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Tuna bonds ‘Credit Suisse should write-off Mozambique debt’: aid agencies

Children playing near water in Mozambique

Cyclone Idai has claimed hundreds of lives, with thousands still missing.

(Copyright 2019 The Associated Press. All Rights Reserved.)

Aid agencies are calling on Credit Suisse to write off CHF1 billion ($1 billion) of loans to cyclone-hit Mozambique. The Swiss bank is under fire for allowing employees to arrange loans to the African country that were allegedly undeclared and syphoned off by corrupt officials.

Mozambique has been devasted by severe flooding caused by cyclone Idai that has killed hundreds and destroyed infrastructure.

NGOs such as Helvetas, Keesa, Solidar Suisse and Terre des Hommes have sent a letter to Credit Suisse chief executive Tidjane Thiam urging the bank to re-think its policy on loan repayments.

In January, three former Credit Suisse employees were arrested by the United States on charges of conspiracy to commit money laundering, violate the US Foreign Corrupt Practices Act, commit wire fraud and to commit securities fraud. Mozambique’s former finance minister has also been charged.

Credit Suisse bankers arranged large loans, so-called “tuna bonds”, to finance a revamp of Mozambique’s fishing industry. But it is alleged that the bonds were not properly declared and that official pocketed 10% of the money.

“It is unfair for Mozambican taxpayers to have to repay these loans,” Martin Fischler of Swiss development organisation Helvetasexternal link told the Swiss public broadcaster SRFexternal link. “These debts are the result of illegal lending. The loans were not approved by parliament and the national bank in Mozambique. They were also not reported to the International Monetary Fund.”

The agencies also demanded that the bank refund fees it charged the African country for arranging the bonds. The consortium estimates this to be in the region of $100 million, but the bank says it only charged $23 million.

Credit Suisse told SRF that it is in contact with Mozambique about rescheduling the debt.

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