EFFORTPOST That time when one of the most corrupt and comically evil banks, Credit Suisse, fricked over the Mozambique economy in 2016.

Greetings Dramatards!

Today I wanna talk about Credit Suisse, a slimy bank filled with slimy Swiss bankers with an absurdly long history of corruption. If you know the stereotype of Swiss bankers taking Nazi gold/ gold stolen from slayed jews, then banks like Credit Suisse are the cause of it. Now I'm basically late to the party, but of particular note is that recently the bank Credit Suisse went full FUBAR after a bankrun, and the Swiss Federal Department of Finance, the Swiss National Bank and FINMA have asked Credit Suisse and UBS to enter into the merger agreement, to prevent the total collapse of the entire Swiss economy. An action which has been astronomically controversial and it's likely that in the coming years that Switzerland will endeavor to bring in a large scale Trust busting of this now banking supergiant.

Imagine my surprise when I realized that the recently tanked Credit Suisse is the exact SAME FRICKING bank which had brought ruination to Mozambique's economy only recently. I talked recently about the devastation which the Mozambique Civil War had had upon its people and economy, and it's truly a sense of unfairness that Mozambique had finally recovered only to have Credit Suisse causing them yet more enduring misery. Mozambique was one of the world’s 10 fastest-growing economies for two decades. It was a prime target of donors and a destination for 10–15 percent of total foreign direct investment (FDI) inflows into Sub-Saharan Africa back in 2013.

THE MOZAMBIQUE DEBT SCANDAL:

https://debtjustice.org.uk/blog/the-mozambique-debt-scandal-the-storm-before-the-storm

It took almost 5 years since the discovery of unapproved loans, but in 2022, Credit Suisse was fined £147 million for its role in causing a debt crisis in Mozambique. What is this debt crisis? Lemme tell u.

Way back in 2013, Credit Suisse granted loans to a state-owned Tuna fishing company. Then loans to fund speed boats, then for docks and docking equipment, the idea was to fund and reinvigorate the dwindling Mozambique fishing economy. Many of the loans were subsequently sold on to other Speculators (which are very large financial firms which trade in debts and investments to make money on the interest.) Credit Suisse didn't tell these other Speculators that these were dogshit loans. None of the loans were agreed by the Mozambique parliament – as required under the Mozambique constitution. When they became public knowledge in 2016, it immediately caused a debt crisis in the country.

The sudden discovery of 2 Billion$ of previously unknown debt caused immediate devaluation of Mozambique's currency, and plunged the Metical crashing down, so that the price of imports and basic goods skyrocketed. The World Bank had stated that as a consequence of this secret Debt, 2 million mozambique peeps were put into poverty. "Mozambique campaigners estimate it has collectively cost the country $11 billion - $350 per person - and could cost a further $4 billion more. Between 2015 and 2019, public spending per person in Mozambique was cut in half."

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So what precisely happened? And why did the debt cause devaluation of the Metical?

https://blogs.worldbank.org/africacan/mozambiques-hidden-debts-turning-crisis-opportunity-reform

Around 2013, a corrupt group of Mozambique politicians had created 3 State-owned Enterprises, organizations which were publicaly controlled, and with these 3 shady mint new State Enterprises took on a series of debt totaling more than 2 Billion $, which was around 12% of Mozambique's GDP. Again, allegedly the loans was to fund and build docks, fishing ships and shipyards ect. The loans were supplied by Credit Suisse and other banks like VTB, and BNP Paribas. The loans were kept so secret that at the time, the 3 banks didn't know each other were also lending money illicitly to corrupt offcials, until Mozambique activists and journ*lists blew the lid in 2016.

The sudden awareness by literally everyone, that the country had taken on loans much much larger than their fledgling economy could reasonably expected to repay, cause instant uncertainty. The surprise was surprising to these dipshit risky banks as well, as all 3 of them had their subterfuge obfuscated from each other as well lmoa. "These loans breached the International Monetary Fund (IMF) program in place at the time, and the International Development Association’s non-concessional borrowing policy, resulting in the outright suspension of budget support by both institutions and other development partners." What they are saying here is that the IMF would refuse to give out new loans which was desperately needed by the Mozambique gov for future development, after discovering the existence of at least 1 billion $ loans already within the national accounting books of Mozambique.

Additionally, these Hidden Debts, caused political turmoil and social unrest within Mozambique, as it demonstrated how easily just a few weak links in the Mozambique political structure could so very easily abuse their positions within the government to obtain illicit loans, bribes and tenders. Subsequently, Mozambique’s Attorney-General started proceedings against several Mozambican officials allegedly involved in contracting the loans, and the British financial supervisor pressed charges against the banks like Credit Suisse. This was truly disasterous for the poor Mozambique peeps.

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So why did these corrupt Mozambique Officials take on such vast loans?

These fake shell companies acted as funnels for syphoning off cash secretly from public funds. By taking on loans, they were syphoning off cash not directly from places where accountants or actuaries could notice discrepancies from annual or semester budgets or whatever, and then be instantly caught. Instead, they would fleece off of the loans, and then pay back back the loans secretly from the taxpayers budget. After all paying back a loan is more easy to disguise than explaining to the account wtf a luxury liner is doing on the annual budget sheet.

