The US Securities and Exchange Commission announced Tuesday that Russian bank VTB has agreed to pay over US$6 million for its role in Mozambique’s hidden debts, hours after the deal with Credit Suisse was announced.
“A London-based subsidiary of Russian bank VTB has separately agreed to pay more than $6 million in a settlement in the face of charges by the SEC,” the US Securities and Exchange Commission made the announcement in a statement.
VTB has agreed to pay “without admitting, nor denying” charges of “misleading investors in a second 2016 bond offering” related to the hidden debts, “in breach of anti-fraud rules against negligence”.
According to the SEC’s order, “the second structured offering by VTB Capital and Credit Suisse allowed investors to exchange their bonds from a previous bond offering for new sovereign bonds issued directly by the government of Mozambique.”
At issue is the fact that the “true nature of Mozambique’s debt and the high risk of defaulting on obligations” was not revealed, which was confirmed, as Mozambique stopped paying the loans after the full extent of the hidden debts was known.
Credit Suisse, meanwhile, had reached a $475 million settlement with financial judicial authorities in the United States, United Kingdom and elsewhere, pleading guilty to conspiracy to commit fraudulent financial transfer.
The discovery of Mozambique’s hidden debts in 2016 led to a financial crisis in the country that resulted in a series of lawsuits against Credit Suisse and the Russian bank VTB, launched by the Mozambican Attorney General’s Office, but the banks also put the country in the dock for non-payment, arguing that the destination and application of the borrowed funds was not their responsibility.