Credit Suisse Group AG is nearing an agreement with the U.S. government that would resolve a criminal probe regarding its role in a U$2 billion Mozambique bond scandal, according to people familiar with the matter.
The discussions with the U.S. Justice Department involve a deferred prosecution agreement that would include a fine, according to the people, who asked not to be identified because the talks are confidential. An agreement is expected to be announced Tuesday.
Any deal with U.S. prosecutors would be the latest action in a multi-year, international legal saga arising out of the 2013-14 deals that were supposed to fund a new coastal patrol force and tuna fishing fleet in Mozambique, one of the world’s poorest countries.
In a 2018 indictment, the U.S. Justice Department alleged the contracts were a front for government officials and bankers to enrich themselves.
Three former Credit Suisse bankers have pleaded guilty to U.S. charges stemming from the scheme.
Credit Suisse declined to comment on any agreement, as did the U.S. Justice Department.
A deal could help put to bed one scandal, even as the bank has been punished this year by investors for its stumbles with Archegos Capital Management and Greensill Capital, which have spurred broad management shakeups.
Mozambique has filed suit against Credit Suisse and shipbuilder Privinvest, one of several cases in U.K. courts that involve the bond deal.
In defending its London lawsuit, Credit Suisse has insisted that it was deceived by rogue bankers and couldn’t be held responsible for their “unlawful conduct” when it arranged the loans in early 2013.
The Swiss bank has said it carried out its usual due diligence before the transactions and was aware of the risk of bribery and corruption.
Andrew Pearse, who led the global financing group in the bank’s London office, testified at a federal trial in Brooklyn, New York that he’d pocketed at least U$45 million in illicit payments for his role in the arrangement of the loans.
The Credit Suisse loans were for three separate maritime projects including a tuna fishing fleet, the building of a shipyard and surveillance operation to protect Mozambique’s coastline and protect against pirates, according to Pearse.
Mozambican government officials, corporate executives and investment bankers stole about U$200 million, prosecutors said.
Both Pearse and his successor at the bank, Surjan Singh, who also pleaded guilty, testified at the 2019 trial of Jean Boustani, a Privinvest Group executive accused by the U.S. of being behind the plan to get Mozambique to borrow billions of dollars and overpay for dubious maritime projects.
A third banker, Datelina Subeva, Pearse’s subordinate, also pleaded guilty but didn’t testify.
All three bankers await sentencing. After a six-week trial in late 2019, a federal jury cleared Boustani of all charges.