Three ex-Credit Suisse Group AG (NASDAQ: TVIX) bankers have been arrested in a scheme connected to about $2 billion in loans to finance fake projects in Mozambique. Andrew Pearse of New Zealand, Surjan Singh of the U.K., and Detelina Subeva of Bulgaria were arrested in London and the U.S. is seeking their extradition. According to reports, the subjects have been released on bail.
According to court documents filed with the U.S. District Court for the Eastern District of New York, the bankers helped arrange over $2 billion in loans guaranteed by the government of Mozambique in a fraud meant to benefit them financially. Pearse received over $45 million in illicit payments, while Singh received about $4.5 million and Subeva was paid at least $2.2 million. The documents show that Pearse and Subeva left Credit Suisse in 2013, while Singh remained until 2017.
As part of the scheme, Pearse, Singh, and Subeva allegedly worked to circumvent internal compliance rules at Credit Suisse to get the loans approved. The bankers failed to report critical information to compliance staff at the bank and removed specific loan conditions without approval, including a requirement that Mozambique’s attorney general vouch for the validity of the government’s guarantee. Their deception led the bank to approve the loans despite red flags. No action has been taken against Credit Suisse, which said it is cooperating with authorities.
Pearse, Singh, and Subeva were not the only ones arrested in connection with the scheme. Lebanese citizen Jean Boustani, an executive at Privinvest Group, an Abu Dhabi-based holding company, was arrested earlier this week in New York. Manuel Chang, the former finance minister of Mozambique, was arrested in South Africa late last month.
Privinvest was hired to provide equipment and services to complete the projects the loans were intended for. Prosecutors allege Boustani paid bribes and kickbacks with Mozambican officials to help hide the scheme. Chang was accused of creating a special vehicle to take on debt without the approval of the International Monetary Fund, which provides aid and financing to Mozambique. Aid was suspended after the loans were revealed, leading the nation to default on its debts early last year.