Credit Suisse (CSGN.S) has hit back against Mozambique in a case in Britain’s High Court, arguing a government guarantee for a $622 million loan – part of a $2 billion debt scandal – is valid and that it is entitled to claim damages.
Mozambique sued the investment bank last year, alongside a number of other defendants, in a bid to cancel the guarantee and seek compensation for losses related to the debt saga, which tipped its economy into crisis.
Credit Suisse rejected Mozambique’s arguments in its defense papers and submitted a counter claim, dated Jan. 21, requesting the court declare the guarantee binding and arguing it is entitled to seek interest and damages, namely the money it says it is owed.
“The claims against CSI and CSLB are denied in their entirety,” the papers said, referring to Credit Suisse International and its London branch. “CSI and CSLB are not liable to pay any damages, compensation or indemnity.”
Credit Suisse and Russia’s VTB (VTBR.MM) bank provided or helped arrange financing, granted in 2013 and 2014, for a project spanning tuna fishing, maritime security and shipyard development, which U.S. authorities now say was an elaborate front for a bribery and kickback scheme. Hundreds of millions of dollars went missing.
Mozambique is trying to claim hefty sums that the country has paid or still owes under the agreements, which also included an $850 million eurobond, now restructured, and a $535 million loan from VTB (VTBR.MM), as well as compensation for economic losses.
A series of court cases spanning three continents has ensnared three former Credit Suisse bankers, Mozambique’s former finance minister and its former president’s son. However, Mozambique’s action against Credit Suisse is the only one to target the bank itself.
The country says Credit Suisse employees, and therefore the bank, knew that large bribes were being paid and that guarantees for the loans exceeded limits set out in law, or were wilfully blind to it.
Mozambique’s Attorney General’s Office did not immediately respond to a request for comment.
VTB earlier this month lodged its own lawsuit in Britain’s High Court suing a Mozambique state-owned company over the $535 million loan.
All of the lending for the project was guaranteed by Mozambique’s government, though some of it was not disclosed. The International Monetary Fund and other donors cut off support to Mozambique when the additional borrowing came to light in 2016, triggering a currency collapse and debt default it is yet to fully recover from.