A Credit Suisse Group AG unit lost its appeal of a $607 million damages bill for failing to rein in a rogue banker who defrauded a Georgian billionaire client.
(Bloomberg) — A Credit Suisse Group AG unit lost its appeal of a $607 million damages bill for failing to rein in a rogue banker who defrauded a Georgian billionaire client.
While the court upheld the award that Credit Suisse Life (Bermuda) Ltd. must pay to Bidzina Ivanishvili, it dismissed his claim of fraudulent misreprentation against the unit, according to a ruling by the appeals court in the island nation’s capital Hamilton. The tribunal asked both sides to make some submissions to determine what costs CS Life might get back.
The life insurance unit was initially ordered to make the payout to Ivanishvili after a Bermuda judge in March 2022 ruled that it had “turned a ‘blind eye’” to Patrice Lescaudron’s fraud. The Frenchman was convicted in 2018 for a scheme he ran to recoup client losses and then skim some off the top for himself. He later killed himself.
“Mr. Ivanishvili did not authorise any of the transactions – hence Mr. Lescaudron’s forgery of instructions,” according to Friday’s ruling. “Mr. Lescaudron, who was a wholesale fraudster,” should “not have executed any of them.”
Read more: Credit Suisse, the Jailed Banker and an Oligarch’s Millions
Zurich-based Credit Suisse said in a statement that it was pleased with the decision to overturn the misprepresentation claim, but “we are disappointed that it has not accepted CS Life’s arguments that it had not breached the contract with its client.”
“The decision is not final, and CS Life intends to vigorously pursue an appeal to the Privy Council,” said the bank, which has always maintained that Lescaudron was a lone wolf who hid his deceit from colleagues and supervisors.
A spokesman for Ivanishvili said it’s the third time in 15 months a court has ruled against the bank in the case.
“The fraud perpetrated against our clients and its concealment spanned almost a decade,” he said. “The time has come for Credit Suisse to take responsibility for the crimes committed by its personnel, accept the rulings and repay in full the damages awarded by the courts.”
Any final damages award will likely reflect an element of double counting because Ivanishvili — once the prime minister of Georgia — also had investments with another Credit Suisse unit in Singapore. The Georgian sued Credit Suisse Trust Ltd. there too over the Lescaudron fraud, and and in May a Singapore court assessed damages of $926 million, an amount that the judge said would be reduced further to ensure there is no double recovery.
Read more: Credit Suisse Loses Singapore Case Against Georgian Tycoon
Credit Suisse, which was recently bought by larger rival UBS Group AG in a government-brokered rescue, called that judgement “wrong” and one that it would appeal.
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