UBS and Mozambique Resolve Decade-Long $2B Dispute Over Credit Suisse Loans

UBS Group AG and the government of Mozambique have announced a resolution to a long-standing dispute linked to a scandal involving Credit Suisse and the financing of tuna fishing vessels. This agreement, reached just before the scheduled start of a trial, effectively concludes a case that has spanned the last decade. Both UBS and Mozambique have agreed to release each other from all claims and liabilities associated with the issue.

The controversy began when Credit Suisse, along with other banks, provided approximately $2 billion to Mozambique for projects intended to establish a tuna fishing fleet and improve the country’s coastal security against piracy and illegal fishing. However, it was later uncovered that hundreds of millions of dollars had gone missing from these funds. The Mozambican government subsequently accused the banks of ignoring signs of theft and misconduct.

As a result of these findings, the International Monetary Fund (IMF) and other foreign creditors halted their support for Mozambique after discovering that the local government had concealed crucial details regarding the state-guaranteed loans. Reports indicate that Mozambique sought $1.5 billion in damages, including compensation for the economic losses incurred due to the IMF’s withdrawal.

The settlement is viewed as a significant achievement for UBS, which completed its acquisition of Credit Suisse in June. The Swiss bank expressed satisfaction with concluding this lengthy dispute stemming from events a decade prior. Under the terms of the settlement, UBS will not make any payments to Mozambique.

The $2 billion in undisclosed debt was borrowed by three government-owned companies, including the security services agency SISE. In 2013 and 2014, $622 million was borrowed by Proindicus, $535 million by MAM, and $800 million by Ematum. Among these loans, $118 million of the Proindicus loan came from the Russian bank VTB, with Credit Suisse providing the remainder and later syndicating some of the loans to investment funds.

It is important to note that VTB and BCP (Banco Comercial Português) are not included in this settlement and continue to pursue legal actions. The precise terms of the agreement remain confidential due to the nature of the syndicated loans, but it is estimated that over $500 million in debt has been written off as part of this resolution.

To date, Mozambique’s legal expenses have reached $80 million, and costs are expected to increase as the trial continues. As proceedings move forward and more evidence is revealed, additional settlements may emerge.