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For Love and Money in Mozambique: How a Credit Suisse Banker Helped Fuel an Alleged $2 Billion Debt Fraud

The Wall Street Journal. logo The Wall Street Journal. 12/2/2019 Margot Patrick and Matt Wirz
a man standing on a stage: Former Credit Suisse bankers Andrew Pearse, center; Detelina Subeva, left; and Surjan Singh, right.© Photo Illustration by Emil Lendof/WSJ; Photos: Bloomberg News|, Getty Images Former Credit Suisse bankers Andrew Pearse, center; Detelina Subeva, left; and Surjan Singh, right.

Andrew Pearse said he negotiated his first bribe while sipping vodka at a hotel in Maputo, the capital of Mozambique, in February 2013.

His employer, Credit Suisse Group AG, was financing a $370 million coastal security contract between Mozambique and Privinvest Group, a shipbuilder owned by Lebanese billionaire Iskandar Safa.

Poolside after deal meetings, Mr. Pearse said he and a Safa lieutenant struck an agreement for Mr. Pearse to receive millions in cash. In exchange, Privinvest would pay a lower fee on Credit Suisse’s loan for the Mozambique security contract.

Mr. Pearse, 50 years old, needed the money. He was having an affair with a colleague and wanted to leave Credit Suisse and start a financial boutique with her.

Soon, according to Mr. Pearse, Privinvest was backing his boutique firm and paying him to get Credit Suisse to lend even more to the Mozambique projects, which expanded beyond maritime security surveillance systems to include fishing boats and a shipyard. His life became a whirl of clandestine meetings, secret bank accounts and exotic travel.

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It all came to an end in January with Mr. Pearse’s arrest in London. In July, Mr. Pearse pleaded guilty in Brooklyn federal court to wire fraud, saying he conspired to defraud investors in the Mozambique deals. His former lover, Detelina Subeva, and another former Credit Suisse colleague, Surjan Singh, both pleaded guilty to laundering illicit funds.

Mr. Pearse told the court this fall that ambition and love drove him to take $45 million from Mr. Safa’s Abu Dhabi-based company. In October, Mr. Pearse was the star government witness in the trial of a Safa lieutenant, Jean Boustani, whom the U.S. Justice Department has accused of fraud and money laundering in $2 billion of debt deals in Mozambique. A verdict in Mr. Boustani’s trial could come as soon as Monday.

Mr. Boustani has denied paying bribes and disputed Mr. Pearse’s account of the payments. He said Privinvest backed Mr. Pearse’s boutique investment firm and paid him a share of revenue.

A Privinvest spokesman said that no bribes were paid and Privinvest is proud of its work in Mozambique.

Lawyers for Mr. Pearse, Ms. Subeva and Mr. Boustani declined to comment, and a lawyer for Mr. Singh didn’t respond to requests for comment.

The trial came at a sensitive time for Credit Suisse, which drew fire in September for hiring investigators to spy on a banker who left for a competitor. That episode and the Mozambique deals added to questions about the bank’s oversight following client tax-evasion scandals and regulatory failings in recent years. The Swiss bank arranged financing for two of the three Privinvest projects that ultimately defaulted on their debts.

Mr. Pearse, in his testimony, said he was able to manipulate the bank’s controls and claimed other senior bankers had side deals with clients.

Credit Suisse says it is a victim of rogue employees in the Mozambique deals and is cooperating with authorities. Chief Executive Tidjane Thiam has sought to repair the bank’s reputation by starting an ethical investing division and a campaign to ensure all debts are disclosed when countries borrow.

New Zealand-born Mr. Pearse joined Credit Suisse in 2000. The bank was pouring money into emerging markets, and Mr. Pearse rode the wave to head a group making loans to foreign companies and governments.

His team included Ms. Subeva, a Princeton graduate from Bulgaria, and Mr. Singh, a longtime friend.

By 2012, Mr. Pearse was looking to leave investment banking and spend more time with Ms. Subeva, who, like him, was married with a young family. Mr. Pearse’s search for funding grew more urgent after colleagues spotted the two canoodling in a restaurant, according to his court testimony and a person familiar with the matter.

