In view of the flood disaster in Mozambique, several Swiss NGOs have issued an open letter calling on Credit Suisse to waive the repayment of a billion-dollar loan to the crisis-ridden country. This is a hidden debt of two billion US dollars as a result of fraudulent illegal agreements between Credit Suisse, the Russian bank VTB, international contractors and Mozambican government representatives. The illegally obtained loans plunged Mozambique into a financial crisis in 2016 that continues to this day and is now making the country’s reconstruction considerably more difficult.
A financial scandal has been causing a stir in Mozambique for almost three years: At the beginning of 2016, it came to light that Armando Guebuza’s government had given permission to three parastatal companies to take out loans amounting to two billion US dollars between 2013 and 2014. Parliament, which should have approved the loans, was bypassed in the process. The Swiss bank Credit Suisse was one of the main lenders. Allegedly, the money was to be used for the purchase of tuna boats, among other things, but a large part of the billions seeped away into opaque channels. In December last year, three former CS bankers, the former finance minister of Mozambique and others involved were arrested at the instigation of the US Department of Justice.
In 2018, Swiss NGOs had already called on Credit Suisse to cancel the debt in line with the demands of Mozambican civil society. However, there was no response from the major bank. In view of the dramatic devastation caused by Cyclone Idai, there is now acute pressure to act to resolve the debt crisis. The humanitarian disaster has reached an unprecedented scale for southern Africa: five million people are directly affected, 1.8 million people are in acute need of help, including one million children. In the flooded areas in the center of the country, the risk of epidemics is increasing due to the lack of drinking water, and the first cases of cholera have been reported.
Against this backdrop, KEESA, terre des hommes schweiz, Helvetas and Solidar Suisse have issued an open letter (see attachment) calling on Credit Suisse to write off its illegal loan of around one billion US dollars and to repay the fees of 100 million US dollars received as part of the loan. This would help the hard-hit country to cope with the consequences of the natural disaster.
International organizations have already taken a clear stance in this direction. The Secretary-General of the United Nations, António Guterres, called for generosity from the international community at the UN General Assembly in New York last week. According to Guterres, Mozambique’s national debt must now be dealt with generously. The UN expert on foreign debt and human rights, Juan Pablo Bohoslavsky, demanded in a statement: “The devastating effects of Cyclone Idai must be taken into account in debt talks. (…) The repayment of the debt should not restrict the necessary financial leeway for reconstruction (…) In short, the secret loans should not and cannot be repaid.” The IMF has also recently emphasized that Mozambique must be granted substantial debt relief.
The undersigned organizations expect Credit Suisse to face up to its responsibilities and draw the consequences of its illegal lending business.
We are always available to provide you with more detailed information on the situation. We can also offer you direct contacts in the crisis area.
Contacts:
KEESA – Barbara Müller, +41 79 601 74 17
Helvetas – Martin Fischler, Regional Coordinator East Africa, +41 79 656 64 83
Terre des hommes schweiz – Gabriela Wichser, Head of Programs, + 41 78 806 30 03
Solidar Suisse – Joachim Merz, +41 44 444 19 86
