Mozambique’s Hidden Debt Scandal: Noose Tightening Around Credit Suisse and Privinvest?

Mozambique has sustained enormous damage thanks to the “hidden debt” scandal.  The 2016 revelation the government had guaranteed $2.2 billion in loans for projects of little or no value led donors to freeze disbursements, slamming the brakes on the economy and leaving many stuck in poverty.

Press accounts and indictments issued in Mozambique and the United States blame the scandal on Jean Boustani, an executive with Privinest, a Middle Eastern shipbuilding firm; three now ex-employees of Swiss banking giant Credit Suisse; and Mozambican officials Boustani and the bankers allegedly bribed. Privinvest has denied involvement in the scheme as has Boustani. Credit Suisse claims the employees evaded its elaborate controls meant to keep it from becoming enmeshed in such schemes.

Thanks to a surprise development Monday, Privinvest and Credit Suisse may find it harder to continue ducking responsibility for the corrupt, fraudulent scheme and the massive harm it inflicted on Mozambique.  Detelina Subeva, one of the former Credit Suisse employees named in the U.S. indictment, confessed her involvement in the scheme to the judge handling the U.S. case.  According to Bloomberg, in admitting wrongdoing she told the court:

“I agreed with others to help launder the proceeds of criminal activities, namely illegal kickbacks paid by a company named Privinvest and its representative, Jean Boustani. . . . I agreed to accept [my cut from the deal] and keep these monies knowing that they were proceeds of illegal activity.”

Subeva’s claim that Privinvest paid “illegal kickbacks” is the first evidence to surface implicating it. The speculation is that Subeva has agreed to cooperate with prosecutors in return for a lesser sentence.  If she can provide American prosecutors with texts, e-mails, or other material to corroborate the claim, Privinvest may soon find itself answering U.S. charges.

Subeva may also have information of interest to bank regulators in the United States and Europe.  Just how was it that she and her Credit Suisse cohorts were able to circumvent the bank’s antimony laundering controls?  Were they that clever?  Or was bank management incompetent?  Negligent?  Or too interested in the profits their deals were generating to ask questions?  If Credit Suisse’s “they were so clever” defense doesn’t stand up, it could be fined millions, if not billions, of pounds, euros, and dollars and in the worst case be barred from doing business in some major markets.

Most importantly, what Subeva knows could help the government and people of Mozambique recover damages from the two companies for the massive harm the debt scandal has caused. UNCAC offers the government and its citizens several options.  Her plea makes it urgent they be carefully assayed and an action plan developed.

2 thoughts on “Mozambique’s Hidden Debt Scandal: Noose Tightening Around Credit Suisse and Privinvest?

  1. Pingback: This Week in FCPA-Episode 155 – the Memorial Day edition | The Compliance Podcast Network

  2. Pingback: This Week in FCPA-Episode 155 – the Memorial Day edition - Compliance ReportCompliance Report

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