
- The US indictment lays bare various instances where Credit Suisse’s internal controls to prevent bribery, money laundering and other financial crimes and conflicts of interests where wholly inadequate and ineffective. Some glaring examples include instances where the deal team managed to alter terms and conditions, without the legal team signing off changes. The ability of the deal team to circumvent compliance team requirements also points to weak internal systems and governance. Combined, these actions contributed to one of the most damaging sovereign debt crisis in the world.
- Chairperson, the Credit Suisse culture as exhibited during the Mozambican debt transaction and its aftermath is the reason why the Bank shares continue to underperform. Shareholders are reminded that between 2009 and 2018, violations of US Federal Laws have cost Credit Suisse close to USD 9 billion. That is value lost to shareholders. These range from fines for corruption, tax and securities fraud and sanctions violations. All these regulatory failures have destroyed shareholder value.
- Irresponsibility and recklessness have a history at Credit Suisse. Like the Mozambican people, Credit Suisse shareholders pay the price for systemic failures and poor governance culture within the bank.
- Unlike the Mozambican people, Credit Suisse shareholders have sufficient instruments to mitigate against future damaging conduct. FMO is calling on shareholders to use their influence to address conduct, which if is allowed to continue unabated, can erode all value in Credit Suisse, destroying long term viability of the bank.
- Shareholders should ask why the Credit Suisse Board has failed to provide adequate disclosures about the Mozambican debt scandal. Additionally, failure of Credit Suisse to adequately provision for risks arising from the Mozambican debt suggest a culture of misstating risks and failing to manage such risks. As shareholders, this AGM should demand answers from the Board.
- FMO is embarking on global action on behalf of Mozambican people to get a fairer outcome in the aftermath of the illegal debt crisis, and to avert a further humanitarian crisis. We therefore ask, Mr Chairperson that:
Credit Suisse to cancel all outstanding obligations by Mozambique, as various criminal, administrative and judicial enquiries provide clear evidence of system wide failures by the Bank.
Credit Suisse cooperates with regulators and authorities to ensure that all responsible parties are held accountable for their role in the $2.4 billion illegal debt scandal. This means full transparency on the genesis of the illegal debts.
Credit Suisse returns, with immediate effect, all proceeds with interest, from the Mozambican debt crisis. At the very least, the monies would be useful in saving thousands of lives as the international community mobilises relief efforts after the climate related disasters. It is rather striking that the IMF announced $118 million emergency package in response to Cyclone Idai humanitarian crisis is far less than the fees generated by Bank from the criminal, illegal debt transactions.
Credit Suisse works with authorities in Mozambique and elsewhere to see that through the return of the proceeds and damage payments the people of Mozambique are not saddled with paying back a debt that provided them no benefit whatsoever.
We believe that continued shareholding without conditionality, would imply that shareholders are complicit to the harmful conduct of the bank and its consequences to the people of Mozambique. We truly believe your ethical and moral values will speak volume on behalf of the people of Mozambique. The realisation of economic, social and cultural rights in Mozambique should not be jeopardised by the servicing this particular ‘illegal loan’. FMO continues to lead various initiatives across multiple jurisdictions to hold responsible parties accountable for their role in the illegal debt crisis. Mozambicans and international civil society is watching both Credit Suisse and its shareholders closely to ensure that they act responsibly going forward.
Mr Chairperson, FMO invites all Credit Suisse shareholders and the Board to join our efforts towards a sustainable solution to the Mozambican Debt Crisis. We are available to welcome all interested parties to Mozambique to witness firsthand, the true cost of poor internal systems and processes.
Pingback: This Week in FCPA-Episode 152 – the Farewell to Chewbacca the Wookie edition - Compliance ReportCompliance Report