Credit Suisse History / Recent Events and Liens

Welcome to the eleventh Pari Passu newsletter,

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Today, we will learn more about:

1. Credit Suisse's background and recent developments

2. Lien Definition and Explanation

Credit Suisse - Past events

Credit Suisse has been subject to a series of scandals in the past couple of years that have exposed the company to public scrutiny. These scandals include:

2014 - Tax Invasion: Credit Suisse agreed to pay a $2.5 billion fine to authorities in the United States for helping Americans evade taxes. Prosecutors said the bank helped clients deceive U.S. tax authorities by concealing assets in illegal, undeclared bank accounts, in a conspiracy that spanned decades, and in one case began more than a century ago.

2019 - Spying Scandal: in 2021 Credit Suisse settled an embarrassing situation with out-of-court agreement with its former leading wealth manager Iqbal Khan and his wife, as well as the private detective firm Investigo, for having had them followed through the streets of Zurich in 2019. Long story short, after Khan left Credit Suisse for UBS, what did Credit Suisse decide to do? they hired a private detective firm to monitor him and identify anyone he met with because of fear that he would attempt to lure staff and clients to UBS.

2020 - Money Laundering Scheme: Credit Suisse was fined for allegedly failing to do enough to stop money laundering linked to drug trafficking by a Bulgarian criminal. The case centered on the bank for accepting millions of euros in deposits from a group of Bulgarian clients between 2004 and 2008. Regulators ruled that the bank ignored obvious red flags, including huge sums of cash being brought in suitcases and two assassinations, that hinted at the possible criminal origins of the funds.

2021 - Corruption Case in Mozambique: Credit Suisse agreed to pay about $475 million to American and British authorities to resolve bribery and fraud charges. Between 2013 to 2016, Credit Suisse helped to arrange $1 billion in bond offerings and a syndicated loan to finance a tuna fishing industry project in Mozambique. Unfortunately, most of the proceeds were diverted via kickbacks to Credit Suisse bankers and Mozambique officials.

2021 - Archegos Capital Management: not going to summarize this thriller, but here Credit Suisse lent money to the hedge fund Archegos Capital Management and ended up losing $5.5 because it turned out that Credit Suisse did not have enough collateral against Archegos’s positions when their positions went down a lot.

2021 - Greensill Capital: another interesting story, here the bank was forced to freeze $10 billion of supply chain finance funds in March 2021 when the financier Greensill Capital collapsed after losing insurance cover for debt issued against its loans to companies. In addition, Credit Suisse had sold billions of dollars of Greensill's debt to investors, assuring them in marketing material that the high-yield notes were low risk because the underlying credit exposure was fully insured.

2022 - COVID Rules: the chairman of global banking giant Credit Suisse, Antonio Horta-Osorio, resigned in January 2022 after breaking Covid quarantine rules, including by attending the Wimbledon tennis finals.

2022 - Leak of Client Data: in February 2022, a whistleblower gave information on 18,000 accounts holding more than $100bn to newspapers. The accounts were opened at Credit Suisse between the 1940s and the 2010s, and were connected to criminals, reported human rights abusers, and sanctioned people — including people accused of torture, corruption or related to dictators. The anonymous source explained their motivation for leaking the records: "I believe that Swiss banking secrecy laws are immoral. The pretext of protecting financial privacy is merely a fig leaf covering the shameful role of Swiss banks as collaborators of tax evaders."

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