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Illustration: Aïda Amer/Axios

It was easy — far too easy — for Andrew Pearse, a Credit Suisse banker, to negotiate $45 million of kickbacks for himself as part of a deeply corrupt series of loan and bond issues in Mozambique.

Driving the news: That's the verdict of a major international fraud investigation that culminated Tuesday in the Swiss bank paying some $475 million in fines.

Why it matters: Up until now, Credit Suisse has claimed it was a victim of rogue employees. But the fines, and the associated findings, make it clear that deep internal weaknesses allowed the crimes to proceed.

The big picture: The biggest victims in the scheme have been the citizens of Mozambique, a desperately poor country with massive debt-servicing costs whose first-ever international bond issue, co-run by Credit Suisse, was an integral part of the scandal.

  • Credit Suisse has forgiven $200 million it's owed by Mozambique as part of this week's announcements. The bank retains the right, however, to try to claw back some of that money from other guilty participants.

Driving the news: Credit Suisse is paying $175 million to the Department of Justice, $100 million to the SEC, and $200 million to the U.K. Financial Conduct Authority. That's over and above any losses it takes on forgiving the Mozambican debt.

Flashback: The so-called tuna bonds were ostensibly issued to pay for Mozambique to build out a tuna fishing fleet. In fact, nearly all of the money ended up being stolen.

  • When it became clear that the debtors would never repay the money, the Mozambique government allowed creditors to swap their paper for (arguably odious) sovereign Mozambique bonds.

The bottom line: Pearse and his co-conspirators have pleaded guilty but have not yet been sentenced; Mozambique is seeking their extradition.

  • Expect many further shoes to drop in this case, which is likely to drag on for years.

Go deeper: How Credit Suisse failed at basic risk management

Go deeper

Nov 10, 2021 - World

China's homebuilders are on the brink

Illustration: Aïda Amer/Axios

Since China Evergrande began flaking on debt payments in September, the world’s focus has turned from whether its collapse represents a Lehman Brothers-like moment of systemic peril (it doesn’t) — to whether China’s whole property sector is set for a string of defaults (it probably is).

Why it matters: Lehman or not, the Federal Reserve warned this week that financial fallout from China’s real estate shakeout “could pose some risks to the U.S. financial system.”

Updated 41 mins ago - Politics & Policy

Congressional leaders clinch support for crucial defense bill, debt limit votes

Senate Majority Leader Chuck Schumer passes waiting reporters on Tuesday. Photo: Eric Lee/Bloomberg via Getty Images

Congress has found a shortcut to pass its annual defense funding bill and raise the debt limit.

Driving the news: The House voted Tuesday night on two major bills — one creating a one-time, fast-track process for the Senate to raise the debt ceiling with just 51 votes, and another passing its annual defense bill.

House passes annual defense bill

Speaker of the House Nancy Pelosi. Photo: Chip Somodevilla/Getty Images

The House voted to pass the annual defense bill 363-70 on Tuesday night, authorizing nearly $770 billion in funding for defenses and national security programs.

Why it matters: The National Defense Authorization Act (NDAA) still has to clear the Senate, but the House passage greatly increases the chances that the must-pass defense bill will move through both chambers of Congress before the end of the year.