In one of the largest legal judgements against the bank, Credit Suisse was ordered by a Singapore court to pay the former prime minister of Georgia $926 million for losing some of his fortune.
In the most recent setback for the struggling bank, which is being taken over by UBS, Singapore's International Commercial Court ruled that a unit of Credit Suisse had not behaved in good faith and neglected to keep the assets of Bidzina Ivanishvili safe.
Credit Suisse announced right away that it would challenge the ruling.
The court heard that multi-billionaire businessman Ivanishvili, who served as Georgia's prime minister from 2012 to 2013, had entrusted Credit Suisse Trust with the custody of $1.1 billion in 2005.
According to Cavinder Bull and Woo Shu Yan, Ivanishvili's solicitors from the company Drew & Napier, Credit Suisse Trust's shortcomings caused fraudulent mismanagement and significant losses.
In its ruling, which was made public on Friday, the court stated that the bank had failed to protect Ivanishvili's assets by denying access to Patrice Lescaudron, an adviser at Credit Suisse Trust in Singapore.
In 2018, a Swiss court found Lescaudron guilty of faking the signatures of former clients over an eight-year period, including Ivanishvili. In a scam that netted him tens of millions of Swiss francs, he acknowledged to fabricating trades and concealing losses. He was freed in 2019 and committed suicide the following year.
"It is not accepted that the defendant's conduct was reasonable," Judge Patricia Bergin said in a written judgment.
"It preferred the importance of Mr Lescaudron in retaining the big client, the plaintiff, with the Credit Suisse organisation to the compliance with its core obligation of keeping the Trust assets safe."
According to Bergin, Credit Suisse waited up to two years for a response from Lescaudron after questioning him and was aware that he had broken rules intended to prevent fraud.
"Its tolerance of these flagrant breaches was not in good faith and was unreasonable," Bergin added.
Credit Suisse will deduct the $79 million it had paid in December from the $926 million it must pay.
"The judgment published today is wrong and poses very significant legal issues," Credit Suisse said in a statement. "Credit Suisse Trust Limited intends to vigorously pursue an appeal," it added.
In relation to another judgement regarding how it handled Ivanishvili's assets, the bank is also appealing.
Ivanishvili and his family are entitled to compensation from Credit Suisse's local life insurance company in the amount of about $600 million, a Bermuda court concluded in March 2022.
The court ruled that in order to avoid a conflict with the Bermuda case and avoid a so-called double recovery, the total amount owed by Credit Suisse should be further decreased. The Bermuda judgement is currently being challenged by Credit Suisse.
According to a person with knowledge of the situation, Credit Suisse has already made provisions for a portion of the entire compensation and the overlap is expected to be around $300 million.
In the Singapore case, the bank will file an appeal on the grounds that the compensation covered losses from poor investment choices as well as fraud.
Ivanishvili's spokesman applauded the Singapore judgement.
"Despite the judgment in Bermuda last year and the admission of breach of duty during the Singapore trial, Credit Suisse has continued to frustrate our clients' efforts to seek redress for the crimes committed by its employees," the spokesperson said.
"We expect Credit Suisse to fully comply with the judgment and finally accept responsibility for its failures."
(Source:www.financialpost.com)
In the most recent setback for the struggling bank, which is being taken over by UBS, Singapore's International Commercial Court ruled that a unit of Credit Suisse had not behaved in good faith and neglected to keep the assets of Bidzina Ivanishvili safe.
Credit Suisse announced right away that it would challenge the ruling.
The court heard that multi-billionaire businessman Ivanishvili, who served as Georgia's prime minister from 2012 to 2013, had entrusted Credit Suisse Trust with the custody of $1.1 billion in 2005.
According to Cavinder Bull and Woo Shu Yan, Ivanishvili's solicitors from the company Drew & Napier, Credit Suisse Trust's shortcomings caused fraudulent mismanagement and significant losses.
In its ruling, which was made public on Friday, the court stated that the bank had failed to protect Ivanishvili's assets by denying access to Patrice Lescaudron, an adviser at Credit Suisse Trust in Singapore.
In 2018, a Swiss court found Lescaudron guilty of faking the signatures of former clients over an eight-year period, including Ivanishvili. In a scam that netted him tens of millions of Swiss francs, he acknowledged to fabricating trades and concealing losses. He was freed in 2019 and committed suicide the following year.
"It is not accepted that the defendant's conduct was reasonable," Judge Patricia Bergin said in a written judgment.
"It preferred the importance of Mr Lescaudron in retaining the big client, the plaintiff, with the Credit Suisse organisation to the compliance with its core obligation of keeping the Trust assets safe."
According to Bergin, Credit Suisse waited up to two years for a response from Lescaudron after questioning him and was aware that he had broken rules intended to prevent fraud.
"Its tolerance of these flagrant breaches was not in good faith and was unreasonable," Bergin added.
Credit Suisse will deduct the $79 million it had paid in December from the $926 million it must pay.
"The judgment published today is wrong and poses very significant legal issues," Credit Suisse said in a statement. "Credit Suisse Trust Limited intends to vigorously pursue an appeal," it added.
In relation to another judgement regarding how it handled Ivanishvili's assets, the bank is also appealing.
Ivanishvili and his family are entitled to compensation from Credit Suisse's local life insurance company in the amount of about $600 million, a Bermuda court concluded in March 2022.
The court ruled that in order to avoid a conflict with the Bermuda case and avoid a so-called double recovery, the total amount owed by Credit Suisse should be further decreased. The Bermuda judgement is currently being challenged by Credit Suisse.
According to a person with knowledge of the situation, Credit Suisse has already made provisions for a portion of the entire compensation and the overlap is expected to be around $300 million.
In the Singapore case, the bank will file an appeal on the grounds that the compensation covered losses from poor investment choices as well as fraud.
Ivanishvili's spokesman applauded the Singapore judgement.
"Despite the judgment in Bermuda last year and the admission of breach of duty during the Singapore trial, Credit Suisse has continued to frustrate our clients' efforts to seek redress for the crimes committed by its employees," the spokesperson said.
"We expect Credit Suisse to fully comply with the judgment and finally accept responsibility for its failures."
(Source:www.financialpost.com)