A Four-Part Series: Hook, Line and Sinker
Below is a list of all the current posts in our "Hook, Line and Sinker" series, complete with direct links for easy access. We hope you find this series both informative and engaging!
Part 1 - The Mozambique Tuna Bonds Scandal
The "tuna bonds scandal" is one of the world's biggest corruption scandals. In 2013, three state-owned companies in Mozambique borrowed over $2 billion from Credit Suisse and VTB, ostensibly to fund tuna fishing and maritime security projects. Instead, the loans were largely embezzled and misused, leading to a fiscal crisis and extensive litigation for Mozambique. A court ruling in July 2024 found that 94 red flags were missed in this case. This series examines the major red flags that were missed during successive phases of the scandal.
Part 2 - The Loans to ProIndicus
In March 2013, Credit Suisse arranged the first loan for ProIndicus to fund coastal security for tuna fishing. Despite due diligence revealing significant corruption red flags, Credit Suisse proceeded with the loan. These red flags included the questionable necessity and feasibility of the project, unrealistic repayment terms, and the absence of any discussion on coastline security in official plans.
Part 3 - Ematum
In September 2013, Ematum secured the second loan, despite numerous flawed assumptions based in a July 2013 feasibility study. This study contained inflated cost estimates for vessels and transportation, unrealistic catch projections that did not reflect known market conditions, and inappropriate tuna pricing benchmarks. Despite these red flags, investors proceeded anyway, believing that Mozambique's significant natural gas reserves would eventually generate substantial earnings for the country.
Part 4 - The Aftermath
By 2016, it became clear that Ematum could not repay its debt, leading Credit Suisse and VTB to convert the loans into tradable bonds while concealing key details. The revelation of hidden debts led to the swift cancellation of aid to Mozambique, leading to a total economic loss of over $10 billion in four years, and pushing approximately 2 million people into poverty. Mozambique, Credit Suisse, VTB and Privinvest (a shipbuilding company) were plunged into extensive litigation, which continues today. The scandal additionally resulted in substantial fines and regulatory actions against Credit Suisse.