A unit of Credit Suisse Group is pleading guilty for its role in a fundraising scandal that looted money from Mozambique and tipped the country into an economic crisis.

The Zurich-based bank has agreed to enter into a deferred prosecution agreement and have a subsidiary, Credit Suisse Securities Europe, plead guilty for conspiracy to commit wire fraud, an attorney for the bank said Tuesday at a hearing in Brooklyn.

The agreement is the latest action in a multi-year, international legal saga that came out of $2 billion of debt deals from 2013 to 2014 to state-owned companies that were supposed to fund a new coastal patrol force and tuna fishing fleet in Mozambique, one of the world’s poorest countries.

Credit Suisse will pay at least $400 million to settle with authorities, according to people familiar with the matter. A spokesperson for the bank declined to comment. In a 2018 indictment, the US Justice Department alleged the contracts were a front for government officials and bankers to enrich themselves. Three former Credit Suisse bankers have pleaded guilty to US charges stemming from the scheme.

The agreement will help the bank move past one of a series of recent scandals. The lender was forced to freeze $10 billion in supply-chain finance funds this year related to defunct finance company Greensill Capital, and it took a $5.5 billion hit from the collapse of prime brokerage client Archegos Capital Management.

The Swiss bank has overhauled its management ranks in the aftermath of those blow-ups, and new chairperson Antonio Horta-Osorio has vowed to clean up the lender’s problematic attitude toward risk management. He has spent the last few months debating strategic options, with an expectation to finalise the long-term vision and mid-term targets by the end of the year.

Credit Suisse had provisioned 1.7 billion Swiss francs for litigation matters as of year-end 2020 and estimated a maximum of 900 million Swiss francs in litigation losses not covered by the provisions.

Last year the bank had been forced to drastically increase provisions – driving it to a fourth-quarter loss – for legacy legal cases in the US, most notably one involving financial crisis-era mortgage-backed securities.

Mozambique revealed in 2016 that it had guaranteed about $2 billion of the loans, more than previously disclosed. As a result, the International Monetary Fund froze its financial support and soon after, a group of donor countries cut their aid. The nation defaulted on $727 million of bonds in February 2017 and its currency plunged, sparking a surge in inflation.

The bonds were restructured in 2019. The tuna fishing boats they paid for are yet to operate and are rusting in the port of Maputo, the capital.

In Mozambique, the scandal has ensnared over a dozen people, including the son of the nation’s former president and the ex-head of intelligence. Former Finance Minister Manuel Chang, who signed the government guarantees for the debts, has been held in custody in South Africa since 2018.

TodayNG