UBS settles with Mozambique in Credit Suisse ‘tuna bond’ case

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UBS has settled with the government of Mozambique over Credit Suisse’s involvement in a £2bn alleged “tuna bond” fraud that wrecked the country’s finances, just before a trial was due to start in London.

Credit Suisse and Mozambique “have mutually released each other from any liabilities and claims” related to loans and bond issues arranged for the country in 2013, UBS said on Sunday.

The loans were ostensibly to fund projects including a state tuna fishery but later collapsed into default over the alleged looting of hundreds of millions of dollars. The borrowing had been partly concealed from the IMF and other donors, who cut support to the country after the loans were discovered.

UBS, which has been working to clear a mountain of legacy legal issues at Credit Suisse since it bought its rival in a rescue deal six months ago, will not pay any cash under the settlement, according to people familiar with the details.

Mozambique had claimed ahead of a three-month trial that was due to start on Monday that Credit Suisse and other defendants ignored the looting of hundreds of millions of dollars from the “tuna bond” loans in bribes and kickbacks.

The country was seeking $1.5bn in damages, including for economic losses after the IMF and international donors pulled their funding.

“The parties are pleased to have resolved this long-running dispute stemming from events occurring a decade ago,” UBS said.

Credit Suisse has already paid $475mn in fines and forgave $200mn of Mozambican debts in a 2021 settlement with four regulators in three countries over the scandal.

Mozambique is still suing Privinvest, the Gulf-based supplier of the boats and other kit under the deal, alleging the shipbuilder paid $136mn in bribes.

Privinvest has denied wrongdoing and said that it lawfully engaged in business ventures with government officials, and paid $10mn in campaign contributions to President Filipe Nyusi and the ruling party.

On Saturday, Privinvest said that it had been given permission to appeal against an earlier ruling that Nyusi could not be sued as part of the case, which could mean the trial is adjourned based on the judge’s response to the appeal.

Mr Justice Robin Knowles ruled that Nyusi had immunity as a foreign head of state but Privinvest has argued that he should be included, to answer for what it has called “a cynical attempt by the republic to clawback the money it spent on the projects”.

In a separate statement on Saturday, UBS said it was unaware of a US Department of Justice investigation into whether Credit Suisse failed to comply with Russia-related sanctions. 

This followed a Bloomberg story last week that caused UBS shares to drop 7 per cent, before mostly recovering by the end of the week.

“The recent reporting on an alleged probe by the US Department of Justice into sanctions-related compliance failures at Credit Suisse and UBS is inaccurate,” the bank said. “We’re not aware of such a probe. UBS and CS have significantly and proactively reduced their Russia-related exposure.”

The DOJ declined to comment.