Mozambique’s lawsuit against Credit Suisse and shipbuilder Privinvest over the decade-old “tuna bond” scandal in London could pitch one of the world’s poorest nations against corporate heavyweights in a R28bn-plus battle this week.
The Maputo government and Credit Suisse’s parent UBS were locked in out-of-court settlement talks on Friday, according to one source in Mozambique’s attorney-general office and two sources familiar with the situation, who asked not to be named because the negotiations were confidential.
The 11th-hour bid to secure a deal would allow Swiss banking giant UBS to resolve an inherited legal headache and escape the scrutiny of a three-month London high court trial due to start on Monday.
If talks fail, the Swiss bank, three of its former staff, UAE-Lebanese shipbuilder Privinvest and its French boss Iskandar Safa will have to defend their roles in deals designed to finance a fishing fleet and maritime security.
In the case, also known as the “hidden debt” scandal, hundreds of millions of dollars went missing, Mozambique was pitched into a protracted economic downturn and Maputo and Washington launched criminal proceedings.
UBS declined to comment and Privinvest did not immediately respond to a request for comment.
Mozambique is hoping to revoke a sovereign guarantee on a loan it alleges was corruptly procured and secure compensation for other alleged wrongdoing.
The case is one of the biggest legacy disputes inherited by Swiss banking giant UBS, which rescued scandal-scarred Credit Suisse earlier this year.
Three state-owned Mozambican companies struck deals in 2013 and 2014 with Privinvest and banks including Credit Suisse for loans of about $2bn (R38bn).
The loans were secured with undisclosed government guarantees and billed as being for projects such as a state tuna fishery. Credit Suisse sold on much of its exposure to international investors.
When the scale of missing funds and borrowing became public in 2016, donors including the International Monetary Fund halted support, triggering a debt default and criminal investigations.
Mozambique alleges it was the victim of a conspiracy and that Privinvest paid more than $136m in bribes to corrupt officials and Credit Suisse bankers.
It alleges, in part, that Credit Suisse is liable for the actions of its staff who worked on the deals and who pleaded guilty in the US in 2019 to conspiracy to breach anti-bribery laws and commit money laundering.
Credit Suisse agreed to pay about $475m to British and US authorities in 2021 to resolve bribery and fraud charges and pledged to forgive $200m of Mozambican debt. The bank alleges it was unaware of the misconduct of its staff at the time, and the former bankers themselves deny being part of a conspiracy.
Privinvest alleges it delivered on its contractual obligations and any payments made were investments, consultancy payments, legitimate remuneration or political campaign contributions.
Manuel Chang, who signed the sovereign guarantees as the then Mozambican finance minister, was extradited to the US in July from South Africa. He pleaded not guilty to US criminal charges of conspiring to commit wire fraud, securities fraud and money laundering. He is scheduled to appear in a Brooklyn federal court on October 27.
A former central bank governor and two ex-central bank employees were charged in Mozambique alongside Chang, facing allegations they abused their positions.
In December, a Mozambican criminal court found Ndambi Guebuza, son of a former president, and 10 others guilty of charges including money laundering and bribery, sentencing them to more than 10 years in jail.
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