Mozambique “Tuna Bond” settlement reveals almost $130 million in agreed payments to creditors

Spotlight on Corruption and partners have obtained a copy of the Mozambique “Tuna Bond” settlement agreement with Credit Suisse and 11 other financial institutions, exposing for the first time the monetary and other costs attached to avoiding a full-scale trial. While the settlement lowered the stakes of an all-or-nothing London trial, it has left the Mozambican people in the dark about who is responsible for the “hidden debt” that crippled the country’s economy.

High stakes and crippling debts

On the eve of a major London-based corruption trial in October 2023, the Republic of Mozambique entered a last-minute settlement that ended its high-stakes dispute over Credit Suisse and 11 other financial institutions’ roles in the “Tuna Bond” scandal. Central to the dispute was a controversial maritime project funded by undisclosed government-backed loans worth more than $2 billion, equivalent to 12% of Mozambique’s GDP at the time. The role of the other major player in the scandal, the UAE-Lebanese shipbuilding company Privinvest, remains for the court to decide. 

Originally hidden from the Mozambican population, the loan was plagued with claims of corruption, exposed through a 2017 audit undertaken by the independent auditor Kroll. The settlement was considered a reprieve for the Mozambican government, writing off roughly $522 million owed to Credit Suisse and other financial institutions through the Mozambican state-owned company, ProIndicus. 

The conditions of the settlement were largely kept secret, until now. Spotlight on Corruption and its partners obtained a copy of the settlement, lifting the lid on the amount Mozambique has agreed to pay – almost $130 million in total. The specific amounts revealed are listed in the table below. The majority of the settlement did not reference any payment agreed by Mozambique to Credit Suisse, though one settlement paragraph remains redacted. 

Mozambique has reportedly paid approximately $142 million in Treasury Bonds and cash thus far, though it is not specified when payments were made and how this amount fits with the agreed payments in the settlement.

Mozambique and each settling institution will pay its own costs related to the London court proceedings prior to settlement, and none admit liability or wrongdoing in the deal. 

Impact on the trial

In addition to the high millions price tag, the settlement had an auxiliary cost of curtailing the opportunity for full and transparent justice. Following a three-month trial in late 2023, the court will now only decide liability and wrongdoing for the remaining claims involving Privinvest and the sanctioned Russian bank, VTB, narrowing accountability prospects for the negative consequences affecting Mozambicans’ everyday lives. 

As the majority of financial institutions settled, and Mozambican President Filipe Nyusi enjoys immunity from proceedings as a sitting Head of State (though this is subject to challenge on appeal), the majority of key witnesses did not testify at trial. Key evidence may now never come to light after ongoing disclosure failings in the trial and the settlement have closed off closer scrutiny of the controversy.

Was the Mozambique “Tuna Bond” settlement a good deal? 

While the settlement comes at a steep cost, it did reduce the risks of high-stakes London litigation where the winner takes all – and the loser picks up a huge legal bill. Financial institutions included in the settlement held about 82% of the total Proindicus debt, or $986.8 million including interest. Mozambique thus achieved a significant reduction in amounts owed through the settlement, assuming no other payments are agreed to Credit Suisse under the redacted settlement provision. 

Additionally, pursuing accountability is not cheap. Mozambique’s legal costs already reached a total of $80 million prior to the settlement agreement and trial. The settlement may have saved Mozambique an eye-watering amount if its claim did not prevail, as the Republic would likely have been required to pay at least a portion of each of Credit Suisse and eleven other financial institution’s immense legal costs.

Credit Suisse, however, will escape the “Tuna Bond” scandal without the scrutiny of a full trial, despite recently revealed evidence that it was warned of Privinvest’s alleged past use of bribe payments prior to approving the loan. If any perception of accountability for Credit Suisse’s involvement can be found, it is largely through other settlement payments. It paid approximately $475 million to UK, US and Swiss authorities to resolve bribery charges in 2021. While three of its former bankers pleaded guilty to US corruption offences, no connected senior managers appear to have faced UK regulatory or enforcement action.

Lastly, obtaining the settlement agreement took significant effort from Spotlight and its partners through a request to the court. The settlement terms would likely not have been revealed without the document being included in trial materials, showing the importance of transparency and public scrutiny in high-value legal disputes involving states. 

The settlement brings a large reduction of financial risk for Mozambique – however, it does not result in greater accountability or transparency surrounding the “hidden debt” grand corruption that resulted in significant hardship for Mozambique and its people.