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Ex-Credit Suisse bankers arrested on US charges over Mozambique loans

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Three former Credit Suisse Group AG (CSGN.S) bankers were arrested in London on Thursday on US charges of involvement in a fraud involving $2 billion in loans to state-owned companies in Mozambique, US prosecutors said.

Andrew Pearse, 49, Surjan Singh, 44, and Detelina Subeva, 37, were charged in a federal court in Brooklyn, New York, with conspiring to violate US anti-bribery law and to commit money laundering and securities fraud. They have been released on bail in London while the United States seeks extradition.

Former Mozambique finance minister Manuel Chang, 63, was arrested in South Africa this week as part of the same case.

A fifth man, Jean Boustani, was arrested on Wednesday at New York’s John F. Kennedy Airport. Boustani is a Lebanese citizen who worked for an Abu Dhabi-based contractor to the Mozambican companies, according to the indictment.

Lawyers for the defendants could not be reached for comment.

“The indictment alleges that the former employees worked to defeat the bank’s internal controls, acted out of a motive of personal profit, and sought to hide these activities from the bank,” Credit Suisse said in a statement, adding that the bank would continue to cooperate with authorities.

$2 BILLION IN LOANS

According to the indictment, between 2013 and 2016 three Mozambican state-owned companies borrowed more than $2 billion through loans guaranteed by the government and arranged by Credit Suisse and another investment bank, which was not named in the document.

Apart from Credit Suisse, the Russian lender VTB (VTBR.MM) also arranged financing for Mozambique’s state-owned companies. Both Credit Suisse and VTB also arranged a eurobond MZ139100344= for Mozambique’s government, which is earmarked for restructuring.

VTB and the Mozambican government did not immediately respond to a request for comment.

Mozambique – one of the most indebted countries in the world – admitted in 2016 to undisclosed lending, prompting the International Monetary Fund and foreign donors to cut off support, triggering a currency collapse and a default on its sovereign debt. It is still struggling to overcome the resulting debt crisis.

According to the indictment, the three state-owned companies were created to undertake maritime projects, but were really “fronts” for Chang, Boustani and the three bankers to enrich themselves.

Prosecutors said at least $200 million was diverted to the defendants and other Mozambican government officials. They said the defendants concealed the misuse of the funds and misled investors in the United States and elsewhere about Mozambique’s creditworthiness.

US TAKES THE LEAD

The companies missed more than $700 million in loan payments after defaulting in 2016 and 2017, the indictment said.

Debt cancellation activists welcomed the arrests, but criticized British authorities for not taking a leading role.

“It is scandalous that it has required action from the US authorities for this investigation and arrests to be made in London,” said Tim Jones, a policy officer at the British-based Jubilee Debt Campaign.

“It was the London branches of Credit Suisse and VTB which lent the $2 billion, yet there has been a shocking lack of action taken by UK authorities in holding them to account.”

Britain’s finance industry watchdog, the Financial Conduct Authority (FCA), started looking at Credit Suisse’s involvement in Mozambique in 2016. The FCA declined to comment on the latest events.

Jones also urged Credit Suisse to face up to its own responsibility.

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According to the indictment, Pearse was the head of Credit Suisse’s Global Financing Group until around September 2013, but had started working for the shipbuilding firm Privinvest Group around April that year. Subsidiaries of Privinvest have been named as primary suppliers to the Mozambican firms.

Singh worked for Credit Suisse as a managing director in the Global Financing Group until February 2017, while Subeva was a vice president in the same department until August 2013. -Reuters

-Brendan Pierson and Karin Strohecker

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Coca Cola South Africa Improves SME Role In Value Chain

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Coca Cola Beverages South Africa (CCBSA) launches an R20 million fund for small supplier development and procurement, annually, for the next five years.

This was announced by the Financial Director, Walter Leonhardt at Gallagher Convention Centre at the third annual Supplier Development Conference.

CCBS is the South African-based subsidiary of Coca-Cola Beverages Africa (CCBA).

Leonhardt said the purpose of this fund is to assist young upcoming black entrepreneurs in the Coca-Cola value chain.

“We are, today, launching the CCBSA supplier fund of access to funding. To address the issue of access to funding which most SMEs experience,” said Leonhardt.

This will enable the entrepreneurs’ procurement process to be easier.

“It is to help them buy equipment, fund working capital and to help them overcome something we have identified as a challenge for upcoming businesses, which is access to capital on quit lenient terms,” said Leonhardt.

Budding entrepreneurs can visit their website to find out how they can access the funds.

There were over 120 suppliers of CCBSA in attendance.

Managing director of CCBSA Velaphi Ratshefola said they spent R2.35 billion last year, supporting 567 black-owned suppliers, of whom, 265 were black female owned suppliers.  

“So for me, it is clear that this is working. We have helped create a very inclusive economy. We need to play our part and we need to ensure that only through an inclusive growing economy we can create a stable environment where businesses can flourish.

“If we do not have a stable environment, a stable economy, we will have a lot of disturbances which are never good for business,” said Ratshefola.                      

“So for all of us, we should not do it just for social reasons, we must do it for the success of businesses and imperative,” said Ratshefola. 

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Zimbabwe Central Bank Borrows $985 Million From African Banks

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Zimbabwe’s Reserve Bank has borrowed $985 million from African banks to purchase fuel and other critical imports with current reserves covering imports for just four weeks, underscoring the severity of dollar shortages, governor John Mangudya said.

The southern African nation last month ditched a discredited 1:1 dollar peg for its surrogate bond notes and electronic dollars, merging them into a lower-value transitional currency called the RTGS dollar.

Mangudya said the central bank borrowed $641 million from the African Export and Import Bank, $152 million from Eastern and Southern African Trade and Development Bank, and $25 million from Mozambique’s central bank, among others.

The loans, which would be repaid from future gold earnings, have a tenure of between three and five years and attract an interest of up to 6 percent above the Libor rate, Mangudya said.

Gold is Zimbabwe’s single biggest mineral export earner, accounting for a third of its $4.2 billion earnings last year after a record output, central bank data shows.

“These loans are well structured facilities contracted last year. They will be paid from future (gold) export receivables,” Mangudya told a parliamentary committee.

The central bank takes 45 percent of dollar sales from gold producers and half from other miners to fund imports like fuel and power and repay foreign loans.

But the miners only have 30 days to keep their dollar balances in local foreign currency accounts, after which they must sell them. The companies have asked the central bank to extend the period they may keep their dollars to 90 days, according to mining executives.

OVERDRAFT LIMIT

Unable to get funding from foreign lenders like the International Monetary Fund and World Bank due to arrears of more than $2.4 billion, Zimbabwe has looked to financiers from the continent and local banks to shore up its budget.

The central bank chief said Zimbabwe had just $500 million in reserves, enough to purchase four weeks’ worth of imports.

Mangudya said government borrowing from the central bank reached $2.99 billion in December, about three times its permissible overdraft limit.

President Emmerson Mnangagwa’s government has promised to curb borrowing in 2019 under reforms to revive the southern African economy, after the budget deficit soared last year following a spike in spending ahead of elections.

Finance Minister Mthuli Ncube said last week that the local RTGS dollar, Zimbabwe’s new de facto currency, will be backed up with fiscal discipline and the government would allow it to fluctuate but would manage excessive volatility.

On the interbank forex market on Monday, one U.S. dollar fetched 2.5 RTGS dollars, the same rate as on Feb. 22 when the central bank sold some dollars to banks. That compares to a rate of 3.5 RTGS dollars per U.S. dollar on the black market. -Reuters

-MacDonald Dzirutwe

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Volvo To Limit Car Speeds In Bid For Zero Deaths

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Volvo Cars said on Monday it will introduce a 180 km per hour (112 mph) speed limiter on all new vehicles as the Swedish automaker seeks to burnish its safety credentials and meet a pledge to eliminate passenger fatalities by 2020.

While Volvo, whose XC90 flagship SUV currently has a top speed of 212 km/h, has made progress on its so-called “Vision 2020” target of zero deaths or serious injuries, Chief Executive Hakan Samuelsson said it is unlikely to meet the goal without additional measures to address driver behavior.

“We’ve realized that to close the gap we have to focus more on the human factors,” Samuelsson said. Volvo did not elaborate on the data but said its passenger fatalities were already well below the industry average before the goal was announced in 2007.

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In addition to the speed cap, Volvo plans to deploy technology using cameras that monitor the driver’s state and attentiveness to prevent people driving while distracted or intoxicated, two other big factors in accidents, Samuelsson said.

The company is also looking at lower geo-fenced speed limits to slow cars around sensitive pedestrian areas such as schools, while seeking to “start a conversation” among automakers and regulators about how technology can be used to improve safety.

Volvo, which is owned by China’s Geely, announced the new speed limitation policy on the eve of the Geneva auto show, where its new Polestar performance electric-car brand is showcasing its second model, the Polestar 2.

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While Volvo buyers often choose the brand for its safety, Samuelsson conceded that the speed cap could be a turn-off for a few in markets such as Germany, where drivers routinely travel at 200 km/h or more on unrestricted autobahns.

“We cannot please everybody, but we think we will attract new customers,” the CEO said, recalling that the roll-out of three-point seat belts pioneered by Volvo in 1959 had initially been criticized by some as intrusive.

“I think Volvo customers in Germany will appreciate that we’re doing something about safety,” he said. -Reuters

– Laurence Frost; additional reporting by Esha Vaish

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