Credit Suisse ordered to pay $926M to ex-Georgian prime minister
In a significant legal blow to Credit Suisse, the bank has been ordered by a Singapore court to pay $926 million to Bidzina Ivanishvili, the former prime minister of Georgia. The ruling, made by Singapore’s International Commercial Court, highlights the bank’s failure to act in good faith and protect Ivanishvili’s assets. According to the court, a unit of Credit Suisse did not adequately safeguard the assets entrusted to them by Ivanishvili, leading to substantial losses. According to the court’s findings, Credit Suisse failed to fulfil its fundamental duty of safeguarding the assets and should have taken measures to prevent unauthorised access by Patrice Lescaudron, an advisor at Credit Suisse Trust in Singapore who was subsequently convicted of fraud.
The case revealed that Ivanishvili had placed $1.1 billion under the custodianship of Credit Suisse Trust in 2005. However, Lescaudron’s fraudulent actions resulted in forged signatures and significant financial losses over an eight-year period. Lescaudron was convicted in a Swiss court in 2018 for his fraudulent activities, which included falsifying trades and hiding losses. Despite being released in 2019, Lescaudron took his own life in 2020.
Judge Patricia Bergin, in her written judgement, criticised Credit Suisse for prioritising the importance of retaining Ivanishvili as a client over the obligation to protect the assets entrusted to them. The court found that the bank had tolerated Lescaudron’s breaches of regulations designed to prevent fraud and had failed to respond adequately when questioned about his actions. Judge Bergin concluded that Credit Suisse’s conduct was unreasonable and not in good faith.
Credit Suisse has expressed its intention to appeal the decision, citing the judgement as incorrect and raising significant legal issues. The bank has already made a payment of $79 million in December, which will be deducted from the total amount to be paid. Credit Suisse is also appealing another ruling in a Bermuda court regarding its handling of Ivanishvili’s assets. In that case, damages totalling approximately $600 million were awarded to Ivanishvili and his family against Credit Suisse’s local life insurance division.
The final amount to be paid by Credit Suisse is expected to be further reduced to prevent an overlap with the Bermuda case and avoid a double recovery. Credit Suisse has already provisioned for a portion of the total compensation related to the overlap. In the Singapore case, the bank plans to appeal on the grounds that the compensation should be related to bad investment decisions rather than solely fraud.
Ivanishvili’s spokesperson welcomed the Singapore court’s decision and called on Credit Suisse to fully comply with the judgement and take responsibility for its failures. The legal award adds to the financial challenges and reputational damage faced by Credit Suisse, as the bank is also undergoing a takeover by UBS.
