Prosecutors believe Credit Suisse can be held criminally liable for its employees’ crimes if they were committed in the scope of their role and at least partly benefited the bank, said one of the sources who is a U.S. law enforcement official. They believe a plea deal and testimonies from two former bankers at a subsequent trial give them evidence of the bank’s culpability, the sources said.

Prosecutors from the Eastern District of New York contacted the bank in February and laid out their initial case against it, the second source said.

"Credit Suisse continues to cooperate with all investigating authorities," a Credit Suisse spokesman said.

The prosecutor’s view on the bank’s culpability and the latest contact between prosecutors and the bank have not been previously reported.

It is not clear whether prosecutors will file any charges against the bank. The second source said talks between prosecutors and Credit Suisse could go on for as long as a year and the bank, which disputes that testimonies from its former bankers proved its guilt, may fight any charges in court.

The Justice Department declined to comment. The two sources declined to be named due to sensitivity of the matter.

The case stems from loans Credit Suisse helped arrange between 2013 and 2016 to develop Mozambique’s coastal defenses, shipping fleet and tuna fishing industry.

The three former Credit Suisse bankers, along with two middlemen and three Mozambican government officials, were charged in 2018 for money laundering and defrauding U.S. investors who had invested in the loans. U.S. prosecutors said at least $200 million of the loans had been diverted to the eight defendants. The former bankers pleaded guilty last year.

One of the former bankers, Andrew Pearse, who was a managing director, said during his plea hearing that he had accepted millions of dollars of unlawful kickbacks to enrich himself and Credit Suisse, according to a court transcript. The bank earned $24 million in fees on the loans, but is still waiting for Mozambique to repay a $270 million portion of the loan, one of the sources said.

A second former Credit Suisse banker who pleaded guilty testified at the trial of one of the middlemen that the bank was aware that the value of the ships financed through the loans were false, the sources familiar with the matter said.

The banker testified during a cross-examination that the bank failed to notify investors after learning that boats it had financed were worth about $250 million and $400 million less than it had originally indicated on the loan, said the law enforcement official.

However, the second source said such disclosures are usually made by the issuer, which in this case is the Mozambican government, and the bank is of the view that its former bankers were not senior enough to prove failure on the part of the lender.

(Published by Financial Times, March 16, 2020)
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