Former Credit Suisse banker pleads guilty over Mozambique loans

Former Credit Suisse banker Andrew Pearse has pleaded guilty to taking millions of dollars in kickbacks on three loans he helped arrange to three state–owned companies in Mozambique. The loans have triggered a debt crisis in the Southern African country. Pearse was arrested in January in the UK as part of a US investigation into the case. On Friday he pleaded guilty in New York to one count of wire fraud conspiracy.

In June, following a case lodged by the Mozambique Budget Monitoring Forum, the Mozambique Constitutional Council ruled one of the three loans illegal under Mozambique law.

Commenting on the latest developments, Sarah-Jayne Clifton, Director of Jubilee Debt Campaign:

“Two of the bankers involved in the loans have now pleaded guilty, and the Mozambique Constitutional Council has ruled that at least one of the loans was illegal. The people of Mozambique should not have to pay one cent on these debts. While individuals are now being held to account, the UK authorities must now act rapidly to ensure that the banks as institutions are also held responsible for their role in plunging Mozambique into debt crisis.”

The three loans were arranged by the London-based branches of Credit Suisse and VTB Capital. Despite this UK link, no UK regulator or crime enforcement agency has yet to take any action against Credit Suisse or VTB. The US has also so far failed to take any action to hold the banks themselves, rather than individuals, to account. In May campaigners from the Budget Monitoring Forum in Mozambique came to London to call on UK authorities to hold Credit Suisse and VTB to account.

Campaigners from the Mozambique Budget Monitoring Forum and Jubilee Debt Campaign outside the UK Treasury in May 2019.

The three loans are all in default. Of the three:

  • The Mozambique government reached an in principal agreement to restructure the Ematum loan, originally arranged by Credit Suisse and VTB. However, after Mozambique’s Constitutional Council ruled the loan illegal, the Mozambique government said that attempts to renegotiate the Ematum bonds had stopped and the government was taking advice from international and constitutional lawyers.
  • The Mozambique government has lodged a case at the High Court in London seeking to declare the Proindicus loan, arranged by Credit Suisse and VTB, void.
  • It has been reported that the Mozambique government is close to reaching a restructuring deal with VTB on the MAM loan. Only VTB, not Credit Suisse, was involved in the MAM loan.

In May Detelina Subeva, another former Credit Suisse banker who worked on the deals, also pleaded guilty, to money laundering conspiracy, in New York. A third Credit Suisse banker, Surjan Singh, is facing extradition from the UK to the US. Jean Boustani, who worked for the contractor Privinvest, is under arrest in New York.

The former Mozambique Finance Minister, Manuel Chang, was arrested in South Africa in January. Both the US and Mozambique are seeking his extradition. On his last day in office in May the South African Minister of Justice Michael Masutha agreed to extradite him to Mozambique. The Budget Monitoring Forum asked for this decision to be reviewed. New South African Justice Minister Ronald Lamola has agreed, and Chang remains in South Africa.

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