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Alexandra Wrage
President and Founder, TRACE


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Nicola Bonucci 
International Lawyer and former
Director for Legal Affairs OECD
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Dave Lee
FCPA Compliance Consultant, TRACE
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Sunny McCall
Senior Director II, Compliance Training, TRACE
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Lee Nelson
Independent Compliance and
Ethics Attorney
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Jessica Tillipman
Associate Dean for Government Procurement Law, The GW University Law School
  • Writer's pictureDave Lee

A Four-Part Series: Part 4 - Hook, Line and Sinker: The aftermath

Mozambique flag

Less than three years after Credit Suisse and the London-based investment banking arm of Russia’s VTB Group first arranged financing in connection with Mozambique’s tuna venture, it became clear that Ematum would not be able to pay off its debt. Although the banks had found other investors to fund some of these loans, they still held much of these risky bets on their own balance sheets.

Needing a way to get some of these bad loans off their own books, or at least to buy time, the banks in 2016 helped convert these debts into bonds that could be could later be traded on the open market – and covered up key details to get it done. (This fraud would later act as the core of US and UK regulatory actions against the banks.)

But the conversion also brought in public scrutiny, and the hidden debts quickly came into view. The reaction was swift and decisive. Donors and multinational organizations cancelled direct budget support and other aid to the government – a reduction of $831 million in 2016 compared to the year before, leaving unpaid bills and a major currency devaluation in its wake. In four years, Mozambique would lose more than $10 billion from its economy, according to a report by Norwegian research institute CMI.

Not surprisingly, a web of commercial litigation ensued. The disputes were largely between Mozambique, Credit Suisse, VTB, and Privinvest, the shipbuilder accused of orchestrating the bribery scheme.

By the end of 2023, Mozambique and Credit Suisse had reached a settlement in their dispute. Although the specific terms were not disclosed, a subsequent International Monetary Fund report revealed that the ProIndicus debt was largely resolved: Credit Suisse’s successor waived an outstanding debt of around $450 million from ProIndicus, and Mozambique would pay about $140 million to all other creditors except VTB.

And while Mozambique’s own top court has ruled the Ematum bonds to be illegal, Mozambique has indicated that it will continue to honor payments on them, so as not to jeopardize its credit rating.

What remains in dispute is the repayment of roughly $650 million in loans that VTB arranged for ProIndicus and MAM, and held largely on its own books. VTB has sued to collect on the loan, and will likely face allegations that it knew (or should have known) of the same red flags Credit Suisse ignored; it may also need to address allegations that its own employee accepted bribes in connection with the loans.

In addition, Mozambique is pursuing $3.1 billion in claims against Privinvest in British courts. Although a Privinvest employee was acquitted of U.S. fraud and money laundering charges in 2019, the case was not about whether Privinvest paid any bribes, but about whether such activities has a sufficient nexus to the United States.

No matter the result, it appears unlikely that any of those parties will come out as “winners.” Ironically, only the investors in the Ematum bonds – the ones that Credit Suisse and VTB defrauded in 2016 – may end up ahead.

FCPA Compliance Consultant, TRACE



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