Insights Nigel Fairbrass Uncategorised

Fishful Thinking

Swiss banking giant Credit Suisse confirmed almost half a billion dollars in fines and $200m of Mozambican debt relief this week, following successive regulatory investigations into the so-called “tuna bonds” scandal.  Credit Suisse and VTB, a Russian investment bank, had arranged $2bn of bonds and loans for Mozambique, ostensibly to set up a state-backed tuna fishing fleet.  Investigations later revealed that $500m of the funds vanished in kickbacks to Mozambican officials and employees of the bank.  The subsequent collapse of the scheme plunged Mozambique into years of financial crisis as international donors, such as the IMF, cut off their support.

Credit Suisse’s statement could have expressed some element of mortification for its role in the affair.  Instead, it smugly declared itself to be ‘satisfied with the completion of the proceedings’.  This duff note was aggravated further by the cynical inclusion of another regulatory settlement tagged on to the same statement:  In this case, the Swiss banking regulator’s investigation into spying by senior Credit Suisse executives on its own employees.  The surveillance in question, referred to as ‘observations’ in a tortured legal ambiguation, was something the bank confidently asserted it could ‘now draw a line under’. 

The temptation to declare the end of one’s own crisis is always enticing, but rarely effective.  Instead, it conveys a desperation to move on that simply invites further scrutiny.  In Credit Suisse’s case, its attempt to take out the trash in one go resulted in some ugly coverage.  The BBC’s Today Programme (2hrs 40min / 8.40 am) interviewed the head of enforcement for the FCA on the Mozambique investigation, implicating the bank in the impoverishment of millions of Mozambicans.  Ritually tarred and feathered, the bank was brutally ‘empty chaired’ before the presenter then read out a section of its statement that addressed the settlement on spying, rather than the Mozambique bonds.  Presumably on the basis that the entire statement made so little sense, it didn’t really matter which section they used.  This error was also made (perhaps not entirely coincidently) by The Guardian.

The language in legal settlement announcements is often prescribed by the relevant regulator’s lawyers, precisely to ensure as much accountability as possible.  In this instance, it would appear that Credit Suisse thought it expedient to deflect that accountability through an exercise in obfuscation and dissimulation.  As a practice, this attempt at kitchen-sinking did little to support claims of a new corporate culture taking root under António Horta-Osório.  It simply reinforced the perception that, despite a continuing litany of scandals facing investment banks, fines rarely lead to wholesale management change, or indeed any change at all.  Notwithstanding the departure of CEO Tidjane Thiam.

Now faced with the prospect of continuing criminal trials over the tuna bonds affair, Credit Suisse’s attempts to draw a line under this latest imbroglio by simply declaring that it’s over and done with, look like fishful thinking.

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