UBS Still Embroiled in Mozambique Case After Swiss Opened Criminal Probe

This content was published on October 31, 2024 - 14:52

2 minutes

(Bloomberg) — The Mozambique ship-financing scandal that rocked Credit Suisse continues to haunt UBS Group AG, after Swiss prosecutors revealed they opened a criminal probe late last year.

The Swiss Federal Court in September rejected an appeal by three unnamed bank units that sought to keep information sealed in an investigation into “persons unknown.” The probe is focused on a suspected illicit payment of $7.9 million into a Credit Suisse bank account that was sought by federal prosecutors, according to the anonymized Sept. 25 decision.

While Credit Suisse is not named in the ruling, it refers to “bank B” units no longer being in existence “having been integrated in a merger.” UBS acquired Credit Suisse in a government-brokered rescue last year. There is also a reference the “Mozambique debt scandal.”

The issue dates back a decade to when Credit Suisse first financed the construction of a new coastal patrol force and tuna fishing fleet for Mozambique. The African nation alleges the Swiss bank ignored red flags and the corruption of its own bankers in deals struck as part of $2 billion worth of bond sales.

UBS reached a settlement with Mozambique over Credit Suisse’s role in the case last year, as it sought to resolve the numerous lingering disputes that dogged the former bank. Meanwhile, a London judge in a separate civil suit ruled that Mozambique was defrauded — the government-backed fundraising was plagued by corrupt deals, with hundreds of millions of dollars looted, while much of the debt was kept hidden from bondholders and other lenders.

The Swiss Attorney-General’s Office began an investigation in September 2023 as to why the payment was not flagged to relevant authorities and is looking into “possible criminally relevant omissions or, where appropriate, actions by unknown employees of the former Bank B. Group,” according to the ruling.

A spokesperson for UBS declined to comment. The federal prosecutors confirmed it is investigating “persons unknown” on suspicion of money laundering but declined to comment further. The federal court didn’t respond to messages seeking comment.