UK watchdog bans ex-Credit Suisse bankers over tuna bond bribes | USAEMALL.com

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The UK financial watchdog has banned two former Credit Suisse bankers from working in the sector almost six years after they pleaded guilty to accepting bribes linked to $2bn of “tuna bonds” they arranged for Mozambique.

The Financial Conduct Authority’s decision to ban managing directors Andrew Pearse and Surjan Singh is the latest twist in one of Africa’s biggest corruption scandals, which started over a decade ago, wrecked Mozambique’s finances and contributed to the collapse of one of Switzerland’s largest banks.

Pearse and Singh are facing criminal proceedings in the US for their roles in the alleged conspiracy to commit money laundering and wire fraud after they admitted accepting at least $52mn in illegal bribes linked to loans they lined up for Mozambique.

The FCA said on Tuesday it had banned the duo for “lacking integrity, following US convictions for arranging corrupt loans to the Republic of Mozambique”. Neither of the men took up the option to appeal against their ban.

“There is no place in our markets for those who engage in bribery and corruption,” said Steve Smart, joint executive director of enforcement and market oversight at the FCA. 

The FCA fined Credit Suisse £147mn for serious financial crime due diligence failings over the Mozambique bonds in 2021, when it also secured an agreement by the bank to forgive $200mn of the outstanding debt.

The authority said it was aware of the two men’s guilty pleas in 2019 but decided to await their sentencing “in order to take the judge’s sentencing remarks into account”. While they are yet to be sentenced, the FCA said it decided “it is now appropriate to proceed with its action” after the duo gave evidence last year in the US criminal case. 

Credit Suisse has previously blamed Pearse and Singh for circumventing the bank’s compliance rules along with Detelina Subeva, who has pleaded guilty to receiving kickbacks from the Mozambique bonds.

The tuna bonds case stems from a 2013 deal for Mozambique, one of the world’s poorest countries, to borrow from international investors ostensibly to fund maritime projects, including a state tuna fishery, ahead of investments in offshore gas. 

Credit Suisse helped arrange $2bn of loans and bond issues, which were partly concealed from the IMF and other donors to the country. When the loans were discovered in 2016, the IMF and international donors cut off support for Mozambique’s government budget, triggering a slowdown for what was one of Africa’s fastest-growing economies. 

Auditors later found that $500mn of the money raised by the loans could not be accounted for and that the companies behind the debt paid over the odds for equipment. 

Mozambique’s former finance minister Manuel Chang was sentenced earlier this year to eight and a half years in prison by a US judge for his role in the fraud.

Controversy over the Mozambique bonds was one of several high-profile scandals that besmirched Credit Suisse’s reputation by revealing systemic failures in risk management, contributing to a loss of confidence that ultimately led to the bank’s takeover by rival UBS.

Pearse is due to be sentenced soon in a US court, where prosecutors have asked the judge for clemency on the basis that he “was the government’s Rosetta Stone” for cracking “this complex international fraud and bribery scheme”.

“Without Mr Pearse’s guilty plea and co-operation with the government, no global resolution would have been possible,” they added. As part of his co-operation with authorities, Pearse forfeited to the US a vineyard in South Africa, interests in Polish gasfields worth up to $40mn, and a stake in an Australian quartz mine worth about $2.3mn. The US has sold the vineyard for $1.4mn.

“I helped create projects that made an economic crisis in Mozambique worse than it would otherwise have been. Your Honour, I am truly sorry — I will never get over the guilt and shame that I feel,” Pearse wrote to the judge last month.

“I was motivated by greed and in doing so, I have become the poster child for greedy, immoral bankers,” he added. “I had the opportunity to say no at every turn, but instead I said yes.”

Rupert Butler, a lawyer at Leverets who represents both Pearse and Singh, said they declined to comment.

UBS declined to comment.