In a ruling that sends shockwaves through the financial world, Credit Suisse has been ordered to pay a staggering $926 million to Georgia’s former prime minister, Bidzina Ivanishvili.
The ruling, handed down by Singapore’s International Commercial Court, marks one of the largest legal awards ever made against the embattled bank.
The court concluded that a Credit Suisse unit had demonstrated a lack of good faith and failed to protect Ivanishvili’s fortune, dealing yet another blow to the beleaguered institution, which is currently undergoing a takeover by UBS. Undeterred, Credit Suisse swiftly announced its intention to appeal the decision.
At the heart of the case is Ivanishvili, a billionaire businessman who served as Georgia’s prime minister from 2012 to 2013.
Ivanishvili had entrusted $1.1 billion to Credit Suisse Trust in 2005 for safekeeping.
However, his legal team, comprising Cavinder Bull and Woo Shu Yan from the renowned law firm Drew & Napier, argued that Credit Suisse Trust’s negligence and failures had resulted in fraudulent mismanagement and substantial losses.
In its published judgment, the Singapore court determined that the bank had failed in its duty to safeguard Ivanishvili’s assets, enabling Patrice Lescaudron, an advisor at Credit Suisse Trust in Singapore, to gain unauthorized access to them.
Lescaudron, who was convicted by a Swiss court in 2018 for forging signatures and engaging in deceptive practices, admitted to falsifying trades and concealing losses, amassing millions of Swiss francs. Released in 2019, Lescaudron tragically took his own life in 2020.
Judge Patricia Bergin expressed her unequivocal condemnation of Credit Suisse’s conduct in her written judgment, stating, “It is not accepted that the defendant’s conduct was reasonable. It preferred the importance of Mr. Lescaudron in retaining the big client, the plaintiff, with the Credit Suisse organization to the compliance with its core obligation of keeping the Trust assets safe.”
Bergin further highlighted that Credit Suisse was aware of Lescaudron’s regulatory breaches and had allowed a significant delay in receiving his response to their inquiries, indicating a lack of good faith and reasonableness.
The ordered payment of $926 million by Credit Suisse will be offset by the $79 million already paid in December.
Nevertheless, the bank vehemently contested the decision, asserting that it was flawed and raised substantial legal issues.
“Credit Suisse Trust Limited intends to vigorously pursue an appeal,” the institution declared in a statement.
This is not the only legal battle plaguing Credit Suisse regarding Ivanishvili’s assets.
In March 2022, a Bermuda court ruled that Ivanishvili and his family were entitled to damages of approximately $600 million from Credit Suisse’s local life insurance division.
The Singapore court acknowledged the need to prevent overlapping compensation and double recovery, suggesting that the final amount owed by Credit Suisse should be further reduced. The bank is currently appealing the Bermuda ruling.
While Credit Suisse contends that the compensation in the Singapore case relates to investment losses rather than solely fraud, the magnitude of the ruling remains a resounding blow.
Ivanishvili’s spokesperson welcomed the decision, expressing hope that Credit Suisse would fully comply with the judgment and assume responsibility for its failures.
As the legal battles rage on, the global financial community closely watches the fate of Credit Suisse, a once-revered institution now grappling with the repercussions of its missteps.
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