By that September, Mr. Pearse glimpsed a route out. He worked with Mr. Boustani on the $370 million loan for Privinvest’s security contract, and he said they bonded.

Early the next year, Mr. Pearse pitched a boutique that would help Privinvest finance similar projects. In Maputo, he said he told Mr. Boustani that the $49 million financing fee that Privinvest was paying could be lowered. His aim was to “curry favor” with Messrs. Boustani and Safa so they would invest in his new company, Mr. Pearse later told the court.

Over a bottle of vodka at the Radisson Blu hotel, Messrs. Boustani and Pearse agreed Privinvest would pay Mr. Pearse $5.5 million in exchange for an $11 million reduction in the fee, Mr. Pearse recounted in court. “I remember it very clearly because it was a significant point in my life where it was the first time I’d been offered a kickback,” Mr. Pearse said.

Mr. Boustani in testimony said Privinvest made payments to Mr. Pearse to start his new business.

A few weeks later, at Mr. Safa’s compound in the south of France, Mr. Safa agreed to back Mr. Pearse’s startup and pay it fees for additional loans, according to Mr. Pearse’s testimony.

Mr. Pearse left Credit Suisse, but told Mr. Singh, who remained, that he could earn a few million dollars by pushing Credit Suisse to make more loans, according to testimony from both men. Mr. Singh told the court he was “ashamed to say” he criminally received $5.7 million.

Messrs. Pearse and Singh set up bank accounts to receive the payments in Abu Dhabi, where Mr. Boustani helped obtain residency documents. Mr. Pearse posed as a tube welder. Mr. Singh posed as an archives clerk, stripping off his jacket and tie in a visa-processing center filled with laborers so he would “fit in more,” he told the court.

Mr. Boustani said in court testimony the visas the two men received were to work at the investment boutique, and the job titles came from Privinvest visa quotas.

Mr. Pearse’s new firm thrived, and he and Ms. Subeva traveled together for work and pleasure, including to Bali, the Seychelles and Montego Bay in Jamaica. He started an energy business buying oil rights, and hired a former professional rugby player from New Zealand to coach his son’s high school team in southeast England.

By 2015, the Mozambique projects were failing amid an oil rout and were at risk of defaulting on their debts, which Credit Suisse and other banks had sold to investors around the world.

When Credit Suisse decided to stop lending, Mr. Boustani threatened to write to Mr. Singh on his bank email to demand the return of $3.7 million Privinvest had paid him, Mr. Singh said in court. He said he refused. Mr. Pearse took him on a trip to Paris to create a cover story for payments Privinvest and Mr. Pearse had made to him, Mr. Singh testified.

On the Eurostar train, they tapped out a document describing fees for fictitious investments that Mr. Boustani was supposed to have made for Mr. Singh.

Mr. Boustani testified in court that the actual Privinvest payment was to recruit Mr. Singh to Mr. Pearse’s boutique. Mr. Pearse said he paid Mr. Singh $2 million for getting Credit Suisse to continue the financing.

In 2016, Mozambique restructured some debts and The Wall Street Journal reported on irregularities in the deal, prompting international donors to halt aid and triggering an economic contraction in the impoverished country.

U.S. firms holding the debt began selling out as prices fell. Mutual-fund manager AllianceBernstein took a loss of about $22 million, according to court testimony.

U.S. and U.K. authorities investigated. They got a breakthrough when Credit Suisse found personal email addresses of some alleged conspirators in deal correspondence. The DOJ issued warrants to get the messages from email providers at the end of 2017, and over the next year developed a case alleging that $200 million out of Mozambique’s $2 billion in borrowings went to bankers and Mozambican officials.

Mr. Pearse and Ms. Subeva’s on-and-off affair cooled, but they kept working together. On Dec. 31, 2018, they texted New Year’s greetings.

A few days later, they were arrested in London. Both face up to 20 years in prison.

Corrections & Amplifications The DOJ issued warrants to get messages from email providers. An earlier version of this article incorrectly stated the DOJ issued subpoenas. (Dec. 1)

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