It's a cute idea, but the corrupt Officials flew too close to the sun, and took too much loans on simultaneously, from different banks, and in secret from each other. So when the lid was prized off of the corruption, and sunlight shone on the rat's nest - both Credit Suisse and the public discovered to their horror that these illicit mega loans had ballooned to over 2 billion $, a massive amount to poor Mozambique.

https://www.bloomberg.com/opinion/articles/2019-01-04/the-legacy-of-credit-suisse-s-mozambique-loan#xj4y7vzkg

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So why did the Bankers like Credit Suisse give out such incredibly risky loans?

It should be noted that the scumfricks in Credit Suisse KNEW about the corruption of the Mozambique Officials they were loaning money for, but the lucrative opportunity of reaping in interest rates behind the back of the Mozambique government like a tapeworm was too much to ignore for the avarice of the Credit Suisse employees in charge for this disaster. What's even more remarkable is that Credit Suisse dropped some of its own regulations to deal with these corrupt Mozambique Officials.

"In 2017 an independent audit revealed that at least $700 million of the $2 billion of loans was unaccounted for. The audit further revealed that Credit Suisse initially said the loans needed to be approved by the Bank of Mozambique, checked by the Mozambique Administrative Court and reported to the IMF. This would have meant far greater scrutiny of the loans, and it is likely they would never have been agreed. However, Credit Suisse dropped this requirement, allowing the loans to be agreed without scrutiny."

WHY DOESN'T MOZAMBIQUE JUST GIVE BACK THE MONEY?

Because so much of the Loans from Banks like Credit Suisse have been stolen, bribed or already frauded via these Mozambique Shell State Enterprises, that only part of the fricking 2 Billion sumtotal loans remain. Mozambique can't just pull out 250 million $ out of its butt. Thus they are stuck with a massive national loan. And none of the objectives of these loans, namely constructing new shipyards and docks, investing in the Tuna fishing industry, have been met. Thus there's no manner in which they may obtain the shortfall naturally in their current economy, and there will be no future mystical Tuna industry to tax to pay back this shit.

Additionally the currency devaluation death spiral caused in 2016, further inhibited their capacity to just swallow the bitter pill and negate these vast loans, with their Metical weakening against the Dollar as confidence in the Mozambique Metical fell and fell.

AFTERMATH:

It was a hideous scandal in the banking world, and International, UK and USA regulators would spring into action the fine Credit Suisse out the butt.

Lol, notice that UK Bank would spend only through private humanitarian NGOs, and would circumvent the corrupt Mozambique Government from hereon.

https://www.theguardian.com/business/2021/oct/19/credit-suisse-fined-350m-over-mozambique-tuna-bonds-loan-scandal

Of the famous 2 Billion $ loaned, Credit Suisse was responsible for 1.3 Billion, so of the 3 banks loaning illicitly, these pondscum were burned by their greed and corruption the most badly.

The FCA said Credit Suisse employees took steps to deliberately conceal the kickbacks, while the bank itself failed to properly manage the risk of financial crime within its emerging markets business, despite having “sufficient information” to appreciate the likelihood of bribery related to the government projects. “Credit Suisse was aware Mozambique was a jurisdiction where the risk of corruption of government officials was high and that the projects were not subject to public scrutiny or formal procurement processes,” the FCA said. “Time and again there was insufficient challenge within Credit Suisse, or scrutiny and inquiry in the face of important risk factors and warnings,” the regulator added.

Credit Suisse will pay $275m to US regulators and £147m to the FCA to settle the case. UK regulators said the figure would have been higher had the lender not agreed to forgive $200m worth of debt owed to the bank by Mozambique. “The FCA’s fine reflects the impact of these tainted transactions which included a debt crisis and economic harm for the people of Mozambique,” the FCA’s executive director of enforcement and market oversight, Mark Steward, said.

https://www.wsj.com/articles/credit-suisse-to-pay-475-million-admits-defrauding-investors-to-settle-mozambique-charges-11634679537

Mozambique is screwed:

https://www.dailymaverick.co.za/article/2021-02-09-credit-suisse-an-enabler-of-mega-looting-in-mozambique/

Mozambique is in no position to pay back the loans to Credit Suisse and VTB. It has already defaulted on part of the $2.2-billion in loans related to the tuna fishing project. A coalition of 20 civil society groups, the Mozambique Budget Monitoring Forum (FMO), has sought to declare the secret loans illegal. Despite the FMO winning a case in Mozambique’s Constitutional Court to have the Ematum loan declared illegal, Mozambique’s government is still repaying the loan.

Adriano Nuvunga, coordinator of the forum, said in a statement: ‘The people of Mozambique had no say over, and no benefit from the loans, and should not have to repay one cent.” Moreover, in the past two years, the country has been ravaged by two cyclones and an insurgency in the north of the country which has deepened poverty and suffering. More than 200,000 Mozambicans have been displaced by the conflict and 700,000 Mozambicans are in need of humanitarian assistance. In general, 70% of Mozambicans live in poverty and it is ranked 181 out of 189 nations on the UN’s Human Development Index.

Mozambicans desperately need aid, and unlike in previous years, the IMF is encouraging social spending in the face of Covid-19. However, Mozambique’s debt makes this almost impossible as austerity measures have been put in place in the country in order to finance its large debts. Mozambicans are the victims of unscrupulous politicians and predatory banks. (From the Daily Maverick Article)