(July 29): Credit Suisse Group AG’s legal battle with billionaire client Bidzina Ivanishvili has spread to Singapore, as the Georgian gears up for a trial with a unit of the Swiss lender, over what he claims are US$800 million (about RM3.56 billion) in losses tied to a rogue banker.
Fresh from a big win in Bermuda earlier this year, the former Georgian premier is now suing a different subsidiary of Credit Suisse, as part of his campaign to claw back profits frittered away by convicted fraudster Patrice Lescaudron.
Barring a last-minute injunction, the case will go to trial in September in Singapore, threatening fresh negative headlines for Credit Suisse, after repeated scandals and the appointment of a third chief executive officer in less than three years.
The claim, part of litigation that began in the Asian city state five years ago, relates to what Ivanishvili says was the reckless oversight of his fortune by Credit Suisse Trust Ltd (Singapore). Lescaudron, a former star banker, was convicted of fraud in 2018 for a near decade-long scheme, in which he forged signatures to enable unauthorised trades on his clients’ accounts to try and stay ahead of growing losses. Ivanishvili, a former prime minister of Georgia, was by far Lescaudron’s biggest clients, with whom Credit Suisse set up investment vehicles in Singapore, Bermuda and New Zealand.
Ivanishvili’s London lawyers said they’re seeking about US$800 million in total, a sum derived from misappropriated assets, as well as losses that would not have incurred if the money had been prudently invested. They declined to comment ahead of the trial.
Though Lescaudron took his own life in 2020, a Geneva probe continues into whether the bank bears criminal responsibility in the case, and the prosecutor leading that probe has identified US$60 million in transactions that he believes were laundered through the bank.
Ivanishvili and Lescaudron’s other Russian clients have long maintained that the bank knew of the Frenchman’s unorthodox practices, and should have put a stop to it, before he embarked on his years of fraud. The bank has consistently said that Lescaudron was a lone wolf, who hid his crimes from his colleagues and supervisors.
Credit Suisse said it doesn’t comment on ongoing litigation matters. A spokeswoman for the Singapore courts declined to comment on the trial, saying the September schedule isn’t public yet.
Lawyers for Ivanishvili first sued the bank in 2017, as they sought to obtain internal bank documents they believe would shed light on the bank’s level of awareness of Lescaudron’s behaviour. CS Trust’s lawyers pushed back, however, argue that anything before August 2011 should be time-barred, and that Switzerland, not Singapore, is the appropriate forum to pursue a case against the bank.
The New Zealand High Court dismissed Ivanishvili’s case there in 2018, ruling that Switzerland was the correct jurisdiction for any litigation. CS Trust’s lawyers successfully argued that any litigation in Singapore should be limited to CS Trust, and not the bank, which is headquartered in Zurich.
“At all material times, the investment managers appointed by Mr. Ivanishvili were responsible for and exercised all powers of investment management, to the exclusion of CS Trust, ” the lawyers wrote. “CS Trust denies that it had failed to take any or any reasonable steps to protect and safeguard the assets of the Mandalay Trust.”
In the Bermuda case, the island nation’s supreme court took a less sympathetic view of the bank’s role, ruling that the local unit, Credit Suisse Life Ltd., turned a “blind eye to Mr. Lescaudron’s wrongdoing”.
Of course there’s no guarantee Ivanishvili will prevail in the Singapore case, but he has form. He was awarded damages of US$607.5 million in the Bermuda case, and CS Life was ordered earlier this week to pay that amount into an escrow account by early September, pending the outcome of its appeal.