Credit Suisse Must Cancel Mozambique's Debts

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Together with several Swiss NGOs and the Mozambican Budget Monitoring Forum network, we are calling on Credit Suisse to waive the repayment of an opaque loan worth billions of euros to crisis-ridden Mozambique.

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What it’s about:

Mozambique is currently struggling with the aftermath of devastating Cyclone Idai. Millions of people have lost their livelihoods. Another cyclone, Kenneth-19, has devastated the north of Mozambique in recent days. The country now urgently needs money to alleviate people's suffering and start rebuilding.

However, the country is facing an enormous debt and has had to temporarily declare its insolvency - on the back of the long-suffering population. A large part of this debt, two billion US dollars, goes back to the opaque allocation of loans from Credit Suisse and a Russian bank. The official purpose of the money was to modernise the coastal protection and tuna fishing fleet in order to boost the Mozambican economy. But the transaction was smuggled past Parliament and the National Bank of Mozambique, and the money went to three dubious semi-state companies. The boats were overpriced and have apparently still not been deployed. What’s more, a portion of the money simply disappeared. But because the state has guaranteed the loans, it must pay off the debt – in addition to horrendous fees - rather than providing emergency aid following the catastrophes. The UN, the World Bank and the International Monetary Fund estimate the cost of reconstruction at around USD 2 billion - which is almost exactly the amount of the loan.

What we are demanding:

Credit Suisse has grossly violated its due diligence in granting loans, and must cancel Mozambique's debt and pay back the horrendous fees. The population must not be punished for the illegal loans of their government. Rather than servicing debt, the money must be used for the victims of recent natural disasters. Therefore, please sign the petition to Credit Suisse. It is a joint initiative of Helvetas, Solidar Suisse, terre des hommes schweiz, Solidar Suissse, Multiwatch, Attac and KEESA, and is supported by the Budget Monitoring Forum Mozambique.

Additional information:

In 2013, Credit Suisse and the Russian Bank VTB issued a USD 2.07 billion loan to Mozambique. USD 1.04 billion was provided by Credit Suisse. Disregarding all the usual precautionary measures, the money went to three semi-private companies linked to several high-ranking Mozambican politicians and business people, including the then President and a former intelligence chief. All three companies had recently been founded solely for this purpose and were under the control of the Mozambican intelligence service.

The loan was to be used to purchase a new deep-sea fishing fleet in order to give a boost to the ailing Mozambican economy. However, the tuna boats and coastal protection boats built with the money were massively overpriced and, to this day, have not been used even once. Millions of dollars have also been frittered away in the form of horrendous fees. The loans were kept secret from the Mozambican parliament, the state bank and the International Monetary Fund (IMF). Nevertheless, they were provided with state guarantees. This meant that a whole series of laws and the Mozambican constitution were violated. By granting the loan, Credit Suisse has repeatedly disregarded its own standards and criminally neglected its due diligence obligation.

This all became public in April 2016 - and cast not only the Mozambican politicians, but Credit Suisse and the Swiss financial centre in a very unfavourable light. Although the investigation of the American law enforcement agencies shed some light on the matter, the whereabouts of around 500 million dollars remains unclear to this day. As a result, the IMF blocked all loans to Mozambique, and Switzerland also stopped its payments.

Due to the fraudulently obtained state guarantee, the population of Mozambique now faces an enormous debt of 2.2 billion dollars. That's $80 per inhabitant.

Overall, the country's debt ratio exceeded the 100 % mark at the end of 2018 - a record for Africa. Meanwhile, the government already has to take out new loans in order to finance emergency aid.

In March 2019, the devastating cyclone Idai destroyed large swathes of the country, claimed hundreds of lives, destroyed the livelihoods of millions of people and destroyed up to 90% of central Mozambique's key infrastructure. Once again, it is the poorest who pay the highest price.

Against this background, it is high time that Credit Suisse sent out a clear message. The bank must write off the illegitimate debts of around one billion US dollars and repay the 100 million that they had previously collected in fees to Mozambique. Given the UN's recent call for debt relief to Mozambique, it would be appropriate for Credit Suisse to cancel its debt, including accrued interest. In order not to end up benefiting the same corrupt circles again, it should be contractually guaranteed that the repayments are used for social and humanitarian purposes to assist Mozambique in overcoming the impacts of this natural disaster. In addition, Credit Suisse must cooperate fully with the investigating authorities in Mozambique, the United States and Switzerland, and use all means at its disposal to help clarify the credit scandal.

Our demands:

We are asking Credit Suisse to cancel Mozambique’s debt, including interest rates and fees. By granting the very problematic loan, the Swiss Bank has grossly violated its due diligence obligation and plunged an already poor country further into misery. Given the plight of the Mozambican population, Credit Suisse is expected to heed the call of the UN and to cancel the African country's illegal debts, including accrued interest and fees totalling more than $1.1 billion. It should be contractually guaranteed that the repayments are used for social and humanitarian purposes to assist Mozambique in overcoming the impacts of this natural disaster.

Sign the petition now