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Mozambique, Credit Suisse secure out-of-court settlement over tuna bond scandal

A picture taken on September 29, 2023 in Bern shows a logo of Credit Suisse bank.   -  
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Credit Suisse and Mozambique have reached an out-of-court settlement over the "hidden debt" affair, with the parties "mutually" releasing each other from any liability, UBS, which bought out its Swiss rival, said on Sunday.

The announcement comes as a trial was due to open in London's High Court on Monday into the scandal that plunged Mozambique, one of Africa's poorest countries, into deep crisis.

The agreement, transmitted by UBS in an e-mail to AFP, states that Mozambique and Crédit Suisse "have amicably settled the legal proceedings initiated in London".

"The parties have mutually released each other from all liability and claims relating to the transactions" and "are pleased to have resolved this long-standing dispute", it says.

On Friday, the Financial Times had reported that banking giant UBS was keen to seal a "last-minute" out-of-court agreement with Mozambique ahead of the trial in London, to spare Credit Suisse a battle in the courts.

To prevent Credit Suisse from going bankrupt, UBS was forced in March to buy out its former subsidiary under pressure from the Swiss authorities, and must now settle the numerous cases that had rocked the bank.

The agreement reached between Credit Suisse and Mozambique "is an important milestone in this case (...) and demonstrates that UBS is handling Credit Suisse litigation at a steady pace and resolving it", UBS noted in its email sent to AFP.

In October 2021, Credit Suisse had notably been hit with $475 million in penalties following an agreement with US, UK and Swiss authorities to end prosecutions over loans to Mozambique, at the heart of a vast corruption scandal.

In 2013, the bank had granted loans to state-owned companies intended to finance maritime surveillance, tuna fishing and shipyard projects, but which were partly diverted for bribes. The government hid the debt from parliament, with loans from several banks, including Credit Suisse, estimated at around $2 billion.

When the scandal broke in 2016, the IMF and World Bank suspended their financial support to Mozambique, and the country defaulted on its sovereign debt. Its currency collapsed.

At the time of the agreement in October 2021, Credit Suisse had agreed with the British authorities to cancel 200 million dollars owed by Mozambique.

However, the country had taken legal action against the shipbuilding company Privinvest and Credit Suisse, among others.

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