UBS and Mozambique settle the Credit Suisse “tuna bond” case

UBS reached a settlement with the Government of Mozambique regarding Credit Suisse’s involvement, in an alleged fraud involving “tuna bonds” that ruined the country’s financial situation. This was just days before the London trial.

UBS reported on Sunday that Credit Suisse and Mozambique had “mutually released each other” from all liabilities and claims related to the loans and bond issues made for the country in 2013.

The loans were initially intended to finance projects, including a tuna fishery for the state. However, fell into default due to the alleged theft of hundreds of millions dollars. The IMF and other donors cut off support after discovering the loans.

UBS has worked to resolve a mountainous legal issue at Credit Suisse ever since it purchased its rival six months ago in a rescue agreement. According to sources familiar with the details, UBS will not be paying any cash as part of the settlement.

Mozambique claimed that Credit Suisse, and other defendants, had ignored the looting hundreds of millions of dollar from “tuna bonds” loans through bribes.

The country sought $1.5bn in damages for economic losses, as well as the IMF’s withdrawal of funding.

UBS stated that “the parties are happy to have settled this long-running dispute arising from events which occurred a decade earlier.”

Credit Suisse paid $475mn in fines for the scandal and has forgiven $200mn Mozambican loans in a settlement reached in 2021 with four regulators from three countries.

Mozambique continues to sue Privinvest, a Gulf-based shipbuilder that supplied the boats and equipment under the contract, alleging $136mn worth of bribes.

Privinvest denied any wrongdoing, and stated that it had lawfully entered into business ventures with officials of the government. It also paid $10mn as campaign contributions to President Filipe Nyusi.

Privinvest announced on Saturday that it was granted permission to appeal a previous ruling that Nyusi couldn’t be sued in the case. This could mean that the trial will be adjourned depending on the response of the judge to the appeal.

Privinvest argues that Nyusi should be brought in to account for what they have called “a cynical effort by the Republic to claw back the money spent on these projects”.

In a separate Saturday statement, UBS stated that it was not aware of an investigation by the US Department of Justice into whether Credit Suisse had failed to comply with Russia related sanctions.

The UBS share price dropped by 7 percent last week, but recovered to a large extent at the end of the day.

The bank stated that “the recent reporting about an alleged investigation by the US Department of Justice on sanctions-related compliance failings at Credit Suisse or UBS is incorrect.” We’re unaware of any such investigation. UBS and CS significantly and proactively decreased their Russia-related risk.”

The DOJ declined comment.