Tuna bonds dispute between Credit Suisse and Mozambique has been resolved.
UBS, the Swiss bank that acquired Credit Suisse this year, has announced a significant reduction in its Russia-related exposure. This move comes as the bank also settles a long-standing legal dispute with Mozambique in the 2013 "tuna bonds" scandal.
The settlement, announced just ahead of a civil trial set to start in London on Monday, involves UBS forgiving part of a loan Credit Suisse made to Mozambique in 2013, representing less than $100 million. The parties mutually released each other from any liabilities and claims relating to the transactions, with UBS not paying any cash under the settlement.
In 2013, the Mozambican government hired Credit Suisse to raise funds for maritime projects, issuing bonds worth $850 million, colloquially known as the "tuna bonds." However, a significant portion of the funds were misappropriated, leading to a scandal that has been ongoing for several years.
Credit Suisse agreed in 2021 to pay about $475 million to British and U.S. authorities to resolve bribery and fraud charges connected to the case. Mozambique is still suing Privinvest, the shipbuilder involved in the scandal, alleging the company paid $136 million in bribes.
Privinvest, however, maintains that any payments related to the tuna project were investments, consultancy payments, legitimate remuneration, or political campaign contributions. The company has also received permission to appeal a London High Court ruling granting immunity to Mozambican President Filipe Nyusi.
Meanwhile, if Privinvest is found liable, Mozambique has stated that Nyusi should contribute to damages. Trading in UBS shares was temporarily halted after they fell nearly 8% following a Bloomberg story about the settlement.
Interestingly, UBS is not aware of a Justice Department investigation into alleged compliance failures at the bank and Credit Suisse that may have allowed Russian clients to evade sanctions. Bloomberg reported on the alleged investigation on Wednesday, citing people familiar with the situation.
Mozambique had sought $1.5 billion in damages in connection with the scandal. The settlement marks a step towards resolving this long-standing dispute, while the investigation into potential compliance failures at UBS and Credit Suisse adds another layer of complexity to the situation.
