Friday, October 23, 2020

Former Credit Suisse Banker took $45 million bribe for securing business loans worth $2 billion

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One of the bankers involved in the scandal of Mozambique’s “hidden debts” admitted on Wednesday, in a New York court, that he took at least 45 million US dollars in illicit payments for his role in arranging the loans of over two billion dollars to three fraudulent, security-linked companies, which came close to ruining the Mozambican economy.

At the time of these bribes, the banker concerned, Andrew Pearse, worked for Credit Suisse, and helped arrange the loans.

The loans were granted in 2013 and 2014 by Credit Suisse and the Russian bank VTB to companies that had been set up by the Mozambican security service, SISE – namely Ematum (Mozambique Tuna Company), Proindicus and MAM (Mozambique Asset Management). The loans were only possible because the Mozambican government of the day, under President Armando Guebuza, guaranteed them.

The loan guarantees were illegal since they smashed through the ceiling on guarantees established by the Mozambican budget laws of 2013 and 2014. They also violated the clause in the Mozambican constitution which says that such debt can only be incurred with the consent of the Mozambican parliament, the Assembly of the Republic.

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All three companies are now effectively bankrupt, and the guarantees make the Mozambican state liable to repay the entire two billion dollars.

Because American banks were used in laundering some of the money, and because Mozambican investors purchased part of the debt, the US authorities claim jurisdiction. An investigation by American prosecutors found that at least 200 million dollars of the loan money was used to pay bribes and kickbacks.

The two banks sent all the money, not to Mozambique, but to the Abu Dhabi-based group, Privinvest, which became the sole contractor for the three fake companies. The money for the bribes came from Privinvest – an allegation which Privinvest has strongly denied.

The trial in New York is of Jean Boustani, the Privinvest sales executive who played a key role in arranging the loans, and is regarded by US prosecutors as the mastermind behind the whole operation.

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According to the report of the trial carried by the Bloomberg agency, Pearse, who has already pleaded guilty to one count of conspiracy, testified that at least four other Credit Suisse bankers also took millions of dollars in bribes from Privinvest.

“They all played a role in ensuring the bank made the loans,” Pearse testified. “They provided the bank with false information about Privinvest.”

Two of the other Credit Suisse bankers, Surjan Singh and Datelina Subeva, have also confessed to their role in the fraud, and will testify for the prosecution

Pearse told jurors that other Credit Suisse colleagues – Said Freiha and Adel Afiouni – introduced Privinvest to the bank and also made a multi-million dollar profit after a company they established while working at the bank was bought by Privinvest for more than 10 million dollars.

Boustani “told me they were silent partners with him,” Pearse said. When asked if both men were at Credit Suisse at the time, Pearse replied, “Yes, that’s why the defendant described them as ‘silent.'”

Four Mozambican officials also obtained millions of dollars in kickbacks from Privinvest, and Ndambi Guebuza, the son of the then-president, Armando Guebuza, collected at least 50 million dollars in illegal payments, according to Pearse.

“The son introduced the defendant to his father and to the ministers in the Mozambique government who were necessary for the project to proceed,” Pearse said.




He added that Ndambi Guebuza had once demanded that Boustani pay him an additional 11 million euros (about 12.2 million dollars), Pearse alleged.

“He was living in the south of France and asked to buy a house for himself and a prostitute he’d fallen in love with,” Pearse said. “He wanted 11 million euros to buy a house with the prostitute”.

Pearse found the request surprising, but Boustani merely shrugged, saying, “It’s nothing, given the 50 million dollars I already paid him.”

Ndambi Guebuza is currently under arrest in Maputo, awaiting trial by a Mozambican court for his role in the scandal.

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Boustani is pleading not guilty. In his opening statements, Boustani’s defence lawyer Michael Schachter told jurors that his client had nothing to do with the sale or marketing of loans to investors and had not defrauded them. Pearse got the “sweetest of sweetheart deals” from the U.S., Schachter claimed, and was testifying against Boustani to avoid prison.

Neither Freiha, Afiouni nor Credit Suisse itself have been indicted by the US prosecutors. Freiha and Afiouni no longer work at the bank.

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