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.



<h5 class="wp-block-heading">$2 BILLION IN LOANS</h5>



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 &#8211; one of the most indebted countries in the world &#8211; 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.



<h5 class="wp-block-heading">US TAKES THE LEAD</h5>



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

‘It’s Better  To Live In Hell Than A South African Prison’

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

The sixth edition of the Credit Suisse Global Wealth Report 2015 offers a portrait of the world’s wealth. Besides affirming that global inequality has grown, the study had some interesting findings about the regions it covered, especially in Africa. Since 2000, the rate of growth of millionaires in Africa was faster than the global average, by a factor of four to 126,000 behind only India and China, which grew to 185,000 and 1.3 million millionaires respectively. The findings are supported by a similar report by Capgemini and RBC Wealth Management. In World Wealth Report 2015, Africans with at least $1 million of investable assets are reported to have climbed to 150,000 in 2014, up by 5.2%, while their combined wealth increased by 7% to $1.44 trillion.
Between 2000 and 2015, the Credit Suisse report noted that the wealth of those above the lower-middle-class threshold in Africa had grown by 140% compared to a global average of 113%. It states that adults with wealth beyond the middle class threshold accounted for a further $793 billion, bringing the total wealth of the middle class and beyond to $1.6 trillion, or 0.7% of global wealth. Such detailed and insightful revelations are rare. More importantly, they suggest that the continent’s recent gains are not a myth. Africa rising is real.
That said, the emerging wealth comes with the need for good advice. For that reason, I believe the time is now for private banking, wealth management and asset management in Africa. Although it is less understood than traditional methods of investing, wealth managers should prepare to deliver guidance to these freshly minted high-net-worth individuals (HNWIs). This is necessary. As the proverb says: Wisdom is a shelter as money is a shelter. Well, wisdom and knowledge will be needed. The opportunity is for wealth managers to serve as trusted investment advisors and as educators.
Just as important, these advisors will provide guidance on meaningful social impact activities, like giving back to society and creating entrepreneurial opportunities. This is vital in Africa where wealth inequality is so high. Credit Suisse reports that some Africans are among the top global wealth decile, and even among the top percentile. In fact, the region is more concentrated in the bottom end of the global wealth spectrum, with more than 40% of African adults belonging to the two lowest global wealth deciles. Seychelles, for instance, has a Gini index of 94.8 or near perfect inequality. Libya, South Africa, Botswana, Nigeria and Egypt are among the top 10 most unequal states in the region. In all, wealth managers have a critical role to play.
It is critical that policymakers fast track legislation allowing African funds to invest across the continent, as a means to provide investment channels for African wealth managers spread the risk. There is urgent need to deepen the roughly 30 recognized stock exchanges in the region for HNWIs to gain local financial markets exposure. In the past, Africa’s HNWIs dealt with bankers in New York, the Channel Islands, Geneva or London and invested abroad. This is likely to change soon. It is good to note that some international operators have already seen the opportunity. Specialist wealth managers, such as Pictet Asset Management and UBS, are notable examples. Locally, firms such as Stanlib and Ecobank are leading the way.
There is no doubt that significant wealth creation has occurred in Africa. This is a new dawn, wealth managers need to dump the pessimism and jump in.

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

Africa’s Rise Is Not A Myth