Spies and lies: regulators revolve around Credit Suisse

  • Credit Suisse fined for corrupt Mozambique loans
  • Swiss regulator said espionage was more widespread than thought
  • Scandals revive Swiss push for banking reform

ZURICH / FRANKFURT, Oct. 20 (Reuters) – Credit Suisse misled authorities by spying on staff and lied to investors about a corrupt loan in Mozambique, regulators said, painting a grim picture of cultural decline from the World Bank.

The heavy fines announced Tuesday evening by British and American regulators in the Mozambique affair as well as a rare reproach from Swiss regulators over the espionage affair mark an ebb for a Swiss bank that was once a pillar of the economy .

Credit Suisse, which appointed veteran banker Antonio Horta-Osario as chairman in April to stop the rot, said in response it condemned espionage and had taken “decisive” steps to improve its governance and strengthen conformity.

Nevertheless, the scandals, coupled with the heavy losses due to the collapse of the American family office Archegos and the blow to the bank’s customers by the disappearance of the British financier Greensill, sparked a debate on the strengthening of Swiss banking controls.

“The scandals expose a cultural problem,” said Gerhard Andrey, a Green Party member of the Swiss parliament who is pushing for tighter regulations. “We need more power to tackle the senior executives of these banks, who always come out of such scandals unscathed.”

Vincent Kaufmann, managing director of Swiss investment adviser Ethos, on Wednesday called on Credit Suisse to recover the bonuses paid to managers involved in the various scandals and to consider taking legal action against them.

On Tuesday, Credit Suisse was penalized by $ 547 million by UK and US regulators for secret loans to Mozambique, the discovery of which prompted donors to withdraw support for the southern African country and triggered its economic collapse. .

The US Department of Justice (DOJ) said Credit Suisse hid the true nature of the loans, which were intended to pay off a tuna fishing fleet, including paying $ 200 million in bribes. to its bankers and government officials in Mozambique.

“Credit Suisse, through its UK subsidiary, has embarked on a worldwide criminal conspiracy to defraud investors,” US Attorney Breon Peace said in the DOJ statement.

The DOJ said Credit Suisse is expected to pay UK and US regulators $ 475 million, after factoring in credits and other resolutions.

Speaking on behalf of the Attorney General of Mozambique, Keith Oliver of the Peters & Peters law firm said it was an “important step towards achieving full redress for the people of Mozambique” and that the country would bring those responsible to justice.


The series of scandals at Credit Suisse have shaken confidence in the Swiss bank founded to finance the construction of the national rail network that crosses the Alps.

Shareholders deserted the bank following a string of headlines and mixed performance. Its shares are down 14% this year while the Swiss blue chip index has climbed 11%.

In addition, Swiss regulators accused Credit Suisse on Tuesday of having misled them about the extent of the espionage the bank was undertaking in a scandal that forced the departure last year of CEO Tidjane Thiam.

The crisis erupted when former Credit Suisse star wealth manager Iqbal Khan, who had defected to become his Swiss rival UBS (UBSG.S), confronted a private investigator following him in downtown Zurich. .

As further details were revealed, a private investigator implicated in the scandal committed suicide, escalating the outcry. Credit Suisse, however, has repeatedly downplayed this and another spy episode as isolated incidents.

But the Federal Financial Market Supervisory Authority FINMA said on Tuesday that the bank had planned espionage operations on seven occasions between 2016 and 2019 and had carried out most of them.

He said the bank had sought to cover their tracks by using external text messaging services and “rudimentary bills.” He said several board members were made aware of an employee’s spy plan in Asia in 2019.

Criticizing the banks for serious shortcomings in its governance, FINMA said it had launched enforcement proceedings against three people.

The bank said it regretted not having “ensured that all relevant information is readily available” to FINMA and condemned any “unwarranted observation”.

The scandals have angered FINMA officials, who find it difficult to hold bankers to account because Swiss rules only allow them to sanction directors if they are directly involved in wrongdoing, rather than for misconduct. general management.

Despite more than $ 15 billion in write-downs and penalties at Credit Suisse in recent years, dissident shareholders also did not oust Chairman Urs Rohner before he retired this year.

Cédric Wermuth, a Swiss lawmaker from the Social Democratic Party, supported calls for tighter banking supervision.

“We will have more cases in the future like this unless we have stricter regulations,” he said.

Reporting by John O’Donnell in Frankfurt and John Revill in Zurich; Writing by John O’Donnell; Additional reporting by Karin Strohecker in London; Editing by David Clarke